Planemakers eye replacement sales at Russian air show
MOSCOW (Reuters) - The world's top aircraft makers, scenting a major opportunity in replacing ageing Russian air fleets, will be touting their wares at Moscow's MAKS air show this week in the hope of winning a big slice of that multi-billion dollar market.
Russia needs to replace hundreds of planes as rising passenger numbers drive higher demand, yet many orders are set to go to overseas planemakers.
While President Vladimir Putin has pledged his support to the aerospace industry with ambitions to sell $250 billion worth of aircraft by 2025, Russia has struggled to revive its own airline manufacturing industry and its Superjet program for instance has been plagued by problems.
All of which means foreign makers such as Bombardier Inc, Boeing Co and Airbus view Russia as an important growth market.
"Three of largest replacement markets in the world are the U.S., Europe and Russia, where many older airplanes need to be phased out and more efficient airplanes brought in," Mike Barnett, managing director, marketing at Boeing Commercial Airplanes told a news conference on Monday.
Boeing says it expects air carriers in Russia and the former Soviet states to take delivery of 1,170 planes over the next 20 years at a cost of $140 billion.
Airbus, due to hold an event at MAKS on Tuesday, also has buoyant growth forecasts for 2012 through 2031, expecting Russia to take sixth place globally in terms of new passenger aircraft demand, according to its website.
Driving the market is economic growth, which is fueling a rise in the number of people flying within Russia - the world's largest country stretching from Vladivostok in the east to the Polish border some 8,000 kilometers to the west - and to international destinations.
That in turn is increasing demand for larger planes. But the former Soviet Union is a region where foreign manufacturers already dominate, according to figures on Boeing's website, which show around 70 percent of fleets consist of Western-built planes as opposed to less than 2 percent in the mid-1990s.
Boeing expects 4.5 percent annual expansion in passenger traffic.
"It is ... a market place where they have an ageing fleet and a couple of our products fit in the specific niches where the Russian aviation industry isn't focusing," said Rod Sheridan, vice president of sales and asset management at Bombardier Commercial Aircraft.
The airline industry will be watching for signs of progress at MAKS from Russia's MS-21 planes, a 150 seater passenger jet built by Irkut which is the country's main attempt to rival Airbus and Boeing.
Another key program is the Sukhoi Superjet 100, the first civil plane to be built since the fall of the Soviet Union, which has faced delays and suffered a fatal crash on a 2012 test flight in Indonesia, later determined to be pilot error.
Sukhoi said on Tuesday it signed a delivery contract for six Superjet 100 aircraft with Russia's UTair Aviation and the leasing arm of state development bank Vnesheconombank.
Bombardier's Sheridan sees a market for airlines flying its 50-seater CRJ200 regional jet to upgrade to its larger Q400, which seats between 70 and 80.
"You get about 20 extra seats and you get pretty much the same cash operating costs," said Sheridan. "It's the next logical step ... Everyone we've done business with on the CRJ, we've had discussions about the Q400."
In January, Bombardier said Yakutia Airlines would fly three of its Q400 aircraft, which has a list price of around $30 million, versus a market price of about $9 million for a CRJ200.
Bombardier is also marketing a new family of narrow-body medium-range jets for up to 160 passengers, named the CSeries, and has secured an order from leasing company Ilyushin Finance Co for up to 42 CS300 planes. The aircraft has a list price of about $72 million.
Bombardier is expected to clinch a deal with Russian industrial and defense conglomerate Rostec to assemble the Q400 in Russia. Rostec head Sergei Chemezov said in February it was in talks with Bombardier over a possible $100 million dollar joint venture to build the aircraft in Russia.
Bombardier has declined to comment but has said it has no plans to move Q400 production out of Toronto.
Either way, the Canadian company sees demand in Russia for its planes.
"There are some good products that Russia has developed and is developing, but to ramp up and answer the replacement (demand) is going to take some time," said Sheridan.
(Additional reporting by Solarina Ho in Toronto, Anastasia Lyrchikova and Thomas Grove in Moscow, with Tim Hepher in Paris; Editing by Douglas Busvine and David Holmes)