It is a tradition for members of the Russian United Business Aviation Association (RUBAA) to make an appearance at EBACE. After all, Geneva is, and has always been, an attractive destination for their customers and partners.
This is true even today, when the Russian business aviation industry has suffered a 45 to 50 percent reduction in market demand. That’s the estimate cited by RUBAA vice-president Eugeny Bakhtin, who spoke to AIN on the eve of the show.
This steep drop comes after a period of expansion in Russian business aviation during the years 2010-2013; growth that helped the industry recover from worldwide economic crisis of 2008-2009. Business aviation in the region had a more-or-less flat 2014. While the current setback has struck a heavy blow and presents a serious challenge to commercial viability of the Russian business aviation, at the same time, those who have managed to stay afloat say the nature of interaction with their European colleagues has not substantially changed.
“The decline in demand does not bring with it any sort of fundamental change in our relations with business partners in Europe,” Bakhtin said. Perhaps one notable exception is that RUBAA has had to cancel some of its previously arranged EBAA show appearances on the ground of costs, which have become prohibitively high in view of the market decline.
“And yet we try to stay in contact with our EBAA colleagues,” Bakhtin continued, insisting that the chill in EU/Kremlin relations is not the main factor in the diminished participation.
For almost a year now, the Kremlin has been looking East for political and trade partners. But the Russian business aviation community has done so to a lesser degree, Bakhtin said. “It is true that the demand for business jet flights to Asia-Pacific is on the rise. But the countries of that region cannot compete with Europe and U.S. in terms of the support they can render to Russian business aviation companies, especially in the areas of aircraft maintenance and supply.”
Joint projects between Russian companies and their Western partners in the area of business jet maintenance, ground infrastructure and fleet management have retained their economic viability, to some extent. As an example, Bakhtin refers to the project led by Avcom–a company he has been heading for over a dozen years–on setting up an FBO and maintenance center at Moscow-Ramenskoye Airport.
A number of European companies have contributed their expertise and wares, helping ensure this project’s success. Two of the five hangars erected so far at the southern part of the airport are already operational. They provide storage for business jets and also accommodate Avcom’s maintenance division. The project is managed by International Center for Business Aviation (ICBA), a joint venture between Avcom and Rostec. However, the recent cooling of political relations with the West has caused some European investors to refocus elsewhere.
Naturally, the Russians are looking for substitutes, including entities from China. “We are ready to develop mutually beneficial relationships with Chinese investors and colleagues, be they billionaires or not. However, experience shows that building such partnerships is not easy. Our Chinese colleagues are very cautious and choosy, especially when it comes to a decision to invest in Russian programs, or not,” Bakhtin told AIN.
Some in the Kremlin are more optimistic than Bakhtin. Russian deputy prime minister Igor Shuvalov, whom President Vladimir Putin had asked to supervise Sino-Russian economic development, speaks about “a tremendous interest” from the Chinese, both public and private, in Russian projects. “And not only in the field of oil-and-gas,” he said. Shuvalov insists that some “young and very ambitions Chinese billionaires” expect Russia to “set up a good climate for investment and not interfere in business matters” as their only condition to expand investment programs. These potential investors, incidentally, are also the most enthusiastic users of business jets in the region, and the most desirable clients for Russian business aviation industry going forward.
As of today, Russia’s business aviation community does not have a significant example of a Chinese investment to speak of. That said, one element of Sino-Russian relations that bizav has benefitted from is the big project– “Force of Siberia” a pipeline that would link the north of China with large, recently discovered natural gas fields in Western Siberia, south of Baikal Lake. “With this and other such projects gearing up, there is already a substantial increase in demand for business jets and VIP-configured helicopters in Western Siberia and adjoining territories,” Bakhtin said. Avcom’s local partner Veltal, a business jet operator based in West Siberia, recently added two more Hawkers to its fleet. Bakhtin said, “We are looking at ways to expand our cooperation. One of those ways is a possible assignment of two more aircraft.”
Avcom-Technik provides line maintenance to Veltal and other operators whose jets operate from, or make fuel stops at, Irkutsk and Khabarovsk airports. They are the capital cities of West Siberia and Far East regions, respectively. “We have been running an Avcom-Technik line station at Irkutsk for more than two years now, and we’ll soon be opening one at Khabarovsk,” Bakhtin said.
According to him, Avcom is anxious to expand its offerings to Siberian business jet and rotorcraft operators in light of the growing demand for their services in the regions bordering China. The Force of Siberia pipeline and the Altai (another big gas pipeline project) are seen as “main drivers” for further increase in that demand.
Representatives of Avcom-Technik and International Center for Business Aviation (ICBA) that are going to be present at EBACE’2015, and they are interested in hearing from those who are interested in helping the Russians build air bridges into China.
