The Government scraps duties on big airliners
Andrei Biryukov
In November, Vladimir Putin fulfilled the promise he made during his visit to the Ulyanovsk-based Aviastar-SP aircraft factory in September, signing a decree to introduce zero import duties on aircraft with a capacity of over 300 seats.
Earlier, Deputy Prime Minister Sergei Ivanov said that the Government would scrap import duties on airliners with a capacity between 50 and 200 seats. The Transport Ministry suggested scrapping all import duties on aircraft leased to Russian airline carriers, which have agreements with the UABC for supply of equivalent domestic-made aircraft.
Zero import duties on big airliners are not an anti-crisis measure. Prime Minister Putin only extended the resolution of December 2007, signed by Viktor Zubkov and effective for nine months, from February 2008 to November 2008. The EurAsEC Customs Union has to agree any changes to customs duties, but its members, including Belarus, Kazakhstan, Kyrgyzstan, Tajikistan and the recently self-suspended Uzbekistan, usually delay the process for what can seem like forever, forcing Russia to introduce nine-month duties, prolonged afterwards.
Independent experts say zero duties for big aircraft won't help airline carriers and aircraft manufacturers. Foreign-made aircraft with a capacity of over 300 seats include the Airbus A340-500 and Airbus A340-600 (313 and 380 seats, respectively), and all Boeing 767-400s, Boeing 747s, and Boeing 777s. The only company to take full advantage of the zero duties is Transaero. Since the beginning of 2008, the latter has purchased used Boeing 747s and Boeing 777s to carry tourists to popular resorts in Turkey and Southeast Asian countries, including Singapore.
According to Oleg Panteleyev, chief analyst at the Aviaport agency, the state-owned transport company, Russia recently signed a deal to purchase a number of Boeing 767 aircraft, which neither S7 Airlines nor Aeroflot plan to buy in the near future.
The sole modern Russian-made airliner to carry over 300 passengers, the Ilyushin Il-96MK, was unpopular even when 20% duties were valid. Oleg Panteleev says the order portfolio for this aircraft includes some cargo orders from Russian companies and a few foreign orders. "There's no significant demand in Russia for this aircraft," the expert concludes.
Experts say, amid crisis, it would make more sense to scrap duties on airliners with a capacity of under 300 seats, which are most popular, with Boeing 737, Airbus A319, and Airbus А320 at the top of the list. The latter three form the majority of European fleets, accounting for 90% of their short-haul flights. The same is true of Russian airline carriers, including Aeroflot and S7 Airlines, a trend which will persist. S7 Airlines put most of its Tupolev Tu-154s and Ilyushin Il-86s out of operation.
Zero import duties on aircraft with a capacity below 300 seats, however, would make the Russian aircraft industry non-competitive, shattering hopes of reviving it with three promising projects - the modernised Tu-204, the MS-21, still under development, and the Sukhoi Superjet, currently in testing.