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2 July, 2012  ▪  Volodymyr Kopchak

A Crash of Interests in the Air?

The rivalry between Ukrainian and Russian aircraft companies is set to intensify

The first tragic accident in the history of the Sukhoi aircraft manufacturer, dubbed by Russians as “the hope of Russia’s aircraft industry”, happened on 9 May 2012, a little more than a year after an An-148, made by its main competitor, Ukraine’s Antonov ASTC, suffered a crash. The Ukrainian manufacturer and its supplier companies (including Russian) lost a contract with Myanmar, when that country's government suddenly changed its mind in favour of Russia’s SSJ-100.


For a long time, representatives of the aircraft industry in both countries tried to convince the public that the An-148/158 and the SSJ-100, which have similar parameters from a commercial viewpoint, are not competitors at all. Nevertheless, it was strange, even without delving into detail, that Russia felt a need to develop both projects at the same time. (It has a 50 per cent stake in the production of the An-148/158.) Ukraine’s representatives normally limited themselves to diplomatic statements like “There is enough room for both on the market” and “We wish our colleagues the best of success.” Sometimes it looked like they were trying to convince themselves.

The only way to keep these projects separate “in space” was to strike a “gentleman’s agreement” and divide the potential market in advance. It seemed that this could easily be done – Russia's state-run United Aircraft Corporation (UAC) supervises virtually all passenger (and other) aircraft construction projects in which Russia is involved.

Initially, there was hope that the SSJ-100 would be marketed primarily in Europe, because it was in fact half-European – its SaM146 engine manufactured by the French company SNECMA. In 2004, the Russians and the French even established a joint venture, PowerJet, to produce the engines in Russia. In addition, most of the SSJ-100’s avionics are made by leading aircraft companies in France, Great Britain and Germany. Consequently, the An-148/158 would be marketed in the CIS, including Russia, as well as in Asia and Africa. This division appeared advantageous to Ukraine, primarily to Antonov and the engine manufacturer Motor Sich.

However, it soon became evident that Europe was in no hurry to purchase SSJ-100 despite all its Europeanness. So the aircraft was quietly moved to other markets – those where the An-148/158 was supposed to be promoted. The story of the failed Myanmar order grabbed attention, because it unfolded against the background of a plane crash.

However, the competition between these aircraft is not exactly a case of Ukraine-Russia rivalry. It is a fight between different financial-industrial players inside Russia, more precisely inside the UAC. Our enterprises simply happened to be part of one of the groups. It is unfortunate that there are no clear rules in this competition.


Any plane crash with mortal casualties hurts the image of the aircraft involved. The reputations of designers, sellers and airlines are all damaged. New models that have only just begun to enter the highly competitive market are most vulnerable to such losses. In light of this, what lies ahead for Ukraine’s An-148 and An-158 aircraft?

In late 2010, the prospects of the Ukrainian-Russian aircraft in the Russian and CIS markets appeared very promising. The sector drew further encouragement from the warming relations between Kyiv and Moscow. However, the leadership of the UAC gave the project more than cold treatment in 2011-12.

Experts say that this change of attitude came with the appointment of Mikhail Pogosyan as new chief of the UAC. Previously he was CEO of Sukhoi.  Pogosyan launched an aggressive campaign to shut down the An-148/158 project in favour of the SSJ-100. Subsequently in 2011, the Voronezh Aircraft Plant cut its An-148 production quota by half to a mere five planes despite previous agreements and fixed orders. Later media reported that Pogosyan wanted to stop manufacturing Ukrainian-Russian planes in Voronezh altogether, but this information remains unconfirmed.

“The policy now pursued by the UAC is simply inept, incompetent – not to say criminal – or intentionally veiled and treacherous,” Viacheslav Bohuslaiev, chief of Motor Sich, says about the plan to bury the An-148 project. Why veiled? Because his commentary was given in response to the UAC’s decision to commission the Voronezh plant to produce the An-70 military transport aircraft, another major joint Ukraine-Russia project. Bohuslaiev is convinced that, due to a critical staffing situation, Voronezh will fail this order and, simultaneously, drag down the An-148.

Bohuslaiev’s assessment seems credible. For a long time, Ukraine-Russia relations in aircraft engineering were often the topic of political speculation for Ukrainian supporters of “friendship with Russia”. We would normalise our relations on the government level, they said, and then make a breakthrough in the aircraft industry. Ironically, one of the main proponents of this train of thought was Bohuslaiev himself – both as a Party of Regions member and an industrialist whose business is inseparably linked to the Russian Federation. His position appeared to be reasonable and consistent. But then “normalisation” became reality. Political slogans receded into the background, and Bohuslaiev is now acting largely as an industrialist defending his business interests.

Somehow one tends to believe the industrialist, rather than the politician, in Bohuslaiev. A Russian democrat ends where the Ukrainian issue begins, the saying goes. In the case of the Ukrainian government and the businesses that serves it, this maxim can be restated — Ukrainian patriotism begins where any joint venture with Russia is launched. In order to understand the real state of affairs in the relationships between Ukraine and the UAC, it is enough to look at Bohuslaiev’s statements over the past 12 to 18 months – they contain nothing but criticism of his Russian partners. It is easy to understand him, because the demise of the An-148/158 project would mean tens of millions of dollars in lost profits for his company.

Pogosyan is not the only factor in the situation surrounding the An-148. Naturally, he is promoting the interests of the corporation he previously headed, but he can be replaced at some point. There is another, deeper factor – a European one. In summer 2011, it became known that the Ukrainian government had instructed Antonov to prepare proposals regarding possibly equipping the An aircraft with Western-made engines. And the Russians are interested in having SaM146 engines chosen, the ones that are installed on SSJ-100 airliners. Who needs this change? Where is the reasoning? Will this new engine help boost the sales of the An-148 in Europe? No. It would only create artificial competition with the SSJ-100 and push Motor Sich out of the programme.

After the crash of the SSJ-100, Indonesia is likely to refuse to buy it just like Myanmar rejected the An-148. An international commission established that the cause was a piloting error, not a technical malfunction. Russia, unlike Ukraine, knows how to use political leverage to protect its interests.

Joint Ukraine-Russia projects will continue to develop "in spite" of events or things as before, rather than "because" of them. A lion’s share of Russia’s government support for the aircraft industry goes to Sukhoi and Irkut to develop their SSJ-100 and MS-21 projects, while the UAC’s other department are simply stagnating. The UAC is not managed efficiently – production deadlines and plans are constantly missed.

The new joint ventures set up accompanied by “horror stories” about company takeovers are failing to deliver the results expected of them. Grandiose plans for Ukraine-Russia aircraft projects remain on paper only and just a handful of planes are actually being manufactured.

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