Bloomberg News

Putin’s Aerospace Rebirth Ambition Hangs on SuperJet Crash Probe

May 11, 2012

President Vladimir Putin’s ambition to revive Russia’s aerospace industry will hang on one question dominating the Sukhoi Superjet crash probe in Indonesia this week: pilot or plane?

Investigators have located the remains of the 90-seat Russian-built aircraft that crashed into a mountainside on May 9 with 45 people on board. Salvage crews also spotted the flight recorder, which may offer vital clues to the cause of the crash, after the same jet had performed flawlessly on earlier flights piloted by an expert crew.

“There’s a very good chance this crash wasn’t related to the design of the plane, but battling negative perceptions is very difficult,” said Richard Aboulafia, vice president of Teal Group in Fairfax, Virgina, an aviation consulting company.

At stake is Russia’s attempt to reassert itself on the global aviation scene after a two-decade absence in the wake of the collapse of the Soviet Union. The SuperJet, which carries about 100 passengers, was designed with Western partners and equipped with cutting-edge systems, as Russia seeks to win a slice of the regional jet market now dominated by incumbents Bombardier Inc (BBD/B) and Embraer SA (EMBR3) of Brazil.

The Superjet that crashed was on a promotional tour of Asian nations. The same plane had already ferried other potential customers and reporters on flights in Myanmar, Pakistan and Kazakhstan and was scheduled to move on to Laos and Vietnam. Hours earlier, Putin hailed Russian military and industrial might at a Red Square parade in Moscow to honor the Soviet victory over Nazi Germany in World War II.

Fresh in Service

The twin-engine aircraft is the centerpiece of Putin’s attempt to revive a manufacturing industry that has languished since communism collapsed in 1991. The SuperJet, which Russia spent about $1.4 billion developing with an Italian partner, Rome-based Finmeccanica SpA (FNC)’s Alenia Aeronautica SpA, has a range of 4,600 kilometers (2,800 miles) and comes with a price tag of $35 million, according to the manufacturer.

Flawed design or technical malfunction would be potentially devastating for a plane brought into commercial service a year ago. The aircraft has been sold to Armenia’s Armavia and Russia’s flagship airline OAO Aeroflot, and the eight units in service for two carriers have accumulated more than 3,500 flights. PT Sky Aviation, an Indonesian carrier, has ordered 12 SuperJets.

Fatal Crash

The Sukhoi SuperJet crash in West Java is the most fatal demonstration flight in three decades, according to London-based aviation data provided Ascend Worldwide Ltd. All aircraft that crashed on previous promotional flights carried fewer passengers or had fewer fatalities, the data show.

“There’s a risk in a demonstration flight,” said Paul Hayes, director of safety at Ascend. “When you’re flying customers who’ve just bought the plane, or potential customers, the pilot will want to show it off, and there’s always a risk that you’ll go too far.”

There are no signs of survivors among the 45 people on board, according to Indonesian authorities. Femi Adi, a Bloomberg News reporter, is believed to have been among the passengers on the plane.

The data and voice recorders were spotted and photographed, Russia’s Deputy Industry and Trade Minister Yuri Slyusar said in statement today. Russian authorities have dispatched support crews to Indonesia to aid the investigation.

Deflecting Blame

Demonstration flights tend to be short, and the aircraft typically fly at considerably less than full capacity, meaning the plane is far lighter than on a commercial run, Ascend’s Hayes said. That can give the pilots more leeway to bank sharply or perform more acrobatically, he said, cautioning that no assumptions can be drawn until the cockpit and voice recorders have been analyzed.

Russian authorities moved quickly to deflect blame from the aircraft, with acting Deputy Prime Minister Dmitry Rogozin telling reporters on May 10 that the crash was probably caused by human error and that the SuperJet has a “great future.”

Sukhoi said the jet had gone through a full pre-flight check and displayed the “proper technical condition.” The jet was commanded by a “very experienced crew” consisting of Chief Test Pilot Alexander Yablontsev and co-pilot Alexander Kochetkov, the company said in a statement after the crash.

Other aircraft have gone on to become blockbusters even after a mishap. In 1988, an Airbus A320 flying over Mulhouse- Habsheim Airport in France as part of an air show flew off into the woods after the pilot lost control in a risky manoeuvre, killing three people in the fire that ensued upon landing. The pilot’s license was removed, and the A320 has gone on to becoming Airbus’s bestselling aircraft.

Poor Record

Russia had the world’s worst safety record for air travel last year, with at least five accidents that killed more than 100 people, according to Ascend data. Two of the world’s five deadliest accidents in 2011 happened in Russia, including the September crash of a Soviet-era Yakovlev-42 that killed the entire Lokomotiv Yaroslavl professional hockey team.

Sukhoi, which is owned by United Aircraft Corp., had sought to reverse the negative image of the domestic aviation industry, and break into a market that promises to be among the most lucrative segments in coming years.

While demand for 20- to 50-seat planes has shrunk, the market for aircraft seating 60 to 99 passengers, such as the Sukhoi model, should see demand for 5,800 new aircraft valued at $208.6 billion over 20 years, according to Bombardier’s 2011 forecast.

Major Demand

The biggest demand will come for planes seating 100 to 149, with a requirement for 7,000 new aircraft, valued at $423.7 billion projected over 20 years, Bombardier estimates.

Sukhoi has considered stretching the SuperJet to compete in that category, where it would face further competition from Bombardier’s planned Cseries, scheduled for entry into service in 2014. At this point, the SuperJet has garnered 168 orders, with a target of selling 800 planes over 20 years.

“This tragic accident represents a further setback to the ambitious Russian civilian aerospace industry,” Tom Chruszcz and Dmitri Kazakov at Fitch Ratings said in a report yesterday. “Over the past decade the Russian state has invested heavily in the sector in the hope of re-establishing the country as a global technology and high-end manufacturing leader.”

To contact the reporters on this story: Anna Shiryaevskaya in Moscow at ashiryaevska@bloomberg.net; Andrea Rothman in Paris at aerothman@bloomberg.net

To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net; Will Kennedy at wkennedy3@bloomberg.net


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