Russian Carriers Could Be Prevented from Purchasing Foreign-Built Aircraft

Russian deputy prime minister Dmitry Rogozin outlined proposals on 24 August that aim to boost the country's aviation industry by inducing Russian carriers to procure domestic aircraft. TheMoscow Timesquoted Rogozin as saying, "Our main task is to displace imported aircraft from the domestic market." Rogozin called on the government to support the domestic civil aviation industry by supplying favourable development loans and subsidies, as well as by ensuring that domestic carriers buy Russian-built aircraft. On 7 August, Russian prime minister Dmitry Medvedev called on the aviation industry and the government to pool their resources and consider developing a new regional transport aircraft either alone or in co-operation with a foreign contractor. Due to the size of the country and the remoteness of some regions, there is significant demand for air transportation. The Russian civil aviation sector has fared poorly compared with its military counterpart. Three factors that have contributed to the country's weakness in the civil aviation industry have been a 20-year hiatus in development, a 40% decline in the number of airports since 2000, and a consistent series of accidents that have seriously damaged the perception of Russian manufacturers. Russian industrial policy has not helped the situation either, as it has attempted to strike a balance between supporting domestic carriers replacing old and often dangerous aircraft, and helping the indigenous aircraft manufactures secure sufficient sales.

Significance:The Russian economy is heavily reliant on strategically important sectors such as the oil and gas industry, which the government is seeking to redress by pursuing economic diversification strategies. Rogozin's plans are unlikely to help the country's ailing civil aviation industry, however. Although significant government investment is important, collaborative agreements with market leaders are the most effective way for Russian aviation manufacturers to improve their market share. Recourse to protectionism will only damage the industry's prospects further. The demand for aircraft in Russia will continue to increase, however, alongside substantial government investment in airport and air traffic modernisation programmes that Medvedev stated would come to 470 billion Russian roubles (USD14.7 billion) over the medium term.