Russian airlines have been operating Airbus aircraft for more than 25 years now. In the early 1990s, the European consortium entered the Russian market with its A310 and, today, the country’s largest airline is preparing to introduce the brand new A350 into its fleet. Shortly ahead of the MAKS-2019 event, ATO Show Observer’s (Russian Aviation Insider’s sister publication) correspondent met with Julien Franiatte, head of Airbus Russia, to discuss amongst other things, the importance of the air show, Aeroflot’s preparations for the A350 and the future needs for aircraft in the Russian market.
What will Airbus demonstrate at the Moscow Aerospace Show (MAKS) 2019 and why?
This year we’ll have a nice stand where we’ll be exhibiting not only our product portfolio, but also Airbus’ activities in Russia, focusing a lot on the industrial cooperation in the space segment via our JV Synertech and in the commercial aircraft segment via our engineering centre and our cooperation with suppliers. In addition, as we’ve been doing at every MAKS since 2011, we’re bringing our flight test aircraft. This year it will be the A350-900, with registration number MSN002.
We’re very glad to bring the A350 to MAKS again, especially as it’s fitted with some elements of our latest innovation, Airbus Connected Experience, which we unveiled at Hamburg Interiors Expo in April of this year. It is a part of numerous innovation projects Airbus is currently exploring. As you know, we’re not innovating just to be innovative, we’re innovating where it really matters. Airbus Connected Experience is a kind of an IoT [Internet of Things] concept platform to test various cabin innovations like smart galleys, trolleys, seats, overhead bins and other cabin elements. The crew will be able to access this data and exchange it, the airline will be able to store it and analyse it for predictive purposes, while passengers will be able to receive a more personalised experience. For example, this technology can show the cabin crew the exact location of a can of coca-cola in the galley, or the amount of food items left, etc.
The main goal of all of these innovations we are implementing inside an aircraft is to reduce costs, to boost efficiency, to enhance interaction between the cabin crew and the passenger, thereby increasing passenger satisfaction. The equipment installed aboard MSN002 makes it a kind of Airbus innovations demonstrator used to test the future prospects of various digital cabin technologies available today. This is quite unique, because it’s the first time that some elements of Airbus Connected Experience have been fitted on an aircraft and we’re bringing this aircraft to MAKS.
So, you’ll be bringing only the A350?
The A350-900 yes, but it’s already a big deal. This year the A350-900 will be on the static and flight displays until the 31st of August, meaning that we will demonstrate it not only on the business days, but also during the two public days.
How important is MAKS when compared to other air shows? Do you think that MAKS has been losing importance lately?
I don’t compare MAKS to Farnborough or Le Bourget. I think MAKS has and always has had a special flavour – a unique DNA that you don’t have at other air shows. I think it comes from the legacy of the great aeronautic and aerospace industry that Russia has. I mean, when you go to the MAKS air show, it’s not only about current exhibitors, you can also see the planes from the Soviet Union and the current era that are displayed, and it’s fantastic! Furthermore, MAKS is unbeaten by any air show when it comes to flying displays. And when you look at the exhibitors there, they are different. They are more regional and the small- and medium-sized enterprises (SMEs) have more chance to be presented.
MAKS has always been an air show on its own. So I would not compare it to Le Bourget or Farnborough, which are more commercial for us. MAKS is more of an opportunity to get in touch with the airlines, industry partners and to demonstrate our industrial co-operation in Russia.
That’s basically why we are bringing the A350. Next year Aeroflot will start operating this aircraft. Also, this aircraft has quite a few components made and manufactured in Russia. Airbus ECAR engineering centre has been very much involved in the design of the A350, with more than 6,000 technical drawings provided by the team, including two patents. Then, on the titanium side, VSMPO-Avisma covers about 50 per cent of Airbus’ needs in titanium (all modern aircraft use quite a lot of titanium). The A350 is 14 per cent titanium, for example. We also have the Liebherr and Hydromash companies that are producing parts for the landing gear of the A350.
It’s now widely believed that the Russian civil aircraft industry is unlikely to become a major player in the market. Do you agree with that view?
No, I would not be that critical. Russia already has a great history of aviation. You’ve demonstrated to have fantastic engineers and this is the key for the industry. I don’t think that 50 years ago, when there was this big duopoly of Boeing and McDonnel Douglas, that many people were actually betting that Airbus would become what it became. For instance, take the A320 – in the beginning the business case was to sell 600 airplanes – and today we’ve sold in excess of 14,700 units of the A320 family.
I think we have to see how things will evolve. Yes, there’s a strong duopoly between Airbus and Boeing, but we always said that we welcome competition, and we strongly believe that the duopoly will not last – I mean, we broke it in the past. We now see the emergence of manufacturers worldwide, whether it’s from Russia or China. So the game is not over. It’s too soon to say that Russia will not become an important player.
Last year you said that Airbus now accounts for 50 per cent of all foreign-made +100-seat aircraft in Russia and your goal is to increase this share to 55 per cent. When will that happen and what will contribute to that?
We believe that there’s a sound position between 45 and 55 per cent which is where Airbus and Boeing would like to be positioned. Of course, we have ambitions in Russia and I believe we have the best products, so we can be on the higher end of the figures I just mentioned. We now have around 340 aircraft flying in Russia with nine airlines. Also, we’re now in talks with many [other] airlines which are interested in expanding or joining the Airbus family, so I’m confident that in a few years’ time we’ll get to the 55 per cent market share.
What are the three key differences between Russian aviation and other markets?
I don’t know if I can reduce it to three. Firstly, I would say that you have an incredibly resilient market. That’s one of your biggest strengths. I mean, if you look back, the air transport market has had to face the closure of Ukraine, the closure and partial opening of Turkey and Egypt – all of which were among the top destinations when it comes to leisure traffic for instance. There was, as we know, the economic downturn. There was the rouble devaluation. If you put all these things together, it’s close to the perfect storm. And yet, when you look at the numbers, they’re growing again. Of course, the market has completely changed. It went from well-balanced international-domestic to be mostly domestic at this moment. But the domestic traffic grew by 10 per cent I believe last year and the growth continues. That’s rather unique. I don’t know of many markets [in the world] that went through such a change in such a short space of time.
Secondly, you have to deal with the strong challenges when you look at the country itself. I mean, Russia is the ninth largest country by population and the largest in terms of geographical size. There are nine time zones and the climate is down to below -50 [degrees C] in some parts of the country in winter, and it gets more than +30 [degrees C] in the summer. So this environment is quite harsh for aircraft operations.
And finally the population is unevenly distributed, with three-quarters located in one-third west of Ural. In this situation of course you have a major hub, but you also create a desire to travel and discover the rest of the country. And this is where Airbus has an ideal product, the A321XLR, the newest of the A321 family. This plane is going to be a game-changer for Russia, because it will allow airlines to operate very long routes with a relatively small model. Today, between Moscow and Vladivostok, you have to operate a wide-body, but with the A321XLR you can fly from Kaliningrad to Vladivostok with a smaller option of 180-200 passengers. So that development would be a route-opener.
According to Airbus forecasts, over the next 20 years, Russia and the CIS will need approximately more than 1,200 aircraft. What is your forecast about the Russian market alone?
Firstly, I would like to highlight that, from last year, we changed our approach to our forecasts. Now we look not only at the size, but also the range, for this illustrates more accurately the current changes in the aviation market. For example, we see now that SA [single-aisle] aircraft are used on the same routes as WB [wide-body], such as the A321LR, which can fly from Moscow to Vladivostok, or the A330 which is now used on shorter routes, where the SA used to be operated (Moscow-Irkutsk). So, if we look at the Russia and CIS [together] market from that perspective, we can see a demand for more than 1,200 aircraft in 20 years: 998 smaller, 140 medium, 39 large and 44 extra-large aircraft. For Russia only, I would say that represents somewhere between 900 and 1,000 aircraft, with the prevailing majority being SA aircraft.
And how many wide-body aircraft will Russia and the CIS need in the next 20 years?
We estimate this to be around 200 aircraft in the A330 and A350 category.
What is the average fleet age of the Airbus aircraft operated by Russian airlines?
If I’m not mistaken, it’s on the high end of nine years. If we compare ourselves to our competitor Boeing, we’re about two years younger. Over the course of our presence in Russia, we have always had the youngest fleet versus the competition, and this is something of which we’re proud.
How have things changed during the 27-year history of the presence of Airbus aircraft in the fleet of Russian airlines? What do you think will happen in the future? How will it change?
We have had several waves. We entered the market first with the A310 to Aeroflot in the early 1990s. Then we really made a breakthrough again with Aeroflot in 2003 when the first A320s were delivered and, of course, when you deliver new airplanes, the fleet age instantly drops. Then we had a series of airlines joining the game from 2003 to 2010: Aeroflot got Airbuses, as well as S7 Airlines and Ural Airlines. So we had this first wave of current engine option aircraft coming to the country and therefore bringing down the age of the fleet.
Now we’re expecting the second wave, which was initiated two years ago at MAKS-2017, when S7 Airlines took delivery of the first A320neo in Russia. Now we have this new wave of neos and Ural Airlines has recently added the first A320neo to its fleet. Aeroflot has also announced plans to have the neo. We’re going to see that the average age will drop again.
Talking about Ural Airlines, which received the first A320neo, what has been done on your part to ensure that the customer is sufficiently familiarised and prepared for the new type?
Ural Airlines took delivery of their first A320neo on the 6th of August, becoming the first CFM International [LEAP-1А]-powered A320neo operator in Russia. The commonality between the neo and the ceo is close to 95 per cent. It’s basically just the engines that change. If you take one of the last ceos to come off the production line and compare it with the neo, the difference is really less than five per cent. So the mechanics are already well trained on 95 per cent of the airplane. The remaining five per cent is the engine. As you know, Ural Airlines has extensive experience in A320 family operations and maintenance. But, of course, all the necessary training schemes for the neo were put in place and the respective technical and flight documentation was provided to make the new type’s entry into service as seamless as possible. As usual we’re sending what we call the ‘field representative’, which is the Airbus employee that will be physically located inside Ural Airlines’ facility and will be there to answer any questions the airline might have.
But again, the A320neo is a well-known machine, so we’re not expecting any surprises there.
How are you helping Aeroflot prepare for the A350?
Let’s say that we initiated the preparation when we welcomed the A350 at Sheremetyevo [Aeroflot’s Moscow base airport] in August 2014. It was quite unique because I believe it was the first time that a western-built, non-certified aircraft had landed on Russian soil. Right there you can say that we started checking the [mutual] compatibility of the A350 and Sheremetyevo. Of course, 24 months prior to the actual entry into service next year we had a team from Toulouse working closely with Aeroflot to ensure that the start of operations will be smooth, and this work continues. Meanwhile, here is a gentle reminder that the A350 has a common type rating with the A330s, which Aeroflot has been successfully operating for more than 10 years, plus today we have some 270 A350-900s flying, so it’s an airplane that’s well known by Airbus and it’s also well-known in many places that Aeroflot will be flying to. So again, here everything has been done to minimise any risk and we don’t foresee any challenges.
Airbus also announced that the A220 will receive its Russian type certificate in 2019. When exactly will that happen and why do you think the aircraft still has no commitment from Russian airlines?
It’s not that no airline has committed. There was a commitment from Red Wings, but it did not work out. We see the market for the A220 in Russia. We’re working closely with Russian civil aviation authorities to certify the A220, as we understand it’s on track and it’s to be achieved by the end of this year.
Now let’s talk about customer support. How do you develop your customer support programmes? What news can airlines expect in this area in the next four years?
Customer support, like the rest of the company, is benefiting from digitalisation. I will not go into fine detail, because we talked a little bit about it when we discussed the Connected Cabin, but I will give you just two examples. One is what we call Skywise, a digital platform which enables to record, share and analyse a large amount of data. For example, the A350 generates close to 800 GB of data in one flight, and Skywise can help gather all this amount of information and detect, for example, what we call the micro-fault. This refers to the non-complete failure of a component whereby a micro-fault – that would not necessarily appear in the cockpit because the component hasn’t failed – is recognised as just a micro-fault.
And that tremendously allows the airline to anticipate a failure. This is really the next step in the cost of aircraft maintenance. When you record a certain frequency of micro-faults in a valve, for example, you’re able to remove the valves before they actually fail. And this also allows you to send that valve for repair before it completely fails, so the subsequent cost of repair is much lower. We can even start to gather this big data during the birth of the aircraft in the factory, and then continue to gather all that information throughout its lifecycle. Therefore, airlines have a complete picture of their aircraft and they can anticipate and maintain them accordingly. And for an airline that is used to having second-hand aircraft, this tremendously reduces the cost because, together with the aircraft, you also receive all this information.
The second one is drone technology to carry out the inspection of an aircraft. Today if you inspect an aircraft you do it on a crane, which is time-consuming and there is always a risk of damaging the plane. What we’ve developed is an automatic drone equipped with an HD camera and an Airbus’ aircraft inspection software analysis tool. This way the inspection lasts only three hours, including 30 minutes of image capture by the drone. So you go from one full day to only 3.5 hours and you completely avoid the risk of damaging the aircraft. And, again, the full report and HD images created by the drone and software can then be uploaded into Skywise, thus feeding the big data.
What do you think about the Russian Customs import tariffs and VAT? Should the government change something in this area?
Let me answer differently, we’re in an industry that needs stability and long-term planning. When airlines lease airplanes they lease them for six years minimum. And the standard for wide-bodies is 12 years. They need to be able to plan when it comes down to Customs duty, VAT, or anything on those scales.
What do you think will happen with demand for your narrow-body aircraft in Russia after the MC-21 comes into service?
We always welcome competition and we’re happy to see a third or a fourth player depending if you count the Chinese market. Again, when you look back 50 years ago, we managed to break a duopoly. It’s too early to see how it is going to happen in Russia, we see that there are quite a few commitments from Russian airlines for the MC-21 and it’s natural. We’re glad to see that there’s interest for the MC-21 because that means that there’s demand for such types of models, so maybe it’s an opportunity for Airbus and Boeing to re-think something. But if you look at our forecasted demand for some 1000 aircraft for Russia and the CIS in the next 20 years I think there’s room for everyone.
What is the average daily utilisation rate of Airbus aircraft in Russia compared to in other countries?
The daily utilisation rate in Russia is one of the highest if I’m not mistaken. It’s around 10 hours for single-aisles in Russia compared to nine worldwide. And for the A330 it’s close to 13 hours versus 11.7 worldwide. We regularly have Russian airlines that break records for the number of hours flown on single-aisles. Thus, we have three leaders in terms of daily utilisation in Russia: they are Rossiya Airlines, S7 Airlines and Ural Airlines. Sometimes they fly for 11-12 hours per day, which demonstrates that the airplane is capable of operating those flight-hours which is a sign that the airlines know what they’re doing. And also the more they operate the aircraft the less the unit cost. So that has a direct impact on a plane ticket for passengers.
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