Issue - European Business Air News
Issue - European Business Air News
Issue - European Business Air News
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Page 12-13 28/8/08 3:41 pm Page 12<br />
12 SEPTEMBER 2008 EUROPEAN BUSINESS AIR NEWS<br />
RUSSIA<br />
REGIONAL<br />
REVIEW<br />
Despite hefty price rises in the cost of<br />
fuel and a sales tax of almost 40 per<br />
cent, business aviation in Russia<br />
continues to grow, with operators<br />
acquiring more aircraft and<br />
expanding their business to improve<br />
FBO and maintenance facilities<br />
there. For some time, many<br />
operators have wanted to see<br />
facilities in Russia equipped more<br />
like those of their <strong>European</strong><br />
counterparts and in some areas this<br />
is beginning to happen. The Vologda<br />
region is one key area that is<br />
experiencing increasing demand for<br />
charter. The economy and transport<br />
system has been intensively<br />
developed and both private charter<br />
and scheduled business are growing.<br />
Most charter operators are based<br />
in and around Moscow. Popular<br />
destinations within Russia include<br />
St Petersburg, Nizhny Novgorod<br />
and Samara.<br />
Although Russian aircraft remain<br />
popular, there are very few new<br />
Russian-made aircraft appearing on<br />
the market. Many operators are<br />
opting for western-built aircraft either<br />
in response to their clients’ requests<br />
or to meet <strong>European</strong> regulations<br />
governing noise levels, which has<br />
prevented many operators using<br />
Russian aircraft from entering Europe.<br />
Sergey Guekov is director general<br />
of Aeroflot Plus, an associated<br />
company of Aeroflot, the Russian<br />
airline. Formerly a broker, the charter<br />
company now operates three Tupolev<br />
Tu-134 aircraft, one seats 6-8<br />
passengers while the other two are<br />
also specially-tailored for the VIP<br />
market. Although Guekov explains<br />
that Aeroflot does not perform<br />
regular flights to the same<br />
destination, all of its operations<br />
remain within Russian boundaries.<br />
The company's missions include<br />
weddings and corporate flights, often<br />
for bankers and large corporations.<br />
According to Guekov, the company<br />
is planning to buy two or three<br />
western-built aircraft in the near<br />
future, the most likely choice being<br />
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“In Russia, a lot of passengers want<br />
to use foreign aircraft. We studied the<br />
market and found that the most<br />
sophisticated aircraft to suit our<br />
needs is the Legacy. There are no<br />
new VIP aircraft being built in Russia<br />
and we want to accommodate<br />
more passengers.<br />
“Right now we are also planning to<br />
start our own engineering department<br />
to work on our Tupolev aircraft.<br />
Although I can’t say when it will<br />
be in operation, with the help of a<br />
very experienced chief engineer on<br />
our team we plan to expand the<br />
business to develop our own<br />
maintenance facility.”<br />
Last month, Aeroflot Plus<br />
performed about 30 flights, according<br />
to Guekov. Although there is a lot of<br />
competition from other business<br />
aviation firms, the biggest problem<br />
at the moment is the relatively high<br />
price of fuel.<br />
And as for the future of the<br />
business?<br />
“It’s hard to say if business is<br />
improving as we were formerly a<br />
broker, which was a different kind of<br />
business,” he says.<br />
Russia has, for some time, provided<br />
a lot of business for charter operators<br />
in Europe and this shows no sign of<br />
abating. <strong>European</strong> charter firms have<br />
been targeting the massive potential<br />
there for a number of years, carefully<br />
navigating logistical and operational<br />
problems as they develop business.<br />
Two factors continue to increase<br />
business for <strong>European</strong> operators; a<br />
sales tax of almost 40 per cent within<br />
Russia is encouraging owners to base<br />
their aircraft outside the country,<br />
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often with management or charter<br />
firms. More and more operators are<br />
considering the purchase of larger,<br />
long-range business jets to allow them<br />
to reach North America and the Far<br />
East, and the midsize sector is<br />
broadening too as businessmen<br />
seek faster and more efficient<br />
travel between Russian cities as well<br />
as abroad.<br />
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ExecuJet is expanding services in the air and on the ground.<br />
Pro<strong>Air</strong> recently opened a<br />
representative office in Moscow.<br />
Managing director Elmar Monreal<br />
says: “We have placed a Learjet 45 and<br />
a 31A on our German AOC. Flights to<br />
Russia will be included on that.”<br />
Cessna’s Tom Perry, regional sales<br />
manager for the UK, Ireland,<br />
Scandinavia and the former Soviet<br />
Union, says: “We view Russia as an<br />
important market for the future.<br />
The progressive spread of wealth<br />
throughout the economy and the<br />
rise of more Russian businesses<br />
will generate greater demand for midsize<br />
jets.”<br />
As Russia’s economy has improved<br />
over the past decade, so the number of<br />
potential charter clients has<br />
increased. Russia now boasts some of<br />
the richest individuals in the world –<br />
good news for charter businesses<br />
hoping to attract top-notch clients. It<br />
has not always been so however.<br />
Following the break-up of the Soviet<br />
Union in the early 1990s, Russia’s<br />
economy went into decline. People<br />
on fixed incomes faced a sharp<br />
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while state-owned industries were<br />
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rock-bottom prices.<br />
Almost a decade later, the economy<br />
began to recover and since 2000,<br />
soaring oil and gas revenues have<br />
boosted state coffers and helped<br />
Russia pay off its debts. Russia has the<br />
largest known natural gas reserves in<br />
the world and is the world’s second<br />
largest oil producer after Saudi Arabia.<br />
In 2005, oil and gas accounted for<br />
about 60 per cent of Russia’s exports.<br />
Europe depends on Russia for much<br />
of its energy and almost all existing<br />
pipelines head west. In much the<br />
same way, Europe depends on Russia<br />
for a significant percentage of its<br />
charter business. There is still<br />
currently more demand for flights<br />
from Europe into Russia than the<br />
other way round. Many charter firms<br />
manage aircraft or base aircraft on<br />
<strong>European</strong> soil on their clients’ behalf.<br />
Various factors, including the high<br />
import tax cost of registering aircraft<br />
within Russia, mean that many<br />
Russian owners prefer to purchase<br />
their aircraft outside of the country<br />
and place them with Western<br />
operators. But this is slowly starting to<br />
change, as more business aviation<br />
companies set up premises in Russia.<br />
ExecuJet and Avolus are among the<br />
organisations expanding their<br />
presence in Moscow.<br />
Peter Hartmann, ExecuJet Europe<br />
md, says his company is increasing<br />
the four-strong staff in the city and<br />
will be deploying more aircraft to<br />
meet demand.<br />
“We operate a range of aircraft<br />
from light jets, to midsize and heavy<br />
jets out of Moscow,” he adds.<br />
“Demand is high and increasing<br />
and we make sure our customers are<br />
able to get the aircraft for their<br />
individual needs.”<br />
Hartmann says enquiries, for both<br />
charter and aircraft management, are<br />
coming from international companies<br />
as well as private customers.<br />
The opening of an office in<br />
Moscow, he says, “underlines our<br />
dedication to an already long lasting<br />
and strong relationship with Russia’s<br />
business aviation world – a rapidly<br />
growing market which we feel<br />
deserves a permanent presence.”<br />
Separately Avolus, and Russia’s<br />
Planet Aviation Group have entered<br />
into a strategic relationship that they<br />
say will “bring together the two brands<br />
and their complementary offerings<br />
across the private aviation spectrum.”<br />
The Avolus Group has offices in<br />
London, Moscow, Dubai and Monaco<br />
and operates the Avolus <strong>Air</strong>craft Sales<br />
& Acquisitions Division and Avolus<br />
Luxury Vehicle Charter which offers<br />
charter across private jets, helicopters,<br />
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