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Aeropolitics, Other Aviation Issues, Regional Aircraft, Regional Airlines

SUMMARY: Today the Dutch Safety Board came out with its investigation of the MH17 crash that killed 298 on board, mostly Dutch nationals and yes it was a SA-11 BUK that brought it down, most likely by Russian supported separatists in Eastern Ukraine. At the same time, German owned (Intro Aviation) and Irish based regional airline City Jet announces it will be the first ‘western’ European airline to operate the Russian Sukhoi SSJ-100 Superjet with a lease for 15 plus another 10 options starting next year. Very insensitive timing and a decision code sharing partners Air France and especially Dutch KLM will strongly object to. Normally no one buys anything “Made in Russia” ! they have no products of value to the west, so why buy or lease their SSJ-100 with all the risks attached to its operation ? when the E190/195 (E1/E2), CRJ-900/1000, MRJ, CS100 are far more competitive products, without the political, social, economic, public relations, customer perception and support risks, a business wants to minimize risk, with this aircraft an operator will increase business risk, as its a long 20 year commitment for an aircraft, so much can go wrong with your supplier in that time period. When EU/US/NATO-Russia relations are as bad as they are now, why does any airline think that European nationals will want to fly on a Russian airliner ? they won’t ! I hope that the citizens of Europe will and should boycott any airline operating the SSJ-100 the ‘only’ Russian airliner with any western appeal due to the fact it is now Putin’s baby, a show case with billions of Rubles being spent on it to sell it to the west through Russian state support for low prices, low lease rates and residual guarantees as Russia “hopes” it will ‘open’ doors for the eventual Irkut MC-21 narrow body airliner in the future. Air France and KLM should find a new regional partner, because their brand cannot be on a Russian airliner, that would be a PR disaster and they will loose customers doing so. In fact NO major western airline should accept the SSJ-100 on any ACMI deal either, this ‘white tail’ flying is big business and City Jet is now going to fly CRJ900’s for SAS, and Swedes should have lots of questions for City Jet as well. Has anyone noticed that the ‘Cold War’ is on again ? EU/US economic sanctions are in place on Russian individuals and companies (inc. United Aircraft Corporation) ? Russia for sure had a hand in the downing of MH17 ? Russia annexed its 4th territory (Crimea) last year ? Russia is talking and planning the possibility of ‘tactical nuclear’ warfare ? Wake up Europe, say Nyet/NO to Russia and to City Jet and any other EU airline operating the Russian SSJ-100. IF Russians want to fly on Russian airliners that is fine, they have to, but Europeans don’t have to, we have much better choices with Embraer, MRJ and Bombardier. Hopefully new economic sanctions over the MH17 downing will be aimed at the Russian civilian aerospace industry, then any operator of Russian aircraft will rightfully have huge problems. But right now we need Air France and especially Dutch KLM along with SAS to openly say something to City Jet about its poor aircraft choice, or many of their customers will take their business elsewhere, Europeans need to send a message to Russia. EU consumers have a choice NOT to fly on a Russian airliner, no need for it, and no need to support an aggressive expansionist Russia.

Irish regional airline City Jet has announced it will lease 15 Sukhoi Superjet airlines (SSJ-100) and has options on a further 10 to replace its 18 Avro RJ85 in 2016 and 2017 to become the first ‘western’ European airline to do so, hopefully its code share partners AF-KLM and SAS will have something to say about that and then there is the European consumer who has a choice of saying Nyet to flying on the Russian airliner. The same applies to Danish up start Greenland Express, which plans to lease 5 x SSJ100’s, those that cannot afford a good western aircraft buy Russian, but price and lease payments are a small portion of total life cycle costs, and over the next 15-20 years you can bet operating a SSJ-100 will not be as profitable as a western aircraft.

Add in less revenue from reluctant passengers and partner airlines (code share or ACMI/white tail flying), lower reliability due to a supply chain from Russia, down time means lost revenue, higher fuel costs versus new generation of E2’s, CS100 and MRJ, and seriously much lower re-marketing potential which equals much lower residual value, anything sad otherwise is BS, you can run the numbers and life cycle costs will be higher for the SSJ-100 and life time revenue will be less (per seat).

Read more on the Sukhoi Superjet/SSJ-100 in my blog articles of:

Sept 14/2015, March 4/2015, January 15/2015 and January 6/2015 to really get the inside scoop on the Superjet program.

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ssj100pkecnskyaviation_alexeydemin

The SSJ-100 (PHOTO above of Indonesia’s Sky, one of many failed SSJ-100 operators),is “no game changer” as City Jet CEO Patrick Byrne likes to call it from his extensive knowledge of the aircraft ? The Russians are funding this program extensively, ramping up production (even though they had 40+ white tails last summer) and giving them away through very low state subsidized leases, maybe even paying people and airlines to take them and be their “propagandists” in the west, but if its so good, why did Russians airlines not buy them with any enthusiasm before President Putin made it a “priority” for Russians to fly on Russian airliners, its BS, the aircraft is ok for now, in the same boat as the CRJ900/1000 and E190/195-E1’s today, but their life is now limited and ticking down, with the only way to increase their competitiveness being re-engining and some improvements to aerodynamics like the E190/195-E2 line.

The new Embraer E2’s, MRJ and CS100 are greatly superior aircraft in almost every category, but you can’t have them for next to nothing unlike the SSJ-100, compliments of the Russian Government. Any western operator daring to operate the aircraft will find a reluctant public and major airlines will avoid their use. I am sure that Embraer, Mitsubishi and Bombardier have very good aircraft comparisons with the SSJ-100, any airline can get that from them. The aircraft’s competitive advantage is it is cheap to lease, that is it, but you need to look at life cycle costs and slowly the Russians are substituting western components with local Russians ones, and that has to be worrying for reliability and supply, and looking at a stretch and re-engining, possibly a Russian engine ? 

Lastly, one has to realistic look at this as a long term acquisition, and really what does Russia manufacturer ? when was the last time anyone has seen anything with ‘Made in Russia”, their stuff is poor quality, and to role the dice on the future of any airline and use Russian equipment is foolish in my opinion, way too many risks.

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This comes on the same day that the Dutch Safety Board released their findings of their investigation into what caused MH17 (Malaysian flight 17) to crash with 298 on board killed, most were Dutch nationals. Yes, it was a SA-11 BUK (NATO code name Gadfy) anti-aircraft missile, not a Ukranian SU-25 as Russian claimed until missile shrapnel was found in the debris. Now Russians saw the Ukranians shot it down with a BUK, early next year we will get the report on who shot down MH17, which all western intelligent agencies know is Russia then we need full economic sanctions on Russia’ aerospace industry.

The order for the Sukhoi SSJ-100 is very insensitive and also one that absolutely ignores the state of political and military tensions between the EU/USA and Russia, the Cold War is on and citizens of the EU will and should boycott the use of the SSJ-100, it is unacceptable that at this time any EU airline makes a deal with Russia. The Baltics are afraid of Russia as is Poland and Ukraine, Russia annexed its 4th foreign territory last year by taking Crimea from Ukraine, it has done the same with Abkhazia and South Ossetia in Gerorgia and Transnitria from Moldova, and immediately recognized them as independent states, and sent in Russian troops, and now we have 4 ‘new’ countries that few have ever heard of, but are recognized by Russia.

No wonder Russia has so few close friends in the world, it is not the west that has isolated Russia but their own actions in the past and recent actions against other countries, and all they really have today as “friends” are mostly former USSR Republics and a few isolated ‘pariah’/outcast states  (e.g. Venezuela, North Korea, Iran, Nicaragua, Belarus, Kyrgyzstan, Syria, Tajikistan, Uzbekistan, Turkmenistan) having lost Ukraine, Cuba, Azerbaijan most recently for various reasons. Not a huge following to try and sell commercial airliners to, and that is and will be there problem with the SSj-100 and Irkut MC-21 in the future, yes many will sell domestically, but the western market will be hard to crack, though ‘money’ talks, greed is big and some western operators will buy, only to regret it later, as we have seen it with SSJ-100 sales in Armenia, Laos and Indonesia already.

The Russian pattern of destabilizing a Russian speaking majority in a foreign country is the same every time, get local “mistreated” Russian speakers to protest about anything and agitate and provoke the central government, stir up anger, play the “poor” Russian minority card to the world, especially naive Russians, get Russian arms and “Russian” volunteers, and start shooting till the territory is won, then get recognition from Russia who sends in Russian troops, and that is how we now have The Republic of Abkhazia, Republic of South Ossetia, Pridnestrovian Moldavian Republic and the Republic of Crimea, and we still have the Ukrainian hopefuls, like the Luhansk People’s Republic and the Donetsk People’s Republic.

Will Europe just sit and watch ? the average citizen can choose to protest in their own small way and say Nyet to Russian products like the SSJ-100, it is very rare to be able to boycott a Russian product, as their are so few in the west worth buying, but the Sukhoi SSJ-100 SuperJet is a perfect target for sanctions/boycotts.

Russia’s actions in Ukraine and elsewhere are not acceptable in the 21 century, Europe all to well remembers to evils of the USSR and Putin wants its revival, like Hitler wanted to uni the Germanic speaking people everywhere, Putin wants to unit all the ‘oppressed’ Russian speaking people (Ukraine, Estonia, Latvia, Kazakstan, etc.) and EU nationals can send a a strong message to Moscow by choosing NOT to fly on anything Made in Russia, and punish those that buy their aircraft by refusing to fly on them, thereby making it a money loosing proposition for the operators. Bring back some morality to business and punish those that only want to profit from the misery of others, Europe only has to see what happened in Ukraine, they chose to look west away from Russia, and Russia made sure it will pay for that choice.

Europe must call on Air France-KLM and now SAS who code share with City Jet, to look for other regional partners, as their customers will NOT appreciate flying on a Russian airliner, would Americans fly on one ? NO and neither would Canadians. If City Jet wants to fly Russian airliners, then all major airlines should boycott the airline, no ACMI leases no code shares.

As discussed in several of my articles, the aircraft is NOT that good, naïve CityJet Chairman Patrick Byrne calls is it “a game changing aircraft” which is to any aviation professional just pile of BS from someone who has just jumped on the Russian propaganda bandwagon, he says “I feel as though I have a PhD in this airplane”, looks like he has not done earned that PhD, must be one of those pay to print a degree programs, because anyone that tells me that the SSJ100 is a game changer does not know what he is talking about, even Russia’s airlines did not buy it until they were ordered to do so, who is he kidding ?

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E195CRJ700

These Embraer and Bombardier products are much more competitive, they sell all over the world, while the SSJ-100 sells well at home and then in Mexico, that is it, wonder why ? In the end an aircraft value is based on purchase price, life time of revenue potential, life time of operating costs and finally residual value when its time is up, with the SSJ-100 you get all kinds of unknowns from revenue potential when people boycott the aircraft, operating costs that may be affected by sanctions and increasing Russian components to who knows that residual value there will be on an aircraft that has so far not hit 100 deliveries and may not reach 200 deliveries massive Russian financial support, when the country has so little today to doll out.

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The “unbeatable operating economics” that CEO Patrick Byrne sounds like he is the mouth piece for the Russian aerospace industry, as there is NOTHING advanced on this aircraft to make it stand out against the E190-E1/E2 or the CRJ900/1000, the engines are derivatives of the CFM56, and against the new E190-E2 it has no chance of beating it on economics.

BUT, Russia is giving them away, as you read in previous articles on the SSJ-100, it has bankrupt many airlines already, only 1 western customer uses it in Mexico, Interjet and the rest are all in Russia, with several airlines having gone bust with it, even flag carrier Aeroflot want them, returned their original aircraft and now Russian airlines are forced to use Russian aircraft, as Putin wants Russian flying Russian aircraft.

The economics have to look good when leasing rates and terms are low, that is the only way they can sell/lease the aircraft, everyone knows that. In fact, as I write the Russians are changing western suppliers to Russian suppliers on many SSJ-100 components, what happens when sanction include the civilian Russian aerospace industry which should already be in place.

There are times in this world when corporations have to put aside corporate profits and think about the BIG picture, Russia is an aggressor, 4 territories annexed since 1992, not since Hitler has this happened anywhere in the world, are we watching history repeat itself ? We need to let the Russians know that we are united and serious about containing its aggression on other nations, otherwise countries like Estonia and Latvia are next on Russia’s ‘hit’ list after Ukraine.

The Sukhoi SSJ-100 is Russia’s only western viable aircraft and President Putin has made sure it is propped up by billions of dollars to make it successful, which till now it has not, in fact it has  been a disaster, that Russia thinks it can solve by throwing lots of money at, and City Jet is greedy enough to take the bait but needs to pay a price for that.

The Dutch especially need to come out strong against City Jet, AF-KLM are code share partners, find another partner, stop all ACMI activity as well, because if AF-KLM don’t their customers will choose other carriers, and rightly so.

City Jet is owned by Intro Aviation (Germany) run by Hans Rudolf Wohrl, a very successful airline entrepreneur who started NFD (later Eurowings), bought LTU, dba (Deutsche BA) and sold them to Air Berlin-which has struggled ever since) and bought City Jet from Air France in December 2013, then sold of VLM (Belgium) subsidiary in a management buy out and VLM has also talked of getting SSJ100-s. Most recently Intro Aviation is selling its Austrian regional Intersky (3 x DHC-8-300’s and 2 x ATR-72-600’s) after mounting losses with its ATR-72-600’s, but that looks like its solved with 2 year ACMI lease of both ATR’s to Punto Azul in highly corrupt and risky place to do business Equatorial Guinea.

Presently Intro Aviation is in the running to acquire Slovenia’s Adria Airways now in privatization, so Intro Aviation is growing but with some worrying ties to the Russian aircraft industry. After 17 years in Eastern Europe, I have seen how big money can distort business decisions, and the Russians are now aggressively “marketing” the SSJ-100 and I was always suspicious of the VLM management buyout and an immediate interest in the SSJ-100, and no surprise in City Jet’s interest, with so much Russian money floating around to promote the SSJ-100 everything is possible, as money talks. One has to wonder what role Intro Aviation has in bringing the Sukhoi SSJ-100 to Western Europe, how in bed are they with Russia ? will it bring the SSJ-100 to Adria ? well let’s hope Europe’s big airlines on who regional airlines are dependent on, rain on their show and that European consumers show their disgust and choose not to fly with an airline buying ‘Made in Russia’ aircraft ! they won’t buy Russian cars, refrigerators, stoves, etc. for certain reasons which should apply to aircraft as well.

Recently, City Jet became a Scandinavian Airlines (SAS) partner, when it bought the remains of Blue1 (Finland) from SAS and will operate up to 14 x CRJ900’s for SAS (8 ordered plus 6 options), joining 14 already operating for SAS by Danish operator, Cimber.

The Swedes have their issues with Russia, and are on heightened alert for Russian submarines, maybe SAS should talk to City Jet, do you want a regional partner that is in bed with the Russians at a time when more sanctions over MH17 and Crimea are possible and Russian and Americans are too close to each other in Syria, and accident waiting to happen, as Russia says its bombing ISIS but in fact its bombing all groups opposed to President Assad.

You just cannot trust the Russians, last century the west put up with their lies and antics and here we go again, they are ignorant of their past and the horrible legacy they left behind in Eastern Europe, where distrust of Russia is big and understandably so.

The “unbeatable operating economics” that CEO Patrick Byrne sounds like he is the mouth piece for the Russian aerospace industry, as there is NOTHING advanced on this aircraft to make it stand out against the E190-E1/E2 or the CRJ900/1000, the engines are derivatives of the CFM56, and against the new E190-E2 it has no chance of beating it on economics with Russian state support on price, leases and residual value guarantees.

BUT, Russia is giving them away, as you read in previous articles on the SSJ-100, it has bankrupt many airlines already, only 1 western customer uses it in Mexico, Interjet and the rest are all in Russia, with several airlines having gone bust with it, even flag carrier Aeroflot want them, returned their original aircraft and now Russian airlines are forced to use Russian aircraft, as Putin wants Russian flying Russian aircraft.

The economics have to look good when leasing rates and terms are low, that is the only way they can sell/lease the aircraft, everyone knows that.

So if the SSJ-100 comes to Europe please let’s get out there and call for a boycott of City Jet and ALL operators of the Sukhoi SSJ-100, the symbol of Russia’s aerospace industry can go to hell ! there are much better products at Bombardier, Embraer and Mitsubishi, don’t let the Russians buy their way into the western market, say NYET to the Ukhoi SSJ-100 and the Irkut MC-21.

Till next time, cheers and than you for reading my blog, yes I can get passionate about things, and as a student of International Relations/Diplomacy, I sadly know the Russian history better than most Russians, they do not understand why they are isolated with so few close friends in the world (e.g. Venezuela, North Korea, Nicaragua, Belarus, Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan) having lost Ukraine, Cuba, Azerbaijan most recently.

 

 

 

 

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About Aviation Doctor - Helping aviation companies to transform the present into a more profitable tomorrow

I am a Canadian and EU national with an MBA and 33+ years experience in aviation business development with 20 years overseas and work in 25+ countries. A former investment/merchant banker (mergers and acquisitions to corporate turnarounds). airline and OEM senior executive and past owner of 6 successful aviation companies in 3 countries (executive jet charter/management companies, aircraft sales, aircraft broker, airline/aerospace consulting to aircraft insurance). I have a very diverse aviation background with 75+ aviation companies (45+ airlines of all sizes, OEM's, airports, lessors, MRO to service providers) as consultant, executive management, business analyst and business development adviser. Excellent success track record in International Business Development. Most work with airlines is with new start-ups and restructuring of troubled carriers. I sold new business jets, turboprops and helicopters for Cessna, Raytheon, Gulfstream to Eurocopter as an ASR as well as undertaking sales and marketing of commercial aircraft for Boeing, de Havilland, Dornier, Saab and Beechcraft. Brokered everything from LET-410's to B747's and from piston PA31 to G550 business jets. I look beyond the headlines of the aviation news and analyze what the meaning and consequences of the new information really means. There is a story behind each headline that few go beyond. Picked the name Aviation Doctor, as much of my work has been with troubled companies or those that want and need to grow profitably. I fix problems be in the business, and help with restructuring for a better tomorrow. You can reach me with comments or suggestions at: Tomas.Aviation@gmail.com and I comment a lot on Google+, my Facebook and LinkedIN.

Discussion

One thought on “SUMMARY: Today the Dutch Safety Board came out with its investigation of the MH17 crash that killed 298 on board, mostly Dutch nationals and yes it was a SA-11 BUK that brought it down, most likely by Russian supported separatists in Eastern Ukraine. At the same time, German owned (Intro Aviation) and Irish based regional airline City Jet announces it will be the first ‘western’ European airline to operate the Russian Sukhoi SSJ-100 Superjet with a lease for 15 plus another 10 options starting next year. Very insensitive timing and a decision code sharing partners Air France and especially Dutch KLM will strongly object to. Normally no one buys anything “Made in Russia” ! they have no products of value to the west, so why buy or lease their SSJ-100 with all the risks attached to its operation ? when the E190/195 (E1/E2), CRJ-900/1000, MRJ, CS100 are far more competitive products, without the political, social, economic, public relations, customer perception and support risks, a business wants to minimize risk, with this aircraft an operator will increase business risk, as its a long 20 year commitment for an aircraft, so much can go wrong with your supplier in that time period. When EU/US/NATO-Russia relations are as bad as they are now, why does any airline think that European nationals will want to fly on a Russian airliner ? they won’t ! I hope that the citizens of Europe will and should boycott any airline operating the SSJ-100 the ‘only’ Russian airliner with any western appeal due to the fact it is now Putin’s baby, a show case with billions of Rubles being spent on it to sell it to the west through Russian state support for low prices, low lease rates and residual guarantees as Russia “hopes” it will ‘open’ doors for the eventual Irkut MC-21 narrow body airliner in the future. Air France and KLM should find a new regional partner, because their brand cannot be on a Russian airliner, that would be a PR disaster and they will loose customers doing so. In fact NO major western airline should accept the SSJ-100 on any ACMI deal either, this ‘white tail’ flying is big business and City Jet is now going to fly CRJ900’s for SAS, and Swedes should have lots of questions for City Jet as well. Has anyone noticed that the ‘Cold War’ is on again ? EU/US economic sanctions are in place on Russian individuals and companies (inc. United Aircraft Corporation) ? Russia for sure had a hand in the downing of MH17 ? Russia annexed its 4th territory (Crimea) last year ? Russia is talking and planning the possibility of ‘tactical nuclear’ warfare ? Wake up Europe, say Nyet/NO to Russia and to City Jet and any other EU airline operating the Russian SSJ-100. IF Russians want to fly on Russian airliners that is fine, they have to, but Europeans don’t have to, we have much better choices with Embraer, MRJ and Bombardier. Hopefully new economic sanctions over the MH17 downing will be aimed at the Russian civilian aerospace industry, then any operator of Russian aircraft will rightfully have huge problems. But right now we need Air France and especially Dutch KLM along with SAS to openly say something to City Jet about its poor aircraft choice, or many of their customers will take their business elsewhere, Europeans need to send a message to Russia. EU consumers have a choice NOT to fly on a Russian airliner, no need for it, and no need to support an aggressive expansionist Russia.

  1. Take your propaganda and shove it up your rear. Russia is fighting islamofascists in Middle East,unlike your NATO that is trying to support ‘moderate’ terrorists.

    I support Russia in its endeavor.

    Like

    Posted by mmmm | October 14, 2015, 1:41 pm
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