Russia Buys Production Rights for Ukrainian Transport Planes (commentary originally published in the April issue of Operational Watch)

          Exerting influence over the operations of Kyiv aircraft plant Construction Bureau (CB) Antonov has been a long-term goal of Russia because CB Antonov is one of the two fully functional plants on the post-Soviet territory in which the entire chain of aircraft development and production can be found under a single roof. While the other similar plant, CB Sukhoy, is capable of producing military airplanes, CB Antonov produces military, cargo, and passenger aircraft. Thus, CB Antonov is strategically important to Russia. The excerpt from the accompanying article discusses the recent agreement between the Samara aircraft plant Aviakor and CB Antonov for the transfer of intellectual property rights relating to the transport versions of passenger aircrafts AN-140S and AN-140T. This means that Aviakor will obtain proprietary maintenance rights for these aircraft, to extend its resources, and to alter the design without the Antonov design bureau’s involvement. These aircraft will replace the Russian Air Force’s AN-24 and AN-26 – the light military transport planes of which the Russian military owns around 300.  A contract with CB Antonov will enable the Russian Air Force to buy AN-140s from a Russian company, thus bypassing Ukraine.  It will also allow Russia to build a fleet of domestic aircraft. 

         Earlier, Russian Aviakor had complained about having to deal with the Ukrainian design bureau, which owned the relevant intellectual property and proprietary inspection rights, in order to eliminate defects discovered while using AN-140 aircraft purchased from CB Antonov. Aviakor was dissatisfied with the lengthy procedures and the nuisance of having to wait for Ukrainian approval before making alterations to the plane’s design. With the transfer of intellectual property rights to Russian Aviakor, which cost Russia several hundreds of millions of dollars, the situation has changed.  The main benefit of this deal is that it gives Russia full control over the purchase of aircraft from a Russian company Aviakor, thus assuring independence from political factors arising from dealing with foreign corporations.  Aviation expert Anton Lavrov, cited in the excerpt from the accompanying article, said that it is a common practice for other countries such as China to purchase property rights over foreign airplanes; however, this is the first time Russia has made such an agreement with a foreign company. 

         Collaboration in the airplane construction industry has thus been used by Russia to further its political agenda. For example, Mikhail Zubarov, the Russian ambassador to Ukraine, recently announced that Russia is ending its collaboration with Ukraine to produce AN-70 military and cargo aircraft. The status of projects related to the modernization of AN-140 and AN-124 fleets is currently in question as well. In fact, some experts believe that Russian plans to modernize Ukrainian airplanes without Ukraine’s participation are evidence of a direct attack against Ukrainian aircraft construction industry. This may be intended to pressure Ukraine into joining the Russian-dominated Customs Union, which would jeopardize Ukraine’s participation in the World Trade Organization. 

         There are no legal barriers excluding Russia from modernizing its fleet now that Russia owns the intellectual property rights to several Ukrainian aircraft. However, Russia may lack the expertise to conduct its own modernizations, and may therefore attempt to outsource Ukrainian engineers and experts. Although this situation has obvious negative consequences for Ukraine, it also has the potential to open up additional opportunities for Ukraine’s collaboration with the West and South-East Asia. Ukraine would be forced to search for partners other than Russia to ensure the long-term sustainability of its strategically important aircraft building industry.

Source:  Aleksey Mikhaylov, “Russia Is Purchasing the Rights to the Ukrainian An-140T Airplane. The Air Force Will Not Have To Depend on Foreign Suppliers,” Izvestiya Online, 27 March 2013.