Volga-Dnepr: Still shouldering the burden

14 / 01 / 2015

There are “a lot of assumptions and a lot of speculation about what is happening and what is not happening, but we are a private airline and it has had no direct effect on us,” says Dennis Gliznoutsa, vice-president sales of Volga-Dnepr about the impact on its business of the current tensions between Russia and the Ukraine.

The AN-124s may have been designed and made in Ukraine, and sanctions by US and European governments may be in place, but Gliznoutsa insists that for Volga-Dnepr it is largely business as usual. “Some clients feel it is better to be careful than sorry, but on a day to day basis, dealing with maintenance and flights, it is not affecting us. 

“The business we do is not related to the Russia-Ukraine-Europe situation. We are flying international services for international companies. The situation might at a later date affect traffic into Russia, but not now.”He also confirmed that the SALIS (Strategic AirLift Interim Solution) contract has been extended, with Volga-Dnepr and Antonov Airlines stationing two AN-124s in Leipzig as part of their Ruslan SALIS joint venture. More aircraft are also made available at short notice, when required, to provide airlift for EU and NATO countries. 

An interim solution originally only expected to last till 2009 when the A400M transport plane of Airbus was supposed to be ready, SALIS has recently been extended for another two years. Gliznoutsa says the number of hours in the contract has been reduced, but otherwise it remains unchanged. “From what we see and from the dialogues we have had, all is well, and we have not been advised otherwise.

”More of an issue for Volga-Dnepr, perhaps, has been the fall in flying for governments and NGOs as military operations in Iraq and then Afghanistan were wound down. This has been big business for Volga-Dnepr in the past decade, accounting for anywhere from a quarter to two thirds of turnover. Now that figure is back to pre-conflict levels of 10-15 per cent. 

Gliznoutsa says commercial and project work has picked up to compensate, however, increasing sufficiently to keep 2014 revenues roughly at 2013 levels. “Oil and gas, energy, construction materials and aerospace are all showing positive trends,” he says. 

How long oil and gas demand will continue to be strong is another matter. With the oil price down to $65 a barrel at time of writing, a chill wind was blowing through the sector and exploration projects were being called into question.Gliznoutsa puts a brave face on this, pointing out that there was a similar slump in 2008 (the price falling from $145 in July 2008 to below $40 in December), only for the price to go on to recover to well above $100.

“If the situation continues for longer than six to eight months, then perhaps some oil and gas projects will go on standby. But we are not seeing anything like that yet. We are serving projects that we committed to quite a while ago, maybe a couple of years. So there is inertia in the decision-making and hopefully by the time those projects finish, oil prices will be recovering.

”The oil price fall is also by no means all bad news for Volga-Dnepr, since its aircraft are big gas-guzzlers. As Gliznoutsa acknowledges, the lower price will help companies to choose air solutions over land-based alternatives.

Energy is not all about oil, and one other strong sector for Volga-Dnepr is the alternative power industry. Gliznoutsa reports that solar power has gone dead, with companies unhappy with the returns produced, but says wind turbines and associated equipment remain a good source of business.  As Africa develops, Volga-Dnepr also regularly flies generators, transformers, and water equipment down to the continent. 

As for satellites and aerospace, in Novem-ber Volga-Dnepr flew the upper stage Breeze-M unit of the Proton-M space vehicle to Baikonur to help launch a Russian communications satellite, and in October it moved the first satellite ever to be manufactured in Argentina from Bariloche to French Guiana. 

Gliznoutsa says it flies satellites not just to launch sites but to final assembly and test beds. Rocket engines and sections, large aerospace components such as wings, and helicopters are also regular cargoes.

From a fleet point of view there has been no change, with ten Volga-Dnepr AN-124s still flying. Along with seven operated by the Antonov Design Bureau, these make up the 17-strong fleet marketed by Ruslan International. Competition used to be provided by the four AN-124s of Polet, but Gliznoutsa says these are not operating at present. 

Upgraded AN-124s are also still supposedly in the pipeline, though the years pass without any visible progress on this project, and one must wonder how likely it is given the current tensions between Russia and Ukraine, where the Antonov Design Bureau is based.The upgrade aircraft - the AN-124-111VD - would have a 150 tonne maximum pay­load, a range of 5,000km with 120 tonnes, digital avionics, chapter four engines and a crew of three (compared to the ten or so that operate the AN-124 today).

Gliznoutsa stresses that he is not involved in discussions on this topic, but understands they are still going on, despite the political situation. “There is a dialogue going on with various potential suppliers about what can be done or what cannot be done, and about what kind of organisation is needed. Also how deeply the aircraft needs to be modernised. Certain steps need to be agreed and then I understand that physical modernisation might start in 2016.

”Even further into the future would be the newbuild AN-124-300, for which the AN-124-111VD is supposed to lay the groundwork. “It would be a step too far at the moment,” Gliznoutsa agrees. “It can’t happen until the modernisation programme is com-pleted, because they need to have had the experience of how the factories and suppliers work out on spares and technology.

”The IL-76, the other workhorse of the Volga-Dnepr fleet, is luckier in this respect because a re-engined version of this, with chapter four compliant engines, has been in operation since 2006. 

Volga-Dnepr was the launch carrier for this and has five in its fleet. Silk Way of Azerbaijan is the only other operator.

Gliznoutsa says it remains “a workhorse in its niche”, offering the perfect solution for cargo too big for a B747 freighter but too small to justify an AN-124. “It is doing well and doing the hours and performance we expected.”The carrier originally had plans for 17-20 of the aircraft, but that was halted by the ending of production in the Tashkent factory. “I can’t say why it stopped, but presumably there were not enough orders,” says Gliznoutsa. “We had our last one in 2011 or 2012 and it was the last one out of the factory. I suppose it was not economically feasible to keep it open for one or two aircraft a year.

”He expresses slight regret that Volga-Dnepr’s IL-76 fleet is not larger, but thinks on balance it was probably for the best. “Two or three years ago we would have been very interested in growing the fleet aggressively. In the current situation we would probably think twice about whether we want to add to the fleet and the price would have to be right.

”That qualification also applies to a proposed new version of the IL-76 that is being discussed: the IL-476. “The pricing that they are currently talking about is not commercially viable in our market,” is Gliznoutsa’s judgement.