Air Transportation: China Defies Russia Over Il-76 Price


December 20, 2007: China has put aircraft purchases on hold until a dispute over prices for Il-76 transports is settled. Russia is demanding more money from the Chinese for Il76s already ordered. This is because the manufacturer low balled the price so much that they were sure to lose a lot of money on the deal. A Chinese order for 75 Il-76s forced the manufacturer to (Chkalov) reorganize, and move at least 60 percent of the Il-76 production to a Russian firm (Ilyushin). The new assembly line at the Ilyushin Ulyanovsk plant will produce its first Il-76 in three years time. Now the Il-76 will have two production lines, as well as some protection against political problems in Uzbekistan (which needs the 18,000 jobs the Chkalov operation creates). Russia always produced many of the Il-76 components, and the Chkalov plant still has plenty of work manufacturing replacement parts, and refurbishing aircraft.

Russia itself is a major user of Il-76 aircraft, and expects to buy or refurbish 75 of them in the next decade, and do nearly as much business with foreign customers. The new models of the Il-76 indicate a substantial R&D investment, and an effort to make the Il-76 a serious competitor (mainly on price, at about $50 million each) with the C-17 (which costs about three times as much, and is able to carry up to 86 tons). What the C-17 is best at is carrying about half that weight, half way around the world, non-stop. The Il-76 has a hard time matching that. The C-17 is also easier to maintain, and more reliable. But a fuel-efficient Il-76, that can be refueled in the air, has a price that's tough to beat.

Over 900 Il-76s were manufactured there over the last thirty years, with nearly a hundred exported, so far, mainly to Cuba, Iraq, China, India, Libya and Syria. With few foreign or domestic sales in the last decade, the Il-76 manufacturer (Chkalov) was surviving by manufacturing wings and other components for the An-124, An-70 and An-225 transports. In addition, it made replacement parts for the Il-76 and Il-114 aircraft.




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