Russia: May 23, 2001


Russia's aviation industry has been in free fall since the Soviet Union collapsed in 1991. The government has no money to buy military aircraft. One reason for the Soviet Union's collapse was the system of subsidies for uneconomic activities. One example was commercial aviation. where travel was subsidized. As a result, at the time of the Soviet Union's collapse, 135 million people a year traveled on Soviet airlines. After ten years of no subsidies, and passengers paying their way, only 20 million people a year are flying. During the Soviet period, Soviet factories turned out second rate airliners that had a captive market in the communist nations. Once the communist economic controls were gone, everyone wanted to buy more efficient (and expensive) Western airliners. The Russian government is desperate to keep Russia's civil aviation industry alive. For the last ten years, this industry has been scrambling to survive. Raising standards while selling whatever they could to whoever would buy, the six largest firms are now ready to merge to form just two. While modern Russian airliners are cheaper than Western ones (Il-96 goes for $75, Tu-204 for $30 million.), they still have a reputation for shoddy construction and uneven performance. The military and civil aviation manufacturers share many of the same suppliers. If one dies, the other will likely follow. The government supplies subsidies, but not nearly enough to prop them up as was the case in Soviet days. 


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