High demand for Russian rotorcraft

Russian Mil Mi-8 Hip medium transport helicopters are in high demand both in Russia and abroad. This circumstance is driving up the prices for the type on the pre-owned market. On the other hand, the nearest available delivery time for newly assembled Hips is only in 2012. Other Russian rotary-wing models are not so popular due to their more narrow specialization. 
Many of the Hips are again working in Afghanistan, the country where this modification first proved its operational efficiency as the main means of transportation for the Soviet troops back in the 1980s. According to Russian experts, about 300 such rotorcraft are currently operated in that country by the international coalition forces, private contractors or under UN contracts. Such demand has caused a drastic price growth for pre-owned Hips inside Russia, where the Mi-8 family is still the most ubiquitous and widely used type of helicopter.
As of the beginning of 2010, more than 1,159 helicopters of the Mi-8 family were registered in Russia, making up almost 55% of the country’s entire commercial helicopter fleet. Out of this number, 770 rotorcraft were serviceable. For 12 month from mid-2008 to mid-2009 they had all logged almost 330,000 flight hours, or 87% of the combined flight time for all Russian-made helicopters on the local market for that period.
The high demand exists only for the latest versions of the family — the Mi-8MT (or the Mi-17 in its export designation), due to its hot-and-high capability. Com­pa­red to the earlier Mi-8T version, the Mi-8MT has more powerful TV3-117 turboshaft engines, a new gearbox, improved tail rotor and control linkage, and greater-capacity fuel tanks. These improvements increase the Mi-8MT’s payload capacity by 1 ton and also improve its operational ceiling. Production of this version was launched in 1977; in the late 1980s the designers further improved it into the Mi-8MTV variant designed for high-altitude operations.
 "It’s impossible to buy this modification on the pre-owned marked," a Russian helicopter dealer told Russia & CIS Observer. According to him, two years ago a pre-owned Mi-8MT could be bought in Russia for $4-4.2 million, but now the average price tag on such a rotorcraft in fly-away condition would amount to $6.5 million. The repair stock is also all but exhausted — a helicopter that needs to be overhauled before it is put into operation sells for about 4.5 million, our source said. Owners don’t hurry to sell their rotorcraft, so Hips are only available on the market from the fleets of bankrupted operators, or from those who have switched to Western helicopter types. The Russian Defense Ministry sometimes sells its surplus equipment; such helicopters are highly valued due to their low total flying time. No more than 20-30 pre-owned Hips changed hands in Russia in all of 2009.
The high demand for Mi-8MTs on the pre-owned market is amplified by the shortage of, and expensive price tags for new rotorcraft of this type. Russian Helicopters, the holding company that controls the national helicopter industry, built 139 Hips in 2009, but company CEO Andrey Shibitov says the production capacities are fully booked until 2012. In the past three years the price of a newly assembled Mi-8 has increased from $3.5 million to $9-10 million.
Most of the helicopters are exported. Foreign customers choose this type for its good value-for-money ratio, says Boris Bychkov, head of the Airclaims (CIS) aviation consultancy. According to the company’s estimations, the price for a pre-owned AS332L1 SuperPuma, Hip’s only competitor, varies from $4.5 million to $22.6 million depending on the year of manufacture and configuration.
The earlier modification of the family, the Mi-8T, is more readily available. This version, now out of production, used to be the most mass-produced member of the Hip family — its total output in 1960-1990 is estimated at 15,000 units. Because of its low-power TV2-117A engines the Mi-8T has very limited applications in Afghanistan and is primarily operated in Russia. According to Dmitry Ermilov, deputy head of the Moscow-based Soyuzavia aircraft dealer, the supply of this modification on the local pre-owned market is not large but a rotorcraft assembled in the late-1980s or the 1990s, in good condition, can be purchased for $1.2-2 million. The operational life of this version is now limited to 35 years, but the Mil design bureau can prolong it to 40 years on a case-by-case basis.
Market players predict that the prices for pre-owned Mi-8MT and later versions will remain high for as long as the demand for them stays high in Afghanistan. "[The prices] are unlikely to grow further as the current level is already compromising [the helicopters’] operational profitability under question," notices Ermilov. Nevertheless, the market is unlikely to collapse even if the military operation in Afghanistan ends. Airclaims’ Bychkov says that this type is also in high demand with Russia’s oil and gas industry, and also has numerous applications all over the world. Some Russian operators, like UTair Aviation, successfully operate Mi-8MTs under UN contracts in many regions of the world. UTair, the largest Russian helicopter operator, further increased its Hip fleet in September by taking delivery of 40 new Mi-171s.
Other types of Russian helicopters are in much lower demand due to their narrow specialization. According to Airclaims, the price for a pre-owned Mil Mi-26T, the world’s heaviest transport rotorcraft with a maximum payload of 20 tons, ranges from $6.5 million to $16 million depending on the aircraft’s condition and year of manufacture. "This is a very special aircraft: it’s difficult to find a job for it and its maintenance is very expensive," explains a source at Soyuzavia. Mi-26Ts are currently operated primarily in UN missions, and the demand in this segment is met by the fleets of just two Russian operators — UTair and Vertical-T.
The Kamov Ka-32 medium transport helicopter, a civil version of the Russian Navy’s Ka-27 Helix anti-submarine warfare aircraft, is in a similar situation. Current applications of this coaxial-rotor helicopter are limited to firefighting and underslung load transportation. Most aircraft of this type have been exported. The Ka-32A variant has been certified in Canada and Switzerland. The latest version, the Ka-32A11BC, became the first Russian helicopter to get a EASA type certificate, and is now successfully operated in Spain and Portugal. This list is to be expanded soon by Slovakian-based UTair Europe, a subsidiary of UTair Aviation, which has recently placed an order for 6 Ka-32A11BC helicopters to be delivered in 2011.
The demand for helicopters of this size inside Russia is met by the fleets of several local operators whose combined Ka-32 fleet stands at just 26 units. So this model is rarely found on the pre-owned market. According to Airclaims, the price for a new Ka-32A varies from $6 million to $8 million depending on configuration, while a pre-owned rotorcraft of this type can be purchased for $2-4 million.
The Mi-2 light twin is the second by numbers in the Russian helicopter fleet after the Mi-8 family. In 2009, Russian companies operated 116 helicopters of this type, mainly in transport and pilot training roles. According to local dealers, this model is available on the pre-owned market but demand for it is not great because of the Mi-2’s outdated and not entirely reliable engines.