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Volga-Dnepr Technics targets narrow-bodies

05.12.2011

Volga-Dnepr Technics has grown from an in-house unit into the fully-fledged maintenance specialist company of Volga-Dnepr Group in two years and now mainly focuses on serving Russian-built and western freighter aircraft. In the near future, the company intends to complete construction of hangar facilities in several countries to expand its scope of services for wide-body aircraft and to enter the competitive market niche of maintenance services for narrow-body jets such as Boeing 737s and Airbus A320s.

The company expects to obtain approval to carry out maintenance services on A320 aircraft in November this year. The relevant application for its Moscow-Sheremetyevo airport line station was submitted earlier this spring. According to the executive director of Volga-Dnepr Technics, Konstantin Zorin, the maintenance approval will then be extended onto B737 type aircraft for two stations — Sheremetyevo (SVO) and Domodedovo (DMD). Volga-Dnepr Group operates from both airports and, while A320 maintenance services will be provided to third party customers only, services on B737 may be required in-house due to Volga-Dnepr’s future business plans to launch B737 cargo services.

According to Konstantin Zorin the primary reason for establishing a separate maintenance company within the Group was “to provide competitive advantages to the Group’s fleet in terms of quality and price. To ensure the second advantage, we have to expand and attract outside customers in order to achieve further economies of scale.”

There is a simple explanation for Volga-Dnepr’s interest in providing narrow-body maintenance. This is the most popular aircraft type among carriers and represents the largest share of aircraft operating in the global market. Initial investments in the project were not large. “In our case, the investment was about USD300,000. Further development will require additional investment in staffing, which will depend on the number of customers and aircraft we will be capable of attracting,” said Konstantin Zorin.

However, further growth of the company in this market niche will require quite an effort as Volga-Dnepr Technics will have to compete at Moscow’s airports against existing maintenance providers that already hold a high market share. For example, the maintenance division of Aeroflot Airlines, after having served the carrier’s in-house fleet needs for a long time, is now seeking to actively promote its services to other carriers in SVO. In DMD, Volga-Dnepr Technics will have to compete with S7 Engineering.

The company will need hangar facilities if it wishes to provide more than line maintenance services and Volga-Dnepr has already been in talks with both SVO and DMD on such construction projects. “As for SVO, there has been no decision yet on land allotment. Talks with DMD have been more productive. They are willing to consider allotment of land for construction. So the chances for DMD to have our first hangar are higher. Nonetheless, our objective is to develop appropriate infrastructure at both airports,” added Zorin.

While hangars in Moscow are still in the stage of land negotiations, Volga-Dnepr Technics is getting ready to put new facilities into service in Germany and the UAE. A hangar in Sharjah, UAE, should be completed in 2012 and the company intends to receive an approval for B747 A-check maintenance there the same year with a further extension to C-check. This will be followed by a hangar in Leipzig, Germany. “We have already reached an agreement with the airport to construct a hangar capable of accommodating a B747-size aircraft and to lease it to the German division of Volga-Dnepr Technics. We are now working on our A-check certification in Leipzig and will start services right away in another hangar that we lease on a case-by-case basis from DHL,” said Zorin.

Despite the fact that the Volga-Dnepr Group fleet will remain the primary focus both in Sharjah and in Leipzig, the company hopes to extend its services to outside customers as well. For example, preliminary contacts have been made with Lufthansa Cargo. Outside customers already account for a greater portion of the company’s operations in Sharjah than in-house fleet services. Most maintenance is provided outdoors on Soviet-era aircraft (IL-76, AN-24, AN-26) operated in the Middle East and Africa and some work is also performed on the AN-124 fleet of Volga-Dnepr Airlines with the current split between outside customers and in-house services of 60% and 40%. As for Moscow airports, the Group’s fleet accounts for 90% of all wide-body maintenance provided by the company.

In addition to its infrastructure in Moscow, Sharjah and Leipzig, Volga-Dnepr Technics plans a significant expansion of its presence in Ulyanovsk, Russia with a declared intention to build hangar facilities for B747 aircraft in the newly-established special economic port zone. According to the company’s management, the Ulyanovsk facilities, first of all, contemplate B747 C-check capability to ensure a more flexible approach to the Group’s heavy maintenance requirements, with potential extension of the scope of activities to include narrow-body aircraft. The company believes that favorable customs procedures and tax benefits applied locally in the special economic port zone will allow it to compete for the provision of maintenance services on western aircraft, not just for Russian carriers but for foreign carriers as well.


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