China's transport aircraft Y-20 takes first flight

Xinhua | 2013-1-27 10:40:58

http://www.globaltimes.cn/content/758378.shtml

Emerging economies, China, and India, lead IATA's airline traffic growth forecast Friday, December 07, 2012 by Devesh Agarwal

Good news for three of the BRICS countries. Do read on - AD

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http://www.bangaloreaviation.com/2012/12/emerging-economies-china-and-india-lead.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+BangaloreAviation+%28Bangalore+Aviation%29

Indian AWACS Moves with Israel, Brazil, Possibly Locally Aug 22, 2012 16:00 EDT

IL-76/A-50EI Phalcon: first delivery (click to view full)

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http://www.defenseindustrydaily.com/Indian-AWACS-Moving-Forward-on-2-Fronts-04855/

More on what BRICS can do with regard to civil aviation Archie D'Souza

“Russian aircraft manufacturing companies are capable of penetrating global markets despite tough competition,” said Russian President Vladimir Putin on several occasions especially when he was Prime Minister.  "We are certain that the Russian aircraft industry could find its own niche on the global market and we lay serious hopes on that," he once said at the international forum Engineering Technologies-2010, a little over two years ago.  No doubt there is strong competition on aircraft markets but it comes only from the top two. I have on several occasions said that BRICS can provide the ideal platform for a third player. Please click in-case you haven't yet seen it:

http://sunriseacademyonline.blogspot.in/2012/04/brics-possible-benefits-to-civil_09.html

Russia has several aircraft that could become a success globally, including the An-124 Condor heavy-lift transport plane and the Superjet 100 medium-haul passenger plane.  The An-124 was designed by the Antonov Design Bureau in 1982, and was produced in Ukraine's Kiev and Russia's Ulyanovsk plants until 1995. Although there are no An-124s being built at present, Russia and Ukraine have reportedly agreed to resume production in the future.  The Superjet 100 project is a family of medium-haul passenger aircraft developed by Sukhoi in cooperation with U.S. and European aviation corporations, including Boeing, Snecma, Thales, Messier Dowty, Liebherr Aerospace and Honeywell.  I would like to speak here about an aircraft I’m in love with, the Ilyushin Il-96

Design and development

The Ilyushin Il-96 is a shortened, long-range, and advanced technology development of Russia's first wide-body aircraft the IL 86.  Here are some of its salient features:

·          Super-critical wings fitted with winglets

·          A glass cockpit

·          Fly-by-wire control system

First flown in 1988, it was certified in 1992.  In its basic version the Il-96-300 is equipped with the following:

·          Modern Russian avionics integrating six multi-function colour LCD displays

·          Inertial and satellite navigation systems

·          A Traffic Collision Avoidance System (TCAS), including mode "S".  This allows the aircraft to be operated with just two crew members. The avionics correspond to modern requirements on international routes in Europe and North America (RNP-1) and allow navigation and landing under ICAO CAT III/A conditions. The Il-96 is offered in three main variants: the Il-96-300, Il-96M/T and Il-96-400.

I feel this aircraft could be the first to get into the BRICS agenda. Is any one of consequence reading?

Subsidy Scheme for Shipbuilding – Good or Bad? Archie D’Souza

The following is the text of a press-release made by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) on APR 16, 2002 (Source ASSOCHAM’s website www.assocham.org):
Shipbuilding & ship repair industry to reach Rs 9,200 crore by 2015: ASSOCHAM
Monday, April 16, 2012

The Indian shipbuilding and ship repair industry is likely to reach Rs 9,200 crore [USD 18.4 b] from the current level of just over Rs 7,310 crore [USD 36.6 b) and is growing at a compounded annual growth rate (CAGR) of about 8 per cent, apex industry body ASSOCHAM said today.
India accounts for just about one per cent of the global shipbuilding industry worth about Rs 7.3 lakh crore, [USD 146 b] according to a study titled ‘Shipbuilding Industry in India: An overview’ released by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
The global shipbuilding and ship repairing industry is growing at a CAGR of about 24 per cent and is likely to reach Rs 14 lakh crore [USD 28 b] by 2015 owing to rising global sea borne trade, according to the ASSOCHAM study.

“Lower costs of labour, availability of skilled workforce together with robust demand in the domestic market and a growing steel industry are certain factors that build up a strong case for shipbuilding sector in India,” said Mr D.S. Rawat, secretary general of ASSOCHAM while releasing the findings of the study.
“For a well balanced and comprehensively developed domestic shipbuilding and ship repair industry, the government should provide fiscal incentives to develop strong research and development facilities, designing capabilities and set up an auxiliary base to encourage the growth of the sector,” said Mr Rawat.
The overall cargo traffic at major ports in India is about 600 million tonnes and is likely to reach 1,230 million tonnes by 2015 and 3,000 million tones by 2020 growing at a compounded annual growth rate (CAGR) of about 20 per cent, said ASSOCHAM study.

“For this India needs to furbish up its ports and the whole shipping infrastructure to enhance the handling capacity and facilitate operation of larger shipments to increase its share in the global maritime business,” said Mr Rawat. “The government should rope in maritime states to identify and make land available, thereby seeking their contribution for setting up a new port or a shipyard in each of these states.”

“This also denotes huge scope for private sector and foreign direct investment (FDI) in the shipping industry and the maritime states can develop a composite project on the public-private partnership model,” he said.
China, South Korea and Japan are leading shipbuilding nations and cater to over 80 per cent of the global shipbuilding industry. China alone accounts for over 35 per cent of this global industry. India and Vietnam are upcoming centres for global shipbuilding.

Indian companies are cashing in on the huge scope in building and repair of offshore vessels (OSVs) as leading nations in this industry are jostling with limited capacities.

High input costs and rising costs of raw material, freight together with miscellaneous duties and taxes being imposed amounts to a huge price differential of about 50 per cent in building a ship in India and other countries, said ASSOCHAM.

Besides, though the costs of labour in India is low compared to that in other nations but shipbuilding being a labour-intensive industry, fulfilling the requirement of skilled workforce is another significant problem being faced by the shipbuilding companies.

The government has a key role to improve the efficiency and productivity of domestic shipbuilding companies to enable them compete with their overseas counterparts. ASSOCHAM recommends revival of subsidy scheme, easing tax related regulations and declaring the shipbuilding a status of strategic industry.
With about 8,000 kilometre long coastline there are about 27 shipyards, 12 major ports and 200 ports under states’ jurisdiction in India, there is huge scope for development of shipping sector considering that country’s opportunities in the maritime business have not been utilized fully. Besides, the government should simultaneously boost inland water transport.

Here is what I have to say:

The domestic shipbuilding industry may be growing at eight per cent annually, but it accounts for just one per cent of the global shipbuilding market.  There isn’t a shadow of a doubt that we’ve missed the opportunity to become a major player in shipbuilding despite the fact that the government invested heavily of the years immediately after independence.  The biggest shipbuilding nations are China, South Korea and Japan which between them account for over 80% of the global shipbuilding industry.  China alone accounts for over 35 per cent of the global market.

ASSOCHAM has suggested that in order to put Indian shipbuilding on a faster track, the following should be done:
• Bracket the industry as a strategic one
• Revive the subsidy scheme for shipbuilders
• Cut the slack on certain tax regulations
These three could be taken up for starters.

Let us see what the subsidy they are looking at is.  This, they say, should be provided to the extent of 30 per cent of contract price of orders, subject to certain conditions such as price discovery through competitive bidding.   How much will the exchequer be affected by this?  Domestic shipyards put the estimate in the range of Rs 700 crore [USD 14 m] in 2011-12.  Both the shipbuilding and ship-repair industries are expected to see huge growth despite the current slowdown in the shipping markets.  The study estimates that the global shipbuilding and ship repairing industry is seen as growing at a CAGR of about 24 per cent.

Will subsidising actually be of benefit to Indian shipbuilding?  And, will such a regime be WTO-compliant?  According to ASSOCHAM secretary-general DS Rawat, “Lower costs of labour, availability of skilled workforce together with robust demand in the domestic market and a growing steel industry are certain factors that build up a strong case for shipbuilding sector in India.”   No doubt, the input costs together with miscellaneous duties and taxes, makes manufacturing ships in India about 50% more expensive than other countries.  A 30% subsidy in this case will hardly help as there will still be a 20% difference.

So, what is the alternative?  In my opinion, the main reason why shipbuilding costs are higher in India is the tiny scale of operations compared with the major shipbuilding nations.  An infusion of investments and increase of capacity is the only way out.  In an earlier article (see BRICS: Possible Benefits to Civil Aviation posted on APR9) I had said that BRICS nations could get together to build a third alternative to Boeing and Airbus.  As far as shipbuilding is concerned, I have no such hope for the simple reason that China will not allow it.  However, I don’t see a reason why India can’t go ahead on its own.  The Central Government will have a minimal role in this.  The maritime states though will be important players to ensure that the necessary land and sea accesses are put in place to enable the private sector to build the infrastructure.
I do see India as a major shipbuilding nation, maybe number one.

BRICS - Possible Benefits to Civil Aviation Archie D’Souza

BRICS - Possible Benefits to Civil Aviation 

Archie D’Souza

BRICS is a group of acronyms that refers to the countries of Brazil, Russia, India, China and South Africa.  The group held its fourth summit on MAR 29, 2012.  Here are some interesting facts about BRICS:
BRICS countries account for:

• 25% of global GDP based on the purchasing power parity of national currencies
• 30% of land area
• 45% of the world's population.

The bloc's contribution to global economic growth has now reached almost 50%, making this group the principal driver of global economic development.
Last year, trade between the BRICS countries stood at around $230 billion
It should reach $500 billion by 2015.
BRICS countries have double digit growth, while many G8 countries are creating fewer businesses now than five years ago.
On an average, BRICS nations are creating 18 percent new businesses per annum compared to non-BRICS nations, which are on an average creating just 0.4 percent more new businesses per annum.

Here are some highlights of the BRICS’ summit of 2012:

• The leaders at the summit pitched for reforms of international institutions like the UN, IMF and World Bank.
• They support closer coordination for balanced and sustained global economic recovery
• They signed a pact to set up an Exchange Alliance of all BRICS’ securities exchanges
• They decided to explore the setting up of a BRICS-led South-South Development Bank. Its main objective will be to promote mutual investment and fund infrastructure projects in BRICS and developing countries
• BRICS will pitch for greater representation of developing countries and emerging economies in the IMF by speeding up quota reforms
• As part of the pressure for international institutions to reform BRICS backs a merit-based selection-process for the heads of the IMF and the World Bank.  Currently, these posts are reserved for a European and an American respectively.
• BRICS cautioned the West against allowing the Iranian situation to escalate into conflict. Backs dialogue to resolve the Iranian nuclear impasse
• Backs a Syria-led democratic transition. BRICS voices 'deep concern' over Syria and calls for 'an immediate end to all violence and violations of human rights' and backs a Syrian-led political process
• It backs speedier resolution of the Arab-Israeli conflict and the creation of an independent Palestine co-existing with Israel
• Step up joint efforts for successful conclusion of the Doha Round of multilateral trade negotiations.
• Jointly help in the development and resurgence of Africa
• Backs green economy and agrees to closer coordination on global climate change negotiations
• Adopts an all-encompassing action plan that includes, among other things, meetings of foreign ministers on sidelines of the UN and meetings of Finance Ministers and Central Bank Governors on sidelines of G20 meetings/other multilateral meetings
• Identify new areas of cooperation that includes multilateral energy cooperation within BRICS framework, a general academic evaluation and future long-term strategy for BRICS; BRICS Youth Policy Dialogue; and Cooperation in Population related issues

BRICS also decided that intra-BRICS trade will henceforth be transacted in their own currencies rather than the US Dollar or Euro.  Further, they would go in for maximum investments in each other’s countries.  This will ensure that the days of the dominance of the dollar are over.  It will also offer them a buffer from the effects of any economic crises in the developed world.  This and the setting of a BRICS development bank are, in my opinion, the most important economic decisions taken and will have far-reaching impacts on the way trade is conducted and investments made.

Two areas, which I feel whose time has come don’t seem to be on BRICS agenda at the moment.  Before I mention these areas, let me state a few facts.  These five nations, in general, and India and China together in particular, will between them become the biggest civil aviation and shipping markets.  So large a market will it be that its size will be more than what the rest of the world together will buy.

The market for large commercial aircraft (LCAs) is dominated by two players – Airbus and Boeing, with others almost invisible.  There happens to be no serious competitor to the oligarchy of these two players.  In shipbuilding, while China does have a prominent place, India’s potential has still to be unleashed.  Surely these are areas that need to be looked at.  Every one of these five countries contributes to these two areas in some way or the other.  Let’s look at Civil Aviation first.

• Russia has the knowhow to make LCAs
• India and China between them will purchase more airplanes than North America and Western Europe put together
• The five BRICS countries will be purchasing more aircraft than the rest of the world put together
• Every one of the five countries has people with the entrepreneurial skills and financial capacity to run large companies

Airbus was started as a conglomerate with representatives from five EU nations.  It still runs as a company with its top management from these countries.  Why can’t industrialists from these countries get together and take a decision to form such a conglomerate.  Getting investors for such a venture would not be that difficult.  In course of time this company should be able to get a market share of at least 30%.

I have put in an idea for germination.  Let’s see if there’s anyone who takes it.

When the idea of Airbus was conceived the aircraft market, especially LCAs, was dominated by three American companies with Boeing taking the dominant share of the market.  So much did the Americans dominate that there was hardly a player outside the United States.  LCAs were made in the erstwhile USSR but hardly any planes sold outside the Eastern Block.  Airbus decided to set up its plant near the French city of Toulouse.  The management of the company was multinational with representatives from Germany and Britain besides France on the board of directors.  Components that go into the planes come from vendors all over the World.

In the 1970s & 80s four companies catered to the LCA market.  Boeing was the dominant of these with a market share of over 60%.  Lockheed Aircraft Corporation and Mc Donnell Douglas Corporation were the other two American players and Airbus the fourth.  Between 1985 and 2005, thanks to a merger and take-over, we were left with just two players.  The fall of the Soviet Bloc resulted in the market for Russian aircraft disappearing.

Unlike most business ventures in the free world “Airbus wasn’t launched because some person or persons, had an original idea.  Instead, its origins reflect the deep anxiety of Britain, France, and Germany. Each of which wanted to preserve its aircraft industry.  No one of these industries was any longer strong enough to compete with American companies, and the Europeans saw their multiparty approach – the still nascent European idea – as the only way.” – John Newhouse in Boeing versus Airbus.
It began as a consortium of four European national aircraft corporations – France, Germany, Britain and Spain.  Each of these countries was represented in the board.  Today, the four partners are a unified commercial enterprise, with holdings by EADS, the French State, Lagardere Aircraft Group (Also French), Spain and BAE Systems.  Its shares are traded in European bourses.   EADS is, by the way, 22.5% held by Daimler Chrysler.  The company in its current form, as an integrated corporation, came into existence only in 2000.  This makes Airbus a very young company.

The A300, in 1974, was the first aircraft to come out of the Airbus stable.  Till the birth of the A380 decades later, this was their signature aircraft.  If there’s one example of a truly international product – and this happened long before the AMPs (now Tyco) and GEs started outsourcing their production – it is the A300.  This, with some modifications, can be a model for BRICS to follow for its own assembly.  Let’s see how:

• Aérospatiale builds:
• The nose section, and
• The engine pylons
• Deutsche Airbus of Germany, made up of MBB & VFW-Fokker makes:
• The forward fuselage from the flight deck to the wings
• The upper centre fuselage, and 
• The vertical tail
• VFW-Fokker of the Netherlands makes the moving wing surfaces
• CASA of Spain makes:
• Horizontal tail surfaces
• Landing gear, and
• Main doors
• SNECMA & MTU make turbo-fans under license from GE

All this prove the extent of international manufacture.

If BRICS has to replicate this it will need to work on a different model.  For one, the BRICS nations may not be able to spend on subsidies of the kind that Airbus received.  Secondly, they may not be able to get defence contracts from their respective governments that Boeing received.  Remember, Boeing generates most of its profits from defence deals.  The relationship between the governments of China & India as well as Russia & China isn’t as amicable as the EU countries.  However, as this will be more of a private sector initiative, this too shouldn’t pose a problem.  The cultural differences between the five countries too can be overcome.  So, how will this work?

There is a certain amount of learning from Airbus and this new conglomerate can avoid repeating those mistakes.  Also, there are cultural and political factors, as we have seen, that need to be taken into consideration.  It will be impossible to operate from a single plant because the three biggest nations in the group – China, India or Russia – will not like it to be in another country.  Hence, assembly plants will need to be set up in at least the three big nations, if not in all five.  There will be a positive fallout from this of course.  It will lead to excellent savings with each plant catering to a different geographic market.
China and India will be huge markets for aircraft of every size – from the mega Jumbos (B747 & A380) to the smaller one (B737 & A320).  The Brazilian company Embraer already has a sizeable share of the market outside the sales made by the top two.  Indian companies do have expertise in Avionics, which will be of great help.  The basic frames of the aircraft made by such a consortium will come from Russia of course.  The knowhow exists from the Soviet days.  In fact, the largest and second largest freighter aircraft the AN 225 & AN 124, manufactured by the Russian company Antonov, already exist as a base.
The group of five has already taken a decision to set up a joint development bank and devise a mechanism to trade in their own currencies.  The formal announcement on this was made at the fourth BRICS summit in New Delhi on MAR 29, 2002.  Such an institution will take on the IMF and World Bank.  So, why not become an aircraft manufacturer to take on Airbus and Boeing?

When the idea of Airbus was conceived the aircraft market, especially LCAs, was dominated by three American companies with Boeing taking the dominant share of the market.  So much did the Americans dominate that there was hardly a player outside the United States.  LCAs were made in the erstwhile USSR but hardly any planes sold outside the Eastern Block.  Airbus decided to set up its plant near the French city of Toulouse.  The management of the company was multinational with representatives from Germany and Britain besides France on the board of directors.  Components that go into the planes come from vendors all over the World.

In the 1970s & 80s four companies catered to the LCA market.  Boeing was the dominant of these with a market share of over 60%.  Lockheed Aircraft Corporation and Mc Donnell Douglas Corporation were the other two American players and Airbus the fourth.  Between 1985 and 2005, thanks to a merger and take-over, we were left with just two players.  The fall of the Soviet Bloc resulted in the market for Russian aircraft disappearing.

Unlike most business ventures in the free world “Airbus wasn’t launched because some person or persons, had an original idea.  Instead, its origins reflect the deep anxiety of Britain, France, and Germany. Each of which wanted to preserve its aircraft industry.  No one of these industries was any longer strong enough to compete with American companies, and the Europeans saw their multiparty approach – the still nascent European idea – as the only way.” – John Newhouse in Boeing versus Airbus.
It began as a consortium of four European national aircraft corporations – France, Germany, Britain and Spain.  Each of these countries was represented in the board.  Today, the four partners are a unified commercial enterprise, with holdings by EADS, the French State, Lagardere Aircraft Group (Also French), Spain and BAE Systems.  Its shares are traded in European bourses.   EADS is, by the way, 22.5% held by Daimler Chrysler.  The company in its current form, as an integrated corporation, came into existence only in 2000.  This makes Airbus a very young company.

If BRICS has to replicate this it will need to work on a different model.  For one, the BRICS nations may not be able to spend on subsidies of the kind that Airbus received.  Secondly, they may not be able to get defence contracts from their respective governments that Boeing received.  Remember, Boeing generates most of its profits from defence deals.  The relationship between the governments of China & India as well as Russia & China isn’t as amicable as the EU countries.  However, as this will be more of a private sector initiative, this too shouldn’t pose a problem.  The cultural differences between the five countries too can be overcome.  So, how will this work?

There is a certain amount of learning from Airbus and this new conglomerate can avoid repeating those mistakes.  Also, there are cultural and political factors, as we have seen, that need to be taken into consideration.  It will be impossible to operate from a single plant because the three biggest nations in the group – China, India or Russia – will not like it to be in another country.  Hence, assembly plants will need to be set up in at least the three big nations, if not in all five.  There will be a positive fallout from this of course.  It will lead to excellent savings with each plant catering to a different geographic market.
China and India will be huge markets for aircraft of every size – from the mega Jumbos (B747 & A380) to the smaller one (B737 & A320).  The Brazilian company Embraer already has a sizeable share of the market outside the sales made by the top two.  Indian companies do have expertise in Avionics, which will be of great help.  The basic frames of the aircraft made by such a consortium will come from Russia of course.  The knowhow exists from the Soviet days.  In fact, the largest and second largest freighter aircraft the AN 225 & AN 124, manufactured by the Russian company Antonov, already exist as a base.
The group of five has already taken a decision to set up a joint development bank and devise a mechanism to trade in their own currencies.  The formal announcement on this was made at the fourth BRICS summit in New Delhi on MAR 29, 2002.  Such an institution will take on the IMF and World Bank.  So, why not become an aircraft manufacturer to take on Airbus and Boeing?

Added on JUN 13, 2012
Who is Standard & Poor to decide the composition of BRICS? and, has anyone rated that company? At 6% growth an alarm is being raised. Can't these stupid rating agencies do better?
Click on the link below:
http://www.siliconindia.com/news/business/India-The-Shaky-Eye-in-The-BRIC-nid-119509-cid-3.html?utm_campaign=Newsletter&utm_medium=Email&utm_source=r1