Russian corporations may spend up to $2.5 billion on business jets over the next two years, an aviation trade group has said. No wonder companies like Bombardier, Dassault and Embraer are out on a contract-chase in a country that is supposed to have 60 dollar-billionaires.

The Montreal-based Bombardier has a prominent presence at the ongoing MAKS 2007 air show. Bombardier says Russia is its largest European market, and that the company is the top seller of private jets in the country.

A fast-growing sector
Wealthy Russian individuals and corporations have about 300 executive jets, and 100 more are expected to be delivered by the end of 2008. Russians bought executive planes valued at $1.5 billion in the last two years, triple the amount spent in the previous two.

France's Dassault Aviation and Brazil's Empresa Brasileira de Aeronautica (Embraer) are the other aerospace companies that dominate the business jet space in Russia. While $1 billion of the $2.5 billion in spending expected by 2009 is already contracted, the remaining $1.5 billion is still up for grabs.

The world's most popular business jet models are Bombardier's Global Express, Boeing's Business Jet, Hawker Beechcraft's Hawker 850XP, the Gulfstream V from General Dynamics, the Legacy 600 made by Embraer and Dassault's Falcon business jet. All except Boeing have brought their planes to display at the air show.

Customers in Russia and other former Soviet republics placed 90 orders with Bombardier in the last three years, for its Learjets, Challenger and Global business jets. In the first half of 2007, the company has already bagged 30 business jet orders from these countries, a company representative said.

Dassault has booked orders for 40 aircraft in Russia, Ukraine and Kazakhstan in the past three years, a company representative claimed. Half of the planes have already been delivered. Dassault says it is currently negotiating the sale of 10 private jets.

Servicing in situ
Private flying is encouraging aircraft makers to set up Russian service centres. Bombardier hopes to open a maintenance facility next year. Dassault plans to certify a Russian company building a centre at Moscow's Sheremetyevo International Airport, for work on its Falcon planes.

The Russian client list is hush-hush. Customers are very concerned about privacy, and at least a dozen have outfitted their planes with anti-missile defence systems, given that assassinations are not uncommon in the country. "Take the list of Russia's 100 richest compiled by Forbes; each one will have a private jet or a helicopter, often both," an industry source said.

The big boys and their toys
Roman Abramovich, owner of Chelsea Football Club in England and Russia's richest man, outfitted a Boeing 767 for his private use in 2004, and equipped it with an anti-missile system, newspaper reports say.

Oleg Deripaska, who owns the world's biggest aluminium company and is Russia's second-richest man, flies in a Gulfstream V. Billionaire Vladimir Yevtushenkov, whose business interests range from oil to telecom, travels in a Legacy jet. Gazprom CEO Alexei Miller prefers a Dassault Falcon 900.

Rich Russians don't consider a jet a luxury. While a billionaire may splash out on a $40 million Global Express jet, those with 'less money' may go in for a $6 million city jet. But Russians like to go for the best and biggest they can afford, fitted with the most sophisticated facilities and technology.

Russian customers routinely spend up to 20 per cent more than the jet's original price for superior interiors and communications packages, but ostentation is not their objective. "It must be high-quality and very functional; there is no question of having gold all over, like with Arab sheikhs," an industry representative said.

Customs duties down
The Russian government, too, seems to encourage the new Russian craze for business jets. Prime Minister Mikhail Fradkov has signed a directive to reduce import duty from 20 per cent to 10 per cent for business planes with carrying capacity of 15 to 20 tonnes, an economics ministry source said. The reduced duty on business jet imports could be extended to smaller planes in the next two months, the source added.

A commission on protective measures in foreign trade under the Russian Ministry of Economic Development and Trade proposed at the beginning of 2007 to cut import duty on foreign planes with passenger capacity of up to 50 people to 8 per cent, and for jets carrying 115 to 160 people to 10 per cent.

The commission also proposed lowering import duties for new long-haul Boeing-787 Dreamliner and Airbus A-350 planes from 20 per cent to 10 per cent, but the Ministry of Industry and Energy has strongly opposed the move.