HAL abandons plans to invest in RRJ project

MUMBAI — Public sector Hindustan Aeronautics Ltd (HAL) shelved its plans of investing in an international consortium for building passenger jets following opposition by some partners to contract out aircraft development works to the country.

By (PTI)

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Published: Mon 26 Jun 2006, 10:35 AM

Last updated: Sat 4 Apr 2015, 1:12 PM

The consortium, christened Russian Regional Jet, plans to build passenger jets with a seating capacity of 60, 75 and 95.

"We wanted to join the consortium as a risk partner. We were ready for an investment to the tune of $100 million. But if after all this, some development works cannot be done in India then we think it is not worth such a huge investment," highly placed sources at the Bangalore-based defence aeronautics behemoth told PTI.

This was the first attempt by the public sector undertaking to join the fast-growing and increasingly crowded civilian airplane manufacturing sector.

On top of that, sources said, there was not much clarity about the market and valuation.

"We don't have a clear idea about the market and partners in the project. And we believe competing with the existing players like EMbraer and Bombardier would be very tough as they are already established as major players in the regional passenger airplane sector," sources said.

As per the original plan, the leading consortium partner, Sukhoi would design the aircraft, which will be powered by a SaM 146 engine, developed by French aero-engine major Snecma Moteurs and its Russian counterpart NPO Saturn. Toulouse- based Thales will provide avionics while Boeing will manufacture the body and take care of the certification.

HAL was offered a 10 per cent stake in the consortium as a risk sharing partner and was to have produced airframe modules, which contains empennage, canopy frame and some critical components for the entire RRJ family, sources said.

HAL received this offer during the Farnborough Air Show in 2004, and last year the company had appointed SBI Capital as financial consultant and market advisor for market evaluation.

Since its formation in 1942, HAL has been tasked with the overhaul and upgradation of military aircraft. The company has now started sourcing aircraft modules and structural assemblies for the Airbus family of airplanes and engine components for Snecma.

"By joining the consortium, we thought at least we can bring in the international standards of aircraft development technology to India that will boost the nascent indigenous aeronautical industry," sources said.

The RRJ will compete with Brazil's Embraer and Canada's Bombardier for a leading market share in the regional passenger jet market, which according to Sukhoi estimates, is expected to grow at 25 to 30 per cent over the next five years. With a pricing 10 per cent cheaper than its competitors, the RRJ will have features not of a regional jet but of a mainline aircraft with a smaller capacity.

Though the primary demand for the RRJ is expected to originate from Russia and other members of the Commonwealth of Independent States, the consortium plans to market the aircraft world-wide with Russian and Federal Aviation Administration (FAA/JAA) certification.

The design and engine development has been completed. The maiden flight is planned early next year and the first deliveries are expected by 2007 end.

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