In a wake of the decision by the White House on May 8 to pull out of the nuclear deal with Iran, European vendors may still keep a presence in the Persian market through Russian OEMs.
However, with the re-imposition of the “toughest sanctions” on the Islamic Republic, the European aerospace sector faces a difficult dilemma: how to do business with the Persians without facing punishment through exposure to U.S. domestic law.
In reality there are few options. One is to keep a presence in the market through selling components for Russian airplanes destined for the Iranian air transport industry and rendering aftersales support to them. Although this does not enable the Western aerospace companies to sell as much as they might have thought back in 2015 when the seven nations struck the nuclear deal, it would nonetheless please politicians in London, Paris, and Berlin and help maintain a European beachhead on Persian soil until such time Washington and Tehran come to terms again.
Along with Iran and North Korea, Russia is also under U.S. sanctions, under the Countering America’s Adversaries Through Sanctions Act (CAATSA). However, these do not apply to the Sukhoi Superjet 100 (SSJ100), as it is a purely civil program, one widely acknowledged as a rare positive example of fruitful cooperation between East and West in the aerospace domain.
French firms Thales, PowerJet, and Safran provide the avionics package, SaM.146 turbofan engines, and landing gear, respectively, while Venice, Italy-based Superjet International (SJI, Chalet A3) installs the interior. This is to name just a few European vendors involved.
During an SSJ100 presentation at a previous Farnborough Airshow, the European vendors estimated their share in the aircraft at “over 60 percent.” A more recent estimate from SCAC says imported items make up 60 percent of the serial aircraft costs. Given the list-price of $56 million, and with a clear demand in the Russian and Iranian markets for modern passenger jets, it makes economic sense for the Europeans to stay in.
Two months before Farnborough 2018, Sukhoi Civil Aircraft (SCAC) announced a new version of the Superjet with a suffix “R” attached, the SSJ100R. It would differ from the factory standard in having less foreign content, presumably on account of the unavailability of U.S.-made components and those carrying traces of critical American technologies. In addition to replacing the Honeywell auxiliary power unit with a Russian-made unit from Aerosyla, changes would apply to certain hydraulic, electrical, avionics, and interior items. Most of the suitable substitutes to the U.S. components in the Superjet have been validated during flight trials on the Irkut MC-21 next-generation narrowbody jet.
SCAC CEO Alexander Roubstov explained that the reason behind introducing the R version is to reduce the foreign content by 10 to 15 percent. This matches an estimate for the U.S. content. With the latter taken out of the Superjet, SCAC would no longer need Washington’s permit to sell its products to Iranian airlines. Any foreign OEM producing airplanes with American content exceeding 10 percent needs U.S. licensing from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) for sales to Iran. According to U.S. Treasury Secretary Steven Mnuchin, the respective permits for Boeing and Airbus to sell airplanes will be revoked by August, and waivers permitting sales of commercial aircraft parts and services will be canceled.
A month after the SSJ100R announcement, Guillaume Faury of Airbus told the Hamburger Abendblatt newspaper that because of the re-imposed U.S. sanctions, the European manufacturer will not be able to fulfill the deal with Iran Air for 100 new jets, signed in December 2016 in presence of French and Iranian presidents. Also in June, when the first of 80 Boeings ordered was due for delivery to Iran Air, the company’s spokesman said Boeing had lost its license to make sales in Iran and so will not supply any jets to that country. This means that not only the 100-percent government-owned flag carrier, but also collectively-held Iran Aseman Airlines can no longer expect deliveries from the U.S. airframer.
Embraer, Bombardier and even Comac are also exposed to the American laws, because every type in their product lines has double-digit percent of U.S. content. With the Tupolev-204/214 and Ilyushin-96 production limited to the Kremlin’s orders, and deliverable examples of the MC-21 years from being ready for shipment, the Superjet remains the only contemporary passenger jet available anywhere in the world for any worthwhile qualitative procurement by Iranian airlines in the near term.
Although Moscow would love to sell Tehran airplanes for the whole of the $38 billion that the Western makers signed for with the Iranian airlines in 2016-2017, it cannot offer the intended customers suitable airplanes with seating capacity and payload-range capability close to those from the duopoly. In Aeroflot’s two-class configuration, the SSJ100 seats 86 passengers, the figure rising to about 100 for high-density cabins. While Iran does need regional jets in that capacity, the numerical requirement for them is considerably smaller than that for the mainline airliners available today from the U.S. and Europe only.
Ultimately, Iran is likely to order about 100 Superjets; that number should be enough to serve the domestic network of air routes and international flights falling within the type’s operating range. By list prices, such an order would come to $5.6 billion. In April, SCAC signed memorandum of understanding with Iran Airtours (a branch of the flag-carrier operating out of Mashhad) and Iran Aseman Airlines for 40 airplanes altogether, to be delivered in the 2020-2023 timeframe. Quantitatively, it covers 40 percent of the Iranian air transport system’s needs in the given class of aircraft.
Following the government shakeup that took place after the 2017 general election, President Rouhani and his team resumed talks with Moscow on the Superjet and Kamov Ka-226T helicopter with an intent to procure a number of them from Russia and establish local assembly lines. The respective programs are pictured as pure civilian efforts, so that the Russian manufacturers do not expect issues with shipment of the PowerJet SaM.146 turbofans and Turbomeca Arrius 2G1 turboshafts that power the two types. “Should the Western engine-makers forbid us to use their products [on helicopters destined for Iran], we will work so as to equip them with Russian-made substitutes,” said Russian Helicopters CEO Andrei Boginsky. The same view is also applicable to the Superjet, for which Perm-based Aviadvigatel offers a downscaled version of the PD-14 developed for the MC-21, promising a 7-8 percent reduction in fuel burn.
It is not clear yet whether London, Paris, and Berlin will collectively oppose Trump’s policy towards Iran and defend their commercial interests in that country, or succumb to the pressure from across the ocean. “Europe has displayed that it accompanies the U.S. in most sensitive cases,” Iranian leader Ayatollah Khamenei said in late May. If that is the case, Moscow may oblige Tehran with a completely Russian version of the Superjet, dubbed the SSJ75. It would seat 78 passengers in a single class cabin at 32-inches pitch. First flight is planned for 2021, first shipment the following year and full-scale production starting in 2024-2025. Major design changes include a new fully composite wing, giving a 10 percent increase in lift-to-drag ratio.
The SSJ75 would supplement and then replace the original SSJ100 in production, currently running at 34 airframes annually. As of June 2018, 127 aircraft were in operation with governmental structures and six commercial airlines in Russia and three foreign operators. In 10 years since its maiden flight on May 19, 2008, the type performed 275,000 passenger flights lasting over 420,000 flight hours.