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Last Updated: Wednesday, 22 August 2007, 15:27 GMT 16:27 UK
Iran buys Russian passenger jets
By Steven Eke
Russia analyst, BBC World Service

Iran has signed a deal with Russia to buy five new Tupolev passenger planes.

Russian President Vladimir Putin (left) and Colonel General Alexander Zelin, commander of Russia's Air Force, during the opening ceremony of the MAKS-2007 airshow
President Putin is guest of honour at the MAKS airshow

The deal, announced at the MAKS-2007 international airshow in Moscow, is the single largest sale of Russian passenger planes to a foreign country for many years.

Russia had a powerful aircraft building industry in Soviet times.

But the loss of guaranteed markets in other, formerly Communist countries hit civilian aircraft building hard.

It is now just a shadow of its former self, but the Russian government says it can draw on the experience of the manufacturers of fighter planes and forge new markets.

The bi-annual MAKS airshow outside Moscow provides a great opportunity to project Russia's technological and military might, with new helicopters, fighters and passenger planes performing spectacular aerobatics and roaring past Vladimir Putin.

This year, Russia has showcased four new fighters, from the household names of MiG and Sukhoi.

Russia now equips the airforces of China, India, Malaysia and Venezuela.

Fleet obsolete

The situation in Russian civilian aircraft manufacturing is much more complicated.

Overall production remains far below capacity. Last year, Russia manufactured just 26 civilian aircraft. For comparison, Airbus and Boeing produced more than 250 each.

Yet the Russian Transport Ministry says at least half of the 2,500 passenger planes still in operation in Russia are obsolete and need to be replaced.

Russian military aircraft at the MAKS-2007 airshow
Russia's military jets have been showcased at the airshow

That equates to tens of billions of dollars of new orders over the coming years. And on current form, most of them will go to foreign companies.

This was the driving idea behind the creation of a state-owned corporation, UABC, last year.

It brings together more than 20 separate Russian companies involved in civilian and military aircraft building.

Officials say consolidating capacities like this will eventually enable them to secure a 10% share of the global market for passenger aircraft.

For the time being, however, Russia's leading airlines, including Aeroflot, are ordering new Airbuses and Boeings.

The reason, they say, is that Western planes are quieter, more efficient, and more comfortable than anything domestic manufacturers can offer.

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