September 25, 2020: Antonov, the Ukrainian aircraft manufacturer, rolled out the first Ukrainian manufactured An-178 cargo transport in August 2020. This aircraft contained no Russian components, with American components as substitutes. Antonov found that the American components were not only of better quality but were also cheaper than the Russian ones.

The An-178 was a big deal because Antonov, one of the three main Russian commercial aircraft manufacturers during the Cold War, became a Ukrainian company after the Soviet Union dissolved in 1991 and Ukraine became independent. Throughout the 1990s neither Russia or Ukraine were buying many aircraft. The Soviet Union collapsed in part because it was bankrupt. What commercial aircraft Russian and Ukrainian airlines bought were Western, which everyone agreed were more efficient, comfortable and safer than Soviet era designs. Antonov hoped to change that and came up with new designs similar to the most popular and numerous Western airliners. One of these was the An-148, a competitor for the Boeing 737. Orders were obtained, mainly from Russian airliners and some of the An-148s were to be assembled in Russian plants. The An-178 is the stretched cargo version of the An-148. Most of the components for the An-148 came from Russia and that became a major problem after 2014, when Russia invaded Ukraine and seized Crimea. The invasion failed but Russia is still fighting in eastern Ukraine. This was condemned by most nations and sanctions were imposed on Russia.

Trade between Ukraine and Russia eventually came to a halt. This hurt Russian manufacturers the most because Ukraine could obtain equivalent goods from Western suppliers while Russia could not. It took several years for all these Russia-Ukraine supplier connections to be severed and that hurt production, and the reputation, of the An-148.

The Russian components were part of the problem, as was the sloppy assembly work for the An-148s built in Russia. The An-148 entered service in 2009. Foreign buyers, like Cuba, complained of the poor construction quality and slow delivery of spare parts that had to be purchased from Russian firms at high prices. Production ceased in 2015. Russia was the major customer, buying 27 of 37 aircraft, most for government use.

Antonov believed there was a market for a well-built An-178. Ukraine sought non-Russian components for the An-178 transport version of the An-148 and finally made that work. The An-148 was a twin jet commercial transport that normally carries up to 80 passengers or nine tons of cargo. Max range is 2,100 kilometers. The high-wing design means that the stretched An-178 cargo version can carry up to 15 tons and have a rear door for quickly loading and unloading.

Antonov introduced the An-148 as a competitor for the American Boeing 737. Although Antonov soon had orders for over 200 of the new aircraft, the first operators reported that the An-148 was more expensive to operate than a comparable model of the 737. The 737s had been in service since the 1960s with over 6,000 built. Sensing that competing with the 737, which costs more than 50 percent more, on price alone might not work, Antonov announced a military version of the An-148, the An-178. This was designed to be a cargo aircraft, with a max payload of 15 tons. But that segment of the market is already being served by aircraft like the Western AN-295 and C-27J. The basic problem here is that once mighty Soviet civil aviation industry has been shriveling away since 1991, and has few viable opportunities to make a comeback. Antonov had to overcome the bad reputation of Soviet era aircraft.

The disintegration of the Soviet Union in 1991 not only destroyed centuries of Russian empire building but ruined the Russian civil aviation industry. For decades Soviet commercial aircraft manufacturers had guaranteed customers for their second-rate, compared to Western models, aircraft. Russian and East European airlines had to buy the Russian models, and many poor countries that could not afford Western aircraft accepted the Russian planes as better than nothing. After 1991, the Soviet Union was replaced by a much-diminished Russia and 14 new nations that had been reluctant components of the old empire. No longer was anyone forced to buy second-best Russian airliners anymore. The dissolution deal had whatever Soviet assets were in the new nation belonging to it. Most of the civil aircraft manufacturing facilities were outside of Russia (in Ukraine and Uzbekistan). Of the three major aircraft manufacturing firms, Antonov was headquartered in Ukraine, Ilyushin in Uzbekistan, and only Tupolev in Russia.

Russia managed to persuade, via cash and help with sales, Ilyushin to move a lot of manufacturing back to Russia. Tupolev is being merged with several military aircraft manufacturers, as part of the United Aircraft Corporation. Antonov was in danger of being forced to reconnect with Mother Russia as well, given their inability to design and manufacture aircraft that could compete with AirBus and Boeing, (not to mention many smaller Western firms.

In the 1990s new Russian commercial aircraft designs kept coming up short compared to what the West was offering. It’s not just Boeing and AirBus, but also smaller manufacturers in Europe and the Americas. Even China was entering the commercial aircraft market and is poised to beat the Russian efforts as well. But the Russian government was still determined to pay the price of staying in the market. As long as the subsidies, in the form of cash and government purchases, kept coming, the Russian firms will keep trying.

The Ukrainian situation was different. There were no subsidies or large domestic demand for commercial aircraft. As a result Antonov has gone through bankruptcy and several reorganizations since 1991. Now it is mainly an aircraft maintenance and design operation with a current capability to produce about twelve aircraft a year. That can be expanded and might happen with the An-178. The Ukrainian military has ordered twenty and Peru has ordered “several”. How well these An-178s perform in regular service will determine if Antonov survives as an aircraft manufacturer. The An-178 is cheaper than Western equivalents and designed to be cheaper to maintain and operate. There is a demand for that sort of thing and Russia can no longer support it, especially with the 2014 sanctions still in place. China is the most likely new aircraft producer to grab the old Soviet era market for cheaper, rugged and easier to maintain air transports. Ukraine has an opportunity to grab some of this market and it all depends on the An-178.