To The MAKS!: The Soaring Costs of Moscow’s Premier Airshow

In order to maintain the phrase “first in space,” you have to have a big budget.
18.07.2017
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From 18 to 23 July at the M.M. Gromov aerodrome in the city of Zhukovsky, Moscow region the 13th International Aviation and Space Salon MAKS-2017 will take place and is organized by the state corporation Rostekh and the Ministry of Industry and Trade. Maria Konstantinidi found out how much state companies are willing to spend on participation at the exhibition.


IT IS ONLY SPACE

The MAKS International Aviation and Space Salon will be held July 18-23 in Zhukovsky near Moscow, at the Ramenskoye aerodrome. Aviasalon (owned by Rostekh) conducts the event every odd year. The air show will be attended by 798 companies from 26 countries and 73,270 professional visitors, the presentation of the air show says. According to the official list, 694 companies from 32 countries will participate in MAKS, including 521 participants from the Russian aviation industry.

Any airshow is intended for the conclusion of international contracts; the scale is estimated by the number of participants and the amount of contracts concluded. The world leader, the Paris Air Show (Le Bourget), was attended by 2,381 companies and the amount of contracts reached $150 billion in 2017. In second place, Farnborough in the UK with 1500 participants and contracts for $124 billion in 2016.

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Show at MAKS, photo by aviasalon.com

Russia’s MAKS ranks fourth in the number of participants and also in terms of the number of contracts at $5.3 billion in 2015 (359 billion rubles). However, the number of visitors to MAKS puts it in first place: in 2015 it was visited by 405,000 people (Le Bourget in 2017 was visited by 322,000 people, of which 142,000 were professional participants of the market).

Typically, the air show takes place over six days, with the last three days open to all visitors. The Russian pilot groups "Strizhi" and "Russian Knights" perform at the show to attract visitors. Tickets for the exhibition cost from 400 rubles to 22 thousand rubles.

TERMS OF PARTICIPATION

According to the rules, companies need to pay a 23.5 thousand rubles (without VAT) registration fee. The rent for an exhibition space costs 18-19 thousand rubles per square meter and for unequipped booths (for presentations, press conferences, round tables, as well as negotiations and conclusion of contracts) from 1.9 to 2.7 million rubles, depending on the area. Rental of one place in the parking lot for an aircraft will cost from 5 to 110 thousand rubles. Parking for airplanes is more expensive: for planes, from 45 to 250 thousand rubles, for gas balloons, from 28 to 45 thousand rubles, for thermal balloons, from 30 to 150 thousand rubles, for geostats, 10 thousand rubles.

In 2009, the head of Rostekh, Sergey Chemezov, responded to accusations of inflating prices for participation in the air show: "Rent at MAKS-2009 is indeed slightly higher than at MAKS-2007. But <...> the territory as a whole and the rented premises in particular became much more comfortable, which required additional financial investments from the organizers."

According to him, renting one square meter at MAKS 2009 cost € 260 (about 11.5 thousand rubles at euro rates for July 2009). Chemezov also compared rental prices at air shows of the same level: "Everyone is happy to go to Le Bourget [France] and pay 283 euros per square meter in the pavilion and 132 euros per square meter in the open area. At Farnborough [UK], which people also try not to miss, tenants pay 489 and 139 euros, respectively. "

Now the cost of renting the pavilion has grown by seven thousand rubles and reached € 295 due to depreciation of the ruble against the euro.

ELON MUSK WON’T COME

One of the largest participants in the salon was Roskosmos. According to the state procurement site, the state corporation for space activities spent about 146.1 million rubles for participation in MAKS-2017.

Roskosmos spent 81 million rubles to оrganize the exposition, and the state contract for 34 million rubles was signed for the оrganization of the booth.

In the booth it is necessary to provide a patio for 16 people to monitor the flight program, taking into account various weather conditions (rain, strong wind, heat), a kitchen where to prepare breakfasts, lunch and "business level"receptions for 150 guests and a bar. The exposition itself also provides a staff room with a kitchen and a meeting room. In addition, the company will hire a cook, three drivers, two waiters and a banquet manager.

2.jpg Roskosmos’ exhibition booth at SPIEF-2016, photo by roscosmos.ru

Also, the FSUE Center for the Operation of Ground-Based Space Infrastructure Facilities (a subset of Roskosmos) spent almost 10.8 million rubles on the organization of the exposition.

OAO Glavkosmos (also part of Roskosmos) purchased entrance tickets for 137,000 rubles: 10 tickets for 800 and 900 rubles, 35 BUSINESS tickets for 2,500 rubles and 19 passes for parking for 1680 rubles.

At the exhibition Roskosmos will present the spacecraft modules Kanopus-V, Meteor-M, Lomonosov and Ionosphere, Soyuz carrier rockets, automatic interplanetary stations Luna-24 and Luna-25 and will create an imitation of the lunar surface and show an interactive simulator of a spacecraft landing on the surface of the Moon.

DEFENSE FOR SALE

Recently, Rosoboronexport (a Rostekh sub-entity) reported for the first time on the sale of spacecraft abroad: according to a press release, the company put into orbit 30 such objects for space missions in 14 countries.

One such contract was signed at MAKS-2015 with the Spanish company HISDESAT Servicios Estratégicos S.A. to launch the space satellite PAZ.

This year the company is going to sign more than 10 contracts at the exhibition.

"For Rosoboronexport, participation in the MAKS show is an excellent opportunity to activate the company's marketing and is an important image component. We expect that, following the results of MAKS, we will be able to increase the order portfolio to ensure future deliveries," - said Sergei Ladynin, deputy general director of the company.

At its booth at MAKS-2017 Rosoboronexport will present more than 160 samples of military products primarily for the air force and air defense.

3.jpg Possible exposition plan of Rosoboronexport

Twenty-five million rubles will be spent by Rosoboronexport on MAKS-2017, 2.3 million rubles for renting a booth, 700,000 rubles for renting two electric cars and 20.9 million rubles for renting and equipping an exhibition that includes two kitchens, three negotiation rooms, floristic design, two lounge zones and a certain "levitation zone."

YOUNGER “DAUGHTERS”

At MAKS-2017 many more companies that are members of Rostekhnologii will taken part. All of them have paid to the state corporation for their participation and rent, despite the fact that they belong to it.

For example, JSC Russian Electronics rented an area costing the company 1.4 million rubles. Another 6.3 million rubles went to the arrangement of a negotiation room and catering, 16.8 million rubles for the production of souvenirs, video and multimedia products and arrangement of the exposition, and 706,000 rubles for badges, passes, certificates and stamps in the catalog. The company will also employ two baristas, two dishwashers, two cooks and two waiters for each day of the salon.

Russian electronics was formed by presidential decree in 1997 and is wholly owned by Rostekh. The enterprises produce about 80% of radio components in Russia.


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Head of Rostekh Sergei Chemezov at MAKS-2015, photo by rostec.ru

JSC Concern of Radioelectronic Technologies (CRT) spent almost 34.4 million rubles, of which 29 million rubles was for the lease of 1300 square meters of exhibition area, two 80 sq. m. booths for 4.6 million rubles and almost 590 thousand rubles for passes.

CRT produces radio electronic radio warfare (radio interference) and airborne equipment. Its share of Rostekh equities is only 9.5%, but the concern is fully included in the state corporation.

JSC RT-Techpriemka spent 1.4 million rubles on renting an equipped site at the exhibition. Tekhpriemka is engaged in the management of the quality of Rostekh products. It ensures that the equipment conforms to GOST standards, conducts inspections and controls production.

OLDER “DAUGHTERS”

The only MAKS-2017 contractor is Aviasalon OJSC, through which Rostekh arranged the exhibition. It is with them that all the contracts for participation in the show were concluded. According to the Contour-Focus database, by the end of 2015 (the year of the previous MAKS) Aviasalon OJSC had received 1.6 million rubles of net profit, while the company's revenue amounted to more than 1 billion rubles.

Rostekh conducts all purchases for the exhibition through its other "daughter" RT-Expo. Established in 2010, RT-Expo organizes the state coporation’s stands and platforms at exhibitions and salons. On the state purchases website RT-Expo has placed 10 lots related to MAKS-2017 since the beginning of the year. The company gave Aviasalon about 146 million rubles for the participation of Rostekh and its structures in the show.

Three contracts were for the arrangement of exhibition stands for several companies amounting to 40.6 million rubles and three more contracts were for a total of 59.1 million rubles for the rental of an exhibition space in the stationary pavilion. Another 1.4 million was spent on loading and unloading, the rent of a rigger, three forklifts and the involvement of a freight forwarder. In addition, Rostekh paid 27.5 million rubles to itself for renting an equipped exhibition space and 873.4 thousand rubles for the purchase of tickets. 

Also on the website there is an agreement on the design of the exhibition site of Rosoboronexport for 16.2 million rubles, the technical task of which (including the plan of the pavilion) with small changes repeats the previously described purchases of Rosoboronexport.

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The first contract is between Rosoboronexport and RT-Expo, while the second contract is between RT-Expo and the contractor. Going through RT-Expo, 4 million rubles were added to the contract.

SURPRISE

JSC A.Ya. Bereznyak Rainbow state machine-building design bureau will be presented at MAKS-2017 for less than everyone else. For the "provision of services related to participation in the MAKS-2017 exhibition," the company paid Aviasalon zero rubles zero kopecks. In the agreement card on the site of state procurement the subject of the agreement is classified as "Services in the field of photo and video shooting of events" and "Casino activities."

Design bureau Rainbow was registered in the city of Dubna, Moscow region in 2005. Its authorized capital is 2.8 billion rubles. Its co-founder (33%) is Rosimushchestvo. The company's revenue in 2016 amounted to 6.7 billion rubles with a profit of 343.2 million rubles. During its existence, the company has participated in 18 state purchases, of which it won 16 with a total amount of 58.3 million rubles.

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