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Georgian Aircraft Company Prepares for Take-Off

Will the ambitious plans of a Georgian aviation factory take to the skies or crash?
By Nino Gerzmava
Irakli Kokhreidze is cheerfully optimistic that the aircraft made at his factory will become a major product for the Georgian economy as well as solving transport problems in the Caucasus region.

“Judge for yourself our six-seater Mercury 003 runs on ordinary fuel, and it’s extremely simple to fly,” said Kokhreidze, director of the Kutaisi aviation factory in western Georgia. “The running costs for an hour’s flight in the lowest-class helicopter are 1,200 [US] dollars in Georgia, but flying a Mercury the same distance costs only 64 dollars.”

Having seen off a major legal challenge, the factory still faces more problems before Kokhreidze’s dream can become a reality.

In theory, a light aircraft is an ideal means of transport in a mountainous country with extremely poor roads. The Mercury, a twin-propeller Russian design able to land on rough airstrips, appears to fit the bill. But so far the Kutaisi plant has turned out only three of them.

Each of the three has had further refinements made by Avtandil Khachapuridze, who used to own the factory. Mercury 001 was bought by Georgian border guards, who have used it to chase smugglers on the Black Sea. But Mercury 002 is still parked on the factory’s airstrip awaiting a buyer.

Kokhreidze said the new model, Mercury 003, was an improved version with quieter engines, maximum speed upgraded to 450 kilometres an hour, and four passenger hatches.

“For the well-off, it will be a marvellous replacement for a car,” said Kokhreidze. “It will cost 360,000 dollars, but it could also open up possibilities as a new form of rapid public transport.”

“The age of the aeroplane has just begun. Soon no one but the really poor will be travelling by car.”

According to Kokhreidze, the factory plans to make ten Mercuries this year, and he has had an enquiry about a possible order of 60 planes for a flight training college in St Petersburg, Russia. He also hopes to sell some to the Georgian defence and agriculture ministries and the postal service.

However, the project has its doubters, and the enormous problems it has had getting even to this early stage illustrates the challenges of launching a major business in modern Georgia.

The Kutaisi Aviation Factory was built as a defence plant in 1940 and used to produce aircraft engines for the Soviet Union. With the political and economic crises that engulfed Georgia in the Nineties, it stopped working.

In 1997, during the first round of privatisation in Georgia, the factory was put up for sale for the symbolic sum of one lari and although aircraft designer Khachapuridze paid 1,000 times that amount, it cost him the equivalent of just 500 dollars.

Khachapuridze promised to start aircraft production, but a conflict broke out between him and the chief engineer at the factory, Tornike Zhizhbaya, who accused him in court of asset stripping and selling off machinery for scrap.

The factory stood idle for two years while 49 court hearings were held in the case. In the end, the case against Khachapuridze was dropped, but despite emerging as the winner, the aggrieved owner retired to Moscow and handed the factory back to the state, although he continued to work on a consultancy basis.

Kokhreidze says no equipment was sold under Khachapuridze’s ownership, except for one test-bench that dated back to before the Second World War, and the proceeds of that were used to pay off salaries and debts. According to Kokhreidze, the factory now has assets worth more than four million lari (2.3 million dollars).

Economist Georgy Sanikidze says Khachapuridze, as a designer, had already surprised many of his critics and might yet be able to realise his dream.

“At first no one thought Khachapuridze’s team would get things off the drawing board and make his idea happen,” said Sanikidze. “A factory that hadn’t functioned for two years was able to produce two aeroplanes, which is very important. An airplane isn’t a sewing machine, you need serious funds to acquire and build it.

However, Sanikidze warned that the key goal should be to sell planes as well as make them. “If the factory board cannot sell their products soon, it will end badly. It looks as though the marketing department is working far less well than the designers. If they’d properly advertised the Mercury 002 which was made back in 2000, it wouldn’t have spent so long standing on the airstrip,” he said.

Another economist, Gia Khukhashvili, said Georgia was a risky business environment in which to embark on a project that was highly ambitious and required “serious technological and intellectual capacity”. Georgia’s tax and regulatory systems still did not encourage investment, he said, adding, “An undesirable investment climate will undermine this kind of project. If there isn’t any political motive for doing so, it’s unlikely anyone will make a serious investment.”

Khukhashvili said that he doubted there was a strong market for light aircraft in the Caucasus given current levels of poverty in the region, so aircraft manufacturers should be looking further afield to Russia and Central Asia.

Nino Gerzmava and Natia Kuprashvili are journalists with Panorama, IWPR’s twice-monthly newspaper published in Georgia and Abkhazia.

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