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'We have set the bar high for ourselves and we are confident that we will reach our goal.'

Interview with Gennady Orlov, General Director of Private Helicopter Carrier, AZRF resident, Vertical 87

12 may 2023

Last year, Chukotka's first private air carrier joined the AZRF residents. It was the helicopter company Vertical 87, which now operates passenger and cargo services in Russia's easternmost region. The company already has its own fleet and its own site for parking and repairing equipment. Gennady Orlov, General Director of the carrier, told the Arctic Russia portal about further plans for business development, the measures used to support AZRF residents and the growing demand for tourism in Chukotka.

Only a helicopter can take you to that faraway land

- What is your personal Far East history? Why did you decide to do business here, in Chukotka, in the Arctic?

- I see the development and improvement of the place where you grew up and have lived all your life as natural. We know all the problems and 'thin spots' well from the inside, we understand the needs of the region like no one else.

We are not new to Chukotka. Our past activities were in the fishing industry. The company has developed successfully, and much has been done to develop this area. But unfortunately, due to circumstances beyond our control, we had to change our focus. Which, by the way, we do not regret, as this new direction helps address the needs of the region.

Gennady Orlov, General Director of the helicopter company Vertical 87

- Is Chukotka a world apart? How specific is the work in Chukotka, how different from that in other Arctic regions? What do entrepreneurs need to consider before developing business projects?

- Of course, the remoteness of the region, the lack of rail links and the high price of airfares all affect the development of business in Chukotka. Due to this isolation, it is common among residents to refer to the central parts of the country as 'the mainland,' despite the fact that Chukotka Autonomous Area is a peninsula.

Like a bear before hibernation, Chukotka residents and authorities stock up on food during summer navigation, when cargo is delivered by ship, the most affordable and cheapest form of general cargo delivery in Chukotka.

In winter, the prices of goods fly off into space, with pictures of Chukchi price tags strolling all over the country. There are also problems with mail delivery every year, with people not being able to receive their parcels for 2–3 months at a time. And that is only part of the problem. Therefore, ensuring year-round transport accessibility is critical for our district.

- So your current specialisation was an obvious story, a problem that necessarily had to be solved by someone in the region?

- Yes. Understanding the limited resources of large enterprises and a number of conventions that cannot be omitted, the development of small aircraft has proved to be the logical solution to the problem.

Of course, there are companies in the district that are developing small aircraft, but they were established on the basis of existing, outdated equipment. We decided to take a more labour- and financially-consuming route. To set up a business from scratch, adding state-of-the-art technology to our arsenal.

'Movement is fuel'

- The project, as previously reported, was expected to cost more than RUB 178 mn. Has the amount currently changed? Is it private funds from the investor, a subsidy or has a loan been raised?

- So far, the investment has amounted to about RUB 480 mn. Most of the private capital is from the Company's beneficiary and funds raised through the leasing scheme.

- The project included the construction of a hangar, a refuelling station and a parking area. Has this work been completed yet?

- Yes, all the work has already been completed. The hangar is installed and officially commissioned as real estate. The refuelling station has been upgraded and is also ready for use. The temporary small aircraft landing site is paved and ready for operation. It was important for us to ensure the safety of the expensive equipment, so all our energies were directed towards the construction work.

- What is your current fleet?

- Today, these are two AS 350VZe (H125) helicopters and a Sever 3360 snowmobile. One helicopter and snowmobile owned, and one helicopter leased. We were able to purchase the snowmobile thanks to AZRF resident programmes—we were allocated financial support from the county budget to partially offset the amount of the purchase of this additional equipment. In the long term, there could be the talk of expanding the fleet—buying a seaplane, for example—but this is not a matter of the near future.

- Do you plan to buy Russian helicopters?

- I would like to work with domestic manufacturers and purchase the Mi-8. These machines are uniquely suited to our weather conditions and perform at their best. But the pricing policy does not allow for this. The only way out for domestic products is to take a board without a service life, drive it to the factory and get a machine with a service life. This operation is in the plan. Everything will depend on how much demand for small aviation services there will be in the near future.

'There will be growth in tourism!'

- You have had projects in neighbouring regions. Was it exactly helicopter transport? Do you plan to provide services in other regions?

- Together with Granat LLC, which maintains and pilots our flying units, we carried out geological surveys in the Magadan Region, as part of our geological exploration work.

But at the moment, we are focused on the development of small aviation in Chukotka, we need to build a stable operation here. Of course, in the long term, we plan to go further and are open to suggestions, but in a second order.

- Who are your main customers today and which works are most in demand? Probably mostly business travel, such as geological exploration or shuttle services for shift workers?

- Yes, it is mostly subsoil users and we are often approached to transfer specialists or executives. The approval process with the communications company for the installation of telecommunication towers in remote areas is now underway. In addition, there are ad hoc requests for people, equipment and deliveries.

Before the start of the summer season, the number of enquiries from tourists and travel agencies has increased. Here, of course, we have a significant advantage: we do not depend on the regulations of Chukotka airports, and the requirements for a landing site are minimal, so the helicopter can land on almost any more or less flat surface. 

- So you are also prepared to work with private individuals, with ordinary tourists. Do you see prospects in this market, given the logistics of the region?

- The company's management has decided to participate in the 2022 tourism fairs held on the Expocentre platform in Moscow. We have received keen interest both from travellers for whom our region is a curiosity, one of the unconquered peaks, and from organisations with an extensive client base that want to expand their range of services and capabilities.

I am sure there will be an increase in tourist interest in Chukotka! Last summer, despite the start of active operations, we already had experience transporting tourists to Lake Mainitz. The fishermen were impressed with the catch and have already recommended us to their friends to book a trip for this summer.

You know, for all its apparent simplicity—there is no jungle here, no rich flora, no great variety of animals (which cannot be said about birds)—the nature of Chukotka fascinates with its pristine, unspoilt nature.

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