SNC, Turkish Firm Form Joint Venture

[BLACKEAGLE]

Role Model: US-based Sierra Nevada Corp.’s Dornier 328 will be the base model for Turkey’s regional jet, to be built by TurkJet, a joint venture formed by SNC and Turkish company STM.(Photo: Wikimedia Commons)

Editor's Note: This article was changed to correct the name of the joint venture company.

ANKARA and WASHINGTON – A new joint venture between US-based Sierra Nevada Corp. (SNC) and the Turkish defense technology company STM shows Turkey remains committed to expanding its aerospace industrial capabilities.

The two companies announced last week that they are creating TRJet Havacilik Teknolojileri Anonim Şirketi (TRJet),a joint venture company that will build an indigenous dual-use jet for Turkey.

In the June 16 release announcing TRJet's creation, SNC claimed the enterprise will help to open Turkey to world aviation markets. "SNC, together with 328 Support Services GmbH [its Germany-based subsidiary], will bring new modification standards to the sector," according to the release.

TRJet will be based in Ankara, with SNC President Eren Ozmen and CEO Fatih Ozmen — both of Turkish origin, as the news release highlights — among TRJet's board members.

"TRJet will not only be located in-country, but will employ Turkish workers and utilize local subcontractors and vendors, contributing significantly to the region's economy," the release reads.

SNC has been making inroads into the Turkish market. In May, the country selected SNC's Dornier to provide primary base models for its future regional jet program.

Deals like the one with SNC are important not just for the actual projects they spawn, but because of the technology transfer that comes with it, said Michael Blades, an analyst with Frost & Sullivan.

"Turkey is very motivated to establish a robust defense industrial base and increase its capability to export defense products," Blades said.

Over the next two decades, he added, Turkey "assumes they will be able to provide weapons to countries who can't afford US-European stuff, or cannot get the newest things because of [trade restrictions with the US]. Turkey will fill that gap providing good 'second options' for countries that need capabilities."

And while it is not clear what the military aspect of this jet is at the moment, Blades expressed confidence there will be overlap.

"On the surface, this deal highlights commercial interests, but the technology transfer, considering the companies involved, will no doubt bleed over into defense applications," Blades said.

Richard Aboulafia of the Teal Group, Fairfax, Virginia, is skeptical that the program will pan out for Turkey. He notes that about 15 years ago Turkey tried something similar, but never found a real market for regional jets the same size as is being suggested in the new deal.

In fact, Aboulafia said, the only real reason to do this program is a desire by Turkish President Recep Tayyip Erdogan to bolster Turkey's domestic industry. And given the internal turmoil in Turkey over Erdogan's continued governance, that means any program might have a limited lifespan.

"This is what happens with nationalist driven visions of industry — it'll last as long as he does," Aboulafia said.

Some defense analysts in Ankara agree.

"This is a pet project, like many others, of the ruling [Justice and Development, or AKP] party which lost its parliamentary majority in elections," a Turkish analyst said. "A potential government coalition partner [from another political party] that may take over the Defense Ministry may have a totally different view over the viability of the regional jet program."

Turkey's ruling AKP lost its parliamentary majority in polls June 7. It can still form a coalition government if it agrees on political terms with one opposition party, and Prime Minister Ahmet Davutoglu said June 18 that he would be open to coalition negotiations with all of the three opposition parties. If no coalition deal emerges within 45 days after the elections, parliament will be dissolved and early elections called.

"That will mean another period of uncertainty over major programs, civilian or defense," one Turkish procurement official said.

One senior Turkish aerospace industry source remains more optimistic. "There may be delays due to political uncertainty but I believe the regional jet program will mature in the way it has been structured. A lot about the future of the project will depend more on how and by whom the program will be managed."

SNC has experience integrating smaller aircraft for military solutions and would be a logical partner to militarize some of these planes, but their role in the overall TRJet program doesn't make a lot of sense to Aboulafia.

"This is effectively a civil aircraft that might have military applications," he added. "SNC is a military company. Civil aircraft are not what they do."

Davutoglu has said that the regional jet and an indigenous fighter would be in the air by 2023 — the country's centenary. Under the program, Turkey will buy intellectual property rights for the Dornier 328 and Dornier 628 models from SNC.

Under the regional jet program, STM will coordinate all subsystem production work. Designated local subcontractors are Tusas Turkish Aerospace Industries, Tusas Turkish Engine Industries, military electronics specialist Aselsan, military software specialist Havelsan, private aviation companies Alp Havacilik and Kale Havacilik, and THY Teknik, the maintenance and repairs subsidiary of Turkey's national carrier, Turkish Airlines.

All aircraft will be produced in Turkey. After technology transfers, both jet and turboprop engines also will be produced locally.

The program envisages the eventual production of four models: a TRJ-328 jet and TR-328 turboprop, each with 32 seats, and a TRJ-628 jet and TR-628 turboprop, each with 60 to 70 seats. ■
SNC, Turkish Firm Form Joint Venture