posted on 03/15/2022 18:55 / updated on 03/15/2022 18:58
With change in law, Russian president tries to circumvent sanctions on the country’s air sector – (Credit: Getty Images)
Russia has implemented a new law that makes it harder for foreign aircraft leasing companies to get their planes back in the face of Western sanctions.
Also called leasing, leasing is a kind of aircraft rental made by airlines, something very common in the market.
The new law will allow foreign jets to be registered in Russia “to ensure the uninterrupted operation of activities in the field of civil aviation”.
Russian airlines have 515 jets leased from abroad worth around US$10 billion.
Foreign owners have until March 28 to recover aircraft leased by Russian companies before the sanctions take effect.
The move comes after Bermuda and Ireland, where nearly all foreign leased planes operating in Russia are registered, said they were suspending airworthiness certificates for those aircraft.
The change in law, signed into law by President Vladimir Putin, seeks to circumvent that sanction by bringing security registration and certification within Russia’s borders and using foreign aircraft to fly domestic routes across the vast country.
Since the February 24 invasion of Ukraine, Western companies have been terminating leases and demanding the return of planes.
Most international air routes out of Russia are not being operated and many countries, including the UK, have banned Russia’s national airline, Aeroflot, from flying in their airspace.
By Theo Leggett, BBC News business correspondent
Hundreds of foreign aircraft remain in Russia. To comply with sanctions, leasing companies are trying to recover them. But that seems highly unlikely.
If Russia controls these aircraft — which are collectively worth billions of dollars — they will be able to continue flying, in Russia and a handful of former Soviet republics at least.
But it is one thing to take aircraft, quite another to keep them operating for any length of time.
Airbus and Boeing cannot supply replacement parts, so when something needs to be replaced, it will have to be taken from another plane or manufactured by a third party.
This has serious security implications. It will also make it virtually impossible to insure these planes outside of Russia. Maintenance is also a concern — many aircraft fly overseas for maintenance.
And when the crisis is over, there will be a huge bill to pay.
If aircraft are not properly maintained, their value will drop. So even if landlords get them back, they will demand compensation.
International aviation is an international business, and you have to follow the rules.
Russia could decide to shrug off the rest of the world now. But one day he will want to return to the club – and the conditions for returning can be very tough.
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