On Monday, President Vladimir Putin signed a law that ordered the seizure of leased planes operated by Russian airlines.
This is a retaliatory move made by Moscow in response to earlier sanctions handed by the US and its European allies. By seizing the planes, foreign leasing companies will now have a harder tie reclaiming their aircraft.
Russian Airlines to Locally Register Seized Planes
Following its invasion of Ukraine, the country faced economic sanctions from US and European countries. These sanctions aimed to cripple Russia’s economy by halting international trade and denying them banking access.
Meanwhile, Russia retaliated by seizing hundreds of commercial leased planes owned by US and European companies. This development presented a devastating blow to the future of the Russian airline industry.
Putin signed a new law that allowed Russian airlines to register the seized aircraft locally. According to a Kremlin statement, this will allow regulators to issue local certificates of airworthiness to each leased plane.
Russian Airlines Keeping The Leased Planes
The new law basically allows Russian airlines to keep the leased aircraft to continue local flights. This basically means that the owners of the leased airplanes will have a harder time reclaiming their aircraft.
Earlier, US and European sanctions included an order for leasing companies to repossess their aircraft by month’s end.
Aircraft companies that lease aircraft to Russia include two of the world’s largest aircraft manufacturers, Boeing and Airbus.
Both companies stopped sending spare parts and maintenance equipment to their Russian airline customers. According to aviation analytics firm Cirium, the country utilizes 305 Airbus jets and 332 Boeing aircraft.
They also operate 83 regional jets coming from companies such as Bombardier, Embraer, and ATR. Only 144 planes were made in Russia.
Cirium estimates that leasing companies own 85% of the foreign-made aircraft. The estimated value of these aircraft is $12.4 billion.
At This Point, Leasing Companies Can’t Reclaim Their Planes Anyway
Even without Putin’s new law, leasing companies have no idea how to get their planes anyway. Current sanctions prohibit Russian airlines from flying to most major international destinations. As a result, they can only operate domestic routes.
At the same time, Russian airlines can use their aircraft sparingly. Without access to spare parts, the leased planes might stay grounded at the first sign of problems.
In addition, these planes won’t have valid certificates of airworthiness that Western destinations require.
Richard Aboulafia, managing director of AeroDynamic Advisory, says the situation remains bleak. “These jets won't be supported with parts and maintenance any longer.
It's a real issue if they lose their certificates of airworthiness,” he said. This can happen “if proper records aren't kept, or especially if they're cannibalized for parts.”
Russia in Trouble If Leased Plane Stop Flying
Russia, with more than twice the landmass of the continental United States, will need all the commercial planes it has. Maintaining an operational airline industry is vital for keeping its economy running.
Charles Lichfield, deputy director of the GeoEconomics Center, explains the importance of the local Russian airlines. “It is an important part of Russia's economy.
They want some basic domestic industry to remain in place. Russians don't fly as much as Americans do. They don't fly to Siberia for vacation,” he added.
However, losing access to 85% of its foreign-built planes would be a crippling blow to the country's economy.
Russian airlines remain a crucial link for industries, especially the domestic sector. Companies need to fly equipment and workers to far-off oilfields and mining sites.
“Aviation is an incredible enabler of economic growth, both domestically and internationally,” said Robert Mann, an airline consultant, and analyst. “Without it, you take it back to an almost agrarian economy, trying to operate with a railroad network.”
Watch the Reuters news video reporting that Russia may refuse to return leased airliners:
What do you think will happen to leased aircraft left in Russian hands? Will aircraft leasing companies eventually get their airplanes back?
Let us know what you think. Share your thoughts in the comments section below.