Foreign passenger aircraft lessors canceled Russia’s lease contracts earlier in March and demanded that Russian airlines return almost 500 airplanes on lease, following sanctions that banned the supply of aircraft over Russian full-scale invasion of Ukraine.
March 28 is a deadline for Russia to return hundreds of aircraft leased from the Western lessors, but leasing companies are worried they won’t see the planes, as Moscow’s newly enacted ‘regulations’ claim that it can ‘decide’ their fate unilaterally, including ‘re-registering’ them in Russia and ‘keeping’ them.
“I’m afraid that we are going to witness the largest sort of theft of aircraft in the history of commercial civil aviation,” said an air transport management expert.
Dual registration of planes is forbidden under international rules but, in an unprecedented desperate illegal move, so as not to lose the air fleet, Russia passed a ‘law’ allowing it to ‘move’ foreign-owned aircraft to its domestic registry earlier this week.
According to Russian officials, over 800 aircraft out of a total of 1,367 have already been ‘registered’, and they will be getting ‘airworthiness certificates’ within Russia.
Bermuda and Ireland, where most of the Russian leased planes are registered, have suspended airworthiness certificates which means the aircraft should be grounded immediately. However, according to IBA consultancy, most of the planes are still flying on Russia’s domestic routes, in clear violation of all international civil aviation rules and regulations.
Russian authorities declared that the aircraft, basically stolen by Russia from the Western owners, will stay and operate in Russia until the current lease contracts run out.
78 planes leased to Russian carriers were seized due to sanctions abroad and will be returned to lessors.
According to Russian government officials, Russia will also attempt to buy these aircraft, worth an estimated total of $20 billion. The chief of Russia’s Transport Ministry said this week that Russian airlines are trying to negotiate with lessors to buy the planes, but ‘so far to no avail.’
Western aircraft leasing companies now face years of negotiations with insurers because of the unprecedented nature and scale of losses, due to their aircraft being stolen by Russia.
However, though the total value of the planes is large, the impact on individual leasing firms may not be too great, experts say, as Russian airlines mostly account for less than 10% of leasing firm portfolios.
“It’s not going to cripple these businesses,” a director at Alton Aviation Consultancy, said, noting, however, that the situation “changes the future market potential of Russia.”