Russian President Vladimir Putin has approved a new law that will allow foreign leased jets to be registered in Russia.
According to Russian news agency TASS, citing a government document, the move aims to preserve the foreign aircraft fleet within Russia to keep civil aviation operations going.
Sanctions imposed on Russia after its invasion of Ukraine mean lessors have to terminate contracts with Russian airlines by March 28, 2022. It is estimated that over 500 aircraft are leased to Russia airlines by non-Russian entities.
Many aircraft leased to Russian carriers are registered in Bermuda, for safety and regulatory reasons. However, the Bermuda Civil Aviation Authority announced on March 13, 2022, it was suspending all airworthiness certificates for Russian-operated aircraft, effectively grounding the fleet.
If Russia re-registers the planes, then they can keep flying in Russia under Russian safety oversight.
A write-off?
However, the fact remains that the planes belong to the lessors, who are now having to face the prospect of having to write-off these fleets entirely.
While the lessors may well be able to terminate the contracts, getting the planes back is looking like it will not happen, given the new law and other measures. Repossessing aircraft was already made more difficult by some airspace being closed to Russian operators, and lessors not being able to go to Russia to claim the jets.
In addition, Russia had already advised its airlines not to operate to international destinations using leased aircraft, to prevent the chance of the aircraft being seized whilst on the ground in those jurisdictions.
Furthermore, with manufacturers having suspended support and parts for Russian-operated aircraft, there are questions as to how Russia will maintain the aircraft and keep them safely flying. Lessors fear their jets may be stripped for spare parts to keep Russian-owned planes flying.
The situation means that in the future, no aircraft lessor will want to do business with Russian operators again, nor will insurers likely want to cover the costs of Russian lease contracts anyway, experts have predicted.
Consultancy IBA estimates that there are 523 aircraft on lease by non-Russian lessors to operators in Russia. According to IBA, the foreign lessor with the highest number of aircraft on lease is AerCap with 142, followed by SMBC Aviation Capital with 35.
The airline operators that have the most aircraft on lease from non-Russian entities are S7 Airlines with 101 aircraft and Aeroflot with 89 aircraft, noted IBA.