How the Russian aviation will be affected by the war in Ukraine

The war in Ukraine has serious consequences for Russia’s civil aviation. The United Kingdom, the European Union, and Canada have already imposed sanctions. They have banned Russian planes from entering their airspace.

In a statement from February 27 the European Commission President Ursula von der Leyen said: “We are proposing a prohibition on all Russian-owned, Russian registered, or Russian controlled aircraft. These aircraft will no more be able to land in, take off, or overfly the territory of the EU. This will apply to any plane owned, chartered, or otherwise controlled by a Russian legal or natural person.”

Grant Shapпs, Britain’s Secretary of state for transport, said in a tweet on February 24 that he had signed restrictions banning all Russian airlines from entering UK airspace or landing on British soil.

And after the European Union’s ban, Canada’s Transport Minister Omar Alghabra announced February 27 that the same ban would take effect “immediately”. The immediate effect is the restriction of movements of certain individuals and their private jets as well as the civil aviation aircraft.

The imposed sanctions will certainly have a more complex way of affecting the Russian airline industry then what we can see on the surface. Let’s narrow them down here.:

Aircraft Leasing

Very few airlines in the world actually own the aircraft they operate. Instead, they have a small number of aircraft of their own and the rest they take on leasing. They rent them from aircraft leasing companies. This is a common practice. There are many companies around the world that offer leased aircraft, but the largest of all is the Irish-based company AerCap with nearly 2,100 aircraft to operate.

The latest sanctions by the European Union explicitly said that it prohibits the sale, transfer, supply of any aviation equipment to Russian companies including the leasing of aircraft.

The European commission stipulated that “any contract that is found to be in breach with the current sanctions needs to be terminated within the next 30 days” or by March 28, 2022. To what extent this will hurt the Russian aviation industry?

The total number of aircraft operated in the Russian aviation industry are 980, 515 of which are leased. All of these aircraft will likely be affected by the sanctions. AerCap owns 152 of these aircraft with a market value 4.1 Billion dollars or 5% of the total value of what AerCap owns. If the sanctions continue to apply all of these 152 aircraft have to be returned to AerCap by the end of March..

While the lessors pondered these issues, the Russian government took the matter in their own hands and single mindedly decided to appropriate these foreign aircraft by enacting a law in its favor. The news was announced on March 14, 2022 by the official news agency of Russia, TASS.

Legal consequences 

This unprecedented in the history of civil aviation decisions by Russia will exacerbate the relations between Russian airlines and the lessors. There will certainly be lawsuits in an attempt to get the planes out of Russian territory. But the more important question is, what will happen when these sanctions end? Then the airlines will need planes again. And if they now worsen their relationship with the leasing companies, they are unlikely to get planes from them again in the future.

You might ask, is it even legal to hold on to these airplanes from the lessors? Are there any contractual obligations between the airlines and the lessors when it comes to situations like this? It turns out, there are obligations. In the leasing agreements there are specific clauses for sanctions. In case sanctions occur the airlines have to return the aircraft leased to them.

How this is actually going to happen under the current circumstances, how the leasing companies will physically retrieve their aircraft and get them out of Russia to where they are going to park them, that is a separate equation? It is going to be a monumental task as companies have to send over pilots to fly aircraft back, and then these companies have to deal with Russian authorities…

Some might say that if the aircraft are leased from a company not based in the EU or other country imposing sanctions then such aircraft do not have to be returned. But this could also be a problem even though the aircraft will remain with the Russian airlines.

Let’s remember that Russia is being excluded from the global SWIFT banking payment system as being used for settling large payments internationally. So the Russians will have a hard time paying to these foreign companies for just about anything including their leasing payments. And under the new law the aircraft became Russian property and there will be no payments needed. But there is a more sinister repercussion because of the sanctions.

Aircraft maintenance

By not returning the aircraft to the lessors Russia has become a thief by virtue of their own law. Perhaps they hope they can continue to operate the airplanes just the same once they remain in Russia. But here is the problem. How will they maintain them?

Let’s take as an example Aeroflot – the biggest Russian carrier. They have one of their main maintenance stations in Germany. As a result of the sanctions they will not be able to use this station. Thus, bigger and more complex maintenance work will not be done. The consequence is that Aeroflot airplanes will slowly but surely go out of maintenance check and will become unsafe to fly. Of course some repairs or maintenance can be performed in facilities inside Russia. But that brings us to our third main point.

Spare Parts

Current sanctions prohibit the sale of any aviation-related parts. It means that any parts for aircraft engines, equipment and everything else cannot be sold to Russia and this will ultimately affect the entire Russian aviation industry. As a result spare parts will be in short supply or missing. With no spare parts aircraft will not be able to fly.

Can Russians use aircraft manufactured in their country? Sure, they can. They have the Russian modern MC-21. But the MC-21 still uses Pratten Witney W400G jet engines. And these engines are part of the sanctions, too. If the engines require maintenance they won’t be able to acquire the spare parts, or install new engines.

There is also the Russian SukoiSuper Jet 100, but parts of the plane are also made outside of Russia, such as parts of the plane’s engine, which are manufactured by Safron – a French company.

After all, what does all this mean? Is this the beginning of the end of Russian aviation as we know it? The coming months will be critical for the survival of all Russian airlines which got one last nail in the coffin of their demise.

Revoked airworthiness certificates

As an unprecedented measure, the European Aviation Safety Agency (EASA) has revoked the airworthiness certificates of a number of Russian-made aircraft. The new sanctions by the European regulator will also have a serious negative impact on aircraft types that are still in the testing phase, such as the new passenger MC-21, the turboprop IL-114-300, and the Russian-Chinese CR929.

Meanwhile, the head of Rostec – a Russian state-owned defense conglomerate headquartered in Moscow – under which umbrella operate the airline manufacturing companies and their trading partners, said that “currently the priority of Russian industry is to accelerate programs to replace Western alternatives with local ones, which affects key products, systems and technologies.”

At present, however, the vast majority of Russian aviation programs, in both civil and military aviation, rely on a significant share of Western components and systems for which there are still no local alternatives.