Page 104 - Russia OUTLOOK 2023

approximately 500 planes in the Russian fleet are leased and Russia has
refused to pay the instalments since March in a move that will cost
plane-makers hundreds of millions of dollars.

Putin’s new law will allow Russian airlines to register in Russia planes leased
from abroad, and came into immediate force on March 13. The bill will create a
new obstacle for leasing firms and lenders, which are seeking to recall the 500
planes currently leased by Russian airlines. Western sanctions imposed after
Russia's invasion of Ukraine gave leasing firms until March 28 to repossess
aircraft worth an estimated $10bn.

Aircraft with dual registration do not comply with international airworthiness
regulations, as responsibility for the certification lies with the country of
registration and is a specialty of Bermuda, The Bell reports.

Without the Bermudan registration, Russian planes are refused permission to
land at most international airports. Even Turkey has banned Russian planes
from flying in its airspace.

Of the planes removed from Bermuda’s registry, 105 belong to the Aeroflot
group of airlines (Aeroflot, Rossiya, Pobeda), followed by Utair (36), Azur Air
(9) and S7 ( 6). All of these are "clean" planes, purchased and paid for outright
by the carriers or owned by Russian lessors, which are not subject to arrest at
foreign airports, whereas the unpaid planes are.

Including the Russian-made Sukhoi Superjet, there are now a total of 300
aircraft in Russia capable of flying abroad. In 2019-2021, on average, from 300
to 500 aircraft of Russian airlines regularly flew abroad.

International air transportation in Russia is now more profitable than domestic,
so airlines will put all planes free from double registration on international
routes. Consequently, rates on domestic routes will rise, and the costs of
companies that were previously forced to carry people abroad on
small-capacity Superjet will decrease, aviation industry experts say, reports
The Bell.

The increase in ticket prices can be compensated by state subsidies, but so far
only RUB25bn has been approved for 2023 against RUB100bn in the current
one.

On the other hand the ticket prices on international routes are now expected to
fall. Carriers predict that the shortage of carrying capacity will remain at least
until 2025, after which retired foreign-made aircraft will be increasingly
replaced by the Russian-made MC-21 and Sukhoi Superjet using Russian
engines.

104 Russia OUTLOOK 2022 www.intellinews.com