The War in Ukraine Affected Russian Civil Aviation in Russia — What the Sector’s Future?

a year ago

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The invasion of Ukraine has destabilized Russia’s civil aviation sector, plunging it into its worst crisis in decades due to harshly targeted Western sanctions.

As the international flights of Russian companies were restricted, the profits, the future of this sector, and the confidence of passengers in the safety of aircraft (from a technical point of view) were highly affected.

The impact of the Russian war on Ukraine quickly began to appear in the aviation sector.

This came after major aircraft manufacturers Boeing and Airbus halted deliveries of new foreign aircraft and spare parts to Moscow, forcing Russian airlines to “dismantle” the grounded planes.

 

Western Ban

Since Russia’s invasion of Ukraine, Canada, the European Union, the United Kingdom, the United States, and many other countries have banned Russian aircraft from being in their airspace, while Moscow has responded by banning 36 countries from flying over it.

The mutual sanctions and air restrictions led to an imbalance in the strength of Russian civil aviation and economic problems for Moscow.

Those sanctions canceled Russian flights to many countries and forced them to change their route, which increased the prices of airline tickets.

Experts and figures in the aviation industry were also warned about aviation safety in terms of the inability to secure spare parts.

President Vladimir Putin publicly scolded during a direct video call with officials on January 13, 2023, Denis Manturov, Minister of Trade and Industry and responsible for overseeing the Russian arms and defense industry and equipment supplies to the forces, because he worked “very slowly” on aircraft contracts in the country.

Manturov, who has accompanied Putin on several trips, tried to justify the delay, explaining that his ministry was about to manufacture Helicopter Engines in Saint Petersburg that had previously been made in Ukraine.

But Putin turned his eyes to Manturov, who also holds the position of deputy prime minister, and told him: “I ask you to speed up this work.”

At the start of the call, Manturov, who has been subject to UK sanctions since December 2022, promised the Russian president that he would provide 175 billion rubles (£2.12 billion) to the state airline Aeroflot for leases of civil and military aircraft for 2023 until 2025.

But Putin interrupted Manturov, telling him: “Denis, you have everything ready, but I know that there are no contracts in companies, as the managers told me, so why play the fool? When will the contracts be signed?”

 

Aviation Shock

The Ukraine war showed the great impact that can be put on the Kremlin’s civil aviation sector and the fear of Western efforts to tighten the grip on Russian economic revenues.

Being aware of the direct impact of Western sanctions on aviation, the Kremlin is moving quickly to preserve the cohesion of this sector, at least to fly locally and towards Moscow’s friendly countries in the foreseeable future.

The shock to the Russian aviation sector after the Ukraine war was intense. Russian charter companies stopped flying, while a third of the country’s private jet owners sold their planes at exceptional prices to reduce their losses.

Sanctions in the aviation sector included banning the export of aircraft, spare parts, or equipment, stopping maintenance of aircraft registered in Russia by Airbus and Boeing, and depriving them of insurance and reinsurance services in London.

Also, Bermuda, the country of registration for many Russian aircraft, has suspended its certification.

In particular, sanctions related to the war in Ukraine prevent Western companies from refueling, maintaining, or providing spare parts for Russian-owned business jets. This concern is due to the almost complete absence of any aftermarket parts.

Even the tiny gray market for aircraft parts that already exist requires long lead times and costs 10 to 20 times more.

On September 9, 2022, Sergey Chemezov, general manager of the Russian state technology company Rostec Corporation, said that Boeing and Airbus planes are unlikely to be delivered to Russia again.

Russian citizens own less than 500 business jets. According to experts, the actual number of planes belonging to owners in Russia ranges between 600 and 800, of which about 100 are owned by international airlines.

Meanwhile, commercial air traffic in Russia has fallen from 70 to 50% since the invasion of Ukraine, and the cost of a trip abroad and within the country has doubled.

For example, a business jet charter flight from Moscow to St. Petersburg that cost $25,000 in February 2022 is now about $40,000.

The loss of Russian airlines exceeded 61 billion rubles only for the first quarter of 2022, in addition to losses of 9 billion rubles in air freight.

 

Scapegoat

The American Institute for the Study of War believes in a report published on January 12, 2023, that Putin’s public criticism of the Russian deputy prime minister is part of an ongoing media campaign in the Kremlin to raise the president’s image as a co-leader in wartime.

Especially since the meeting is being edited and inappropriate footage and statements to the media are deleted, as often happens in most Putin meetings.

According to the institute, it is likely that the Russian president will look for a scapegoat in the struggle for the Russian defense industrial base to address the shortage of equipment and technology.

However, some Russian players in business aviation still expect to continue their operations by looking to the eastern countries, especially for aircraft maintenance, which represents a safety key for this sector, especially after depriving Russian companies of maintenance support.

Operators, though, pin their hopes on countries such as China, India, and Iran to help in this regard, i.e., countries that did not join the bloc of sanctions against Russia.

Imposing the 8th round of European sanctions on October 6, 2022, added a new import ban worth seven billion euros to reduce Russia’s revenues.

The new export restrictions aimed to limit Russia’s ability to develop its defense and security sector.

In particular, it concerns some specific electronic components (which are in Russian weapons) and technical materials used in the aviation sector, as stated by the European Commission.

On May 19, 2022, the British government announced new sanctions on major Russian airlines, including Aeroflot. It prevented them from reselling their allocated parking spots at airports in response to the invasion of Ukraine.

The first Russian airline Aeroflot, as well as Ural Airlines and Rossiya Airlines, will no longer be able to resell the landing sites allocated to them that are no longer allowed to be used at UK airports, estimated at 50 million pounds (59 million euro).

According to London, these international sanctions are pushing Russia into the deepest recession since the fall of the Soviet Union in 1991.

 

‘Nationalization Process’

In late February 2022, the European Union imposed sanctions on the Russian aircraft industry, closing its airspace to Russian aircraft and preventing the supply of spare parts to companies.

On the other hand, since December 2022, the Russian government has extended operating procedures for aircraft chartered or leased from foreign companies for a period of two years.

Russia seized hundreds of foreign planes and authorized them to fly exclusively on domestic routes in response to Western sanctions.

This will allow the Russian airline Aeroflot to maintain its fleet of aircraft until Russian-made Sukhoi Superjet 100 aircraft join this fleet, as announced at the end of December 2022. Despite this, the deficiency cannot be compensated, according to experts.

This is due to the deprivation of spare parts and service for Boeing and Airbus aircraft; the company’s problems have become a symbol of Russia’s isolation.

IBA flight data experts previously estimated in May 2022 that Russian airlines have three months’ supply, after which they may start dismantling aircraft parts.

In this context, from November 18, 2022, about 50 Aeroflot aircraft were idle, so half of them were dismantled for spare parts.

In April 2022, Putin announced that he would allocate approximately $310 million to airlines to help cover expenses from February to July of that year.

Subsequently, in May 2022, Russia passed a law that would allow the country’s airlines to re-register foreign-owned aircraft with national registrations, in a move akin to a “nationalization process,” as experienced observers of the Russian defense sector point out.

Indeed, before Putin signed the bill, airlines were warned not to operate these planes to international destinations.

The Kremlin knows that as Western sanctions continue and with time, there will be fewer and fewer usable Boeing or Airbus aircraft at Russian airports, even those Russian-made aircraft, such as the Sukhoi Superjet, are used for short and medium domestic flights.

However, the Sukhoi Superjet suffers—like others acquired after the war—because a large number of its vital parts are manufactured by Western companies, such as navigation, control, hydraulic systems, and others.

According to what was published by the Moscow Times website on January 10, 2023, 2022 witnessed more than 130 accidents in the aviation sector in Russia, including 28 plane crashes, many of which were due to apparent technical malfunctions.

The second problem in the aviation sector is represented in the layoffs of employees or giving them only a third of their salaries, as others note the influx of experienced pilots abroad. This may lead to a shortage of qualified employees in the future.

Russia lost its place on the 36-member board of the International Civil Aviation Organization (ICAO) after failing to win enough votes from its fellow members.

Also, on September 26, 2022, Russian airlines were excluded from the most famous classification.