Russian president Putin signs new law to seize foreign aircraft and use them for domestic routes

Russian President Vladimir Putin signed a law on Monday to make it possible for Russian airlines to keep (seize) their foreign aircraft fleet and give the airlines the opportunity to operate them on domestic routes. 

Aircraft leasing companies and foreign owners have until 28 March to repossess their aircraft from Russian airlines before sanctions kick in. The new law makes it much more difficult for lessors to repossess the roughly 515 aircraft, valued $10 billion.

On 11 March, Russia already entered around 180 aircraft in the Russian state register of civil aircraft since the end of February.

The move comes after the Bermuda Civil Aviation Authority [BCAA] suspended all airworthiness certificates of Russian aircraft two days ago (Sunday 13 March). Many Russian airlines entered their aircraft (Airbus, Boeing, …) in the Bermuda Registry (VP-B** and VQ-B**) in order to have them accepted on airports worldwide.

“The law is aimed at preserving the foreign aircraft fleet with Russian operators for purposes of smooth operation of civil aviation as part of anti-sanction measures,” an explanatory note on the new law said.

Since Russia invaded Ukraine on 24 February, many Western aircraft leasing companies have terminated contracts with Russian airlines and subsequently asked the aircraft to be returned to the lessor.

Russia’s national airline Aeroflot announced on Saturday 5 March the suspension of its international flights from 8 March, after Russia was hit hard by Western sanctions in connection with Ukraine but added that domestic routes and connections with Belarus, one of the rare countries supporting the Russian invasion of Ukraine, would be maintained.

Analysis: airlines in Russia will be able to continue flying their Airbus and Boeing on domestic routes and some other former Soviet republics for a while. Airbus and Boeing are not allowed to provide spare parts due to the imposed sanctions. Spare parts will be taken from other aircraft, or be manufactured by a third party. A reason for safety concerns.

Another worry for aircraft leasing companies is that the value of the aircraft will drop significantly if not properly maintained.