Sanctions May Ground Russia's Major Airlines
Published: August 7, 2014 (Issue # 1823)
The grounding this week of Russia's low-cost airline, Dobrolyot, by European Union sanctions has exposed the vulnerability of Russia's airline industry, which relies on aircraft leased from abroad that can be withdrawn at the push of a pen in Brussels or Washington.
Russian airlines lease 90 percent of their planes from international leasers, meaning any carrier to be blacklisted could lose most of its fleet overnight. Removing that dependence would take time, cost money and likely see Western leasing companies lose out to Asian competitors, industry experts said. As a result, air travel in Russia — already notoriously expensive — could become even less affordable.
"Because of their better fuel economy, most aircraft in the fleets of Russian airlines are Western-made … and these planes are leased by American and European leasing companies," said Andrei Rozhkov, a transport analyst at investment company Metropol. "Technically speaking, all these airlines could be targeted with the same sanctions [as Dobrolyot]," he said.
Dobrolyot, a subsidiary of Aeroflot that began flying in June, was blacklisted by the EU last week for flying to Crimea, the annexation of which by Russia in March sparked outrage in the West.
On Sunday, the company suspended all flights after its leasing contract with Ireland's AWAS for its Boeing-737-800 aircraft was annulled. Lufthansa Technik, the German company that serviced Dobrolyot's planes, also refused to deal with the company.
Dobrolyot said Wednesday it had placed a deposit to buy 16 Boeing 737-800 planes directly from the plane maker, which is not subject to EU sanctions, Interfax reported. The first planes are scheduled to arrive in 2017.
Most of Russia's major airlines fly to Crimea. Aeroflot, S7 Airlines, Uralskiye Avialinii and Red Wings offer regular flights.
Only Red Wings is insulated, as it flies Russian-made Tu-204-100 planes. All other airlines operate either Boeing or Airbus planes acquired through operational leasing.
Pages:  [2 ]