Russia keeps more than 400 planes belonging to other countries, and completely refuses to return them
Russia is holding 400 passenger planes hostage in the fight against global sanctions. The country's airlines refuse to return aircraft leased from foreign companies. Planes are worth billions Washington Post.
Early last month, a Sri Lankan judiciary entered the country's largest airport, waving a court order to suspend an Aeroflot flight bound for Moscow.
Nearly 200 of the plane's passengers were disembarked and taken to local hotels, their journey disrupted by an Irish company that leased the plane to Aeroflot and is now demanding its return under Western sanctions on Russia.
The incident sparked a diplomatic conflict on a tropical island south of India that is heavily dependent on Russia for tourist revenue and, more recently, for fuel. Firstly, Aeroflot suspended all flights to the island, cutting off the flow of tourists. Then in private conversations, according to a European official familiar with the situation, Moscow also threatened to cut off energy supplies, which would exacerbate an economic crisis that was already causing food and fuel shortages and riots.
A few days later, the court, acting on the government's request, issued a new ruling allowing the plane to fly, and it flew to Russia, where it now flies regularly between Moscow and Kyrgyzstan.
For Sri Lanka, the battle over the Irish-owned airliner was just the outbreak in a long string of events that led to chaos last week when protesters broke into the homes of the president and prime minister, forcing them to pledge to resign and the president to flee. from the country. But for Russia, it was a victory in an uphill battle against a four-month Western sanctions campaign. This victory showed how far Moscow is willing to go to protect its economy, especially in vulnerable countries where it has leverage.
There are signs that sanctions are beginning to take effect. Russian government statistics show that car production fell 96,7 percent in May compared to last year, threatening a sector that employs 600 people. Economists say this reflects a massive collapse in manufacturing as foreign factories close and domestic ones try to import Western components.
The International Monetary Fund predicts that hundreds of foreign companies have ceased operations in Russia, inflation is at 16 percent, and the country's gross domestic product will fall by 8,5 percent this year.
Economists say Russia's long-term outlook remains bleak. “The downside potential is far from exhausted,” Sergei Aleksashenko, a former senior Russian Treasury and central bank official now based in the United States, wrote in a June 30 newsletter.
But some factors continue to work in Russia's favor, including lucrative oil and gas exports that fund the military and social security net. According to the Center for Energy and Clean Air Research, a non-profit organization in Finland, Russia made an estimated $93 billion in fossil fuel export revenues in the first 100 days of the war.
And Moscow is fighting hard where it can to soften the impact of the sanctions. Aviation is one such sector.
To date, Russian airlines have refused to return more than 400 aircraft and a host of aircraft parts they have leased from Western companies, forcing leasing companies to file $10 billion in insurance claims, according to data and research firm Cirium.
“Sanctions could serve the long-term goal of isolating Russia,” said Risto Maeots, chief executive of an aircraft maintenance company in Estonia, which was unable to return several engines from Russia. “But in the short term, they weren’t as painful as they should have been.”
He added that despite all the attention being paid to the seizure of yachts owned by Russian oligarchs, what happens to the planes is much more important.
“What will the West do with the yachts – fish? The Russians can do much more with aircraft,” he said. “So short term, they got a pretty good deal.”
Asked for comment, the Russian embassy in Washington, DC, did not respond to questions about the Sri Lankan case, but referred to a June 8 Foreign Ministry statement that called the sanctions illegal.
“International civil aviation has become an instrument of political and economic pressure. This is nothing more than a flagrant violation of international air law,” spokeswoman Maria Zakharova said at the time, adding that the sanctions “will have a negative impact on flight safety.”
Sri Lanka's Ministry of Foreign Affairs called the incident a commercial dispute and said the government had done everything to ensure it did not escalate into a diplomatic conflict.
The aviation sanctions were aimed at eliminating one of Russia's key vulnerabilities - it depends on Boeing and Airbus aircraft manufactured abroad and owned by Western leasing companies. Of the 968 aircraft in the Russian commercial fleet on the eve of the war in Ukraine, 515 belonged to non-Russian leasing companies, according to Rob Morris, head of global consulting at Cirium.
Even domestically produced aircraft such as the Sukhoi Superjet, a regional jet, and the Irkut MC-21, designed to compete with the Airbus A320 and Boeing 737, use engines, avionics and software from the US and Europe. A Russian state-owned company is trying to develop a fully domestic engine for the MS-21, but analysts say it will take time.
The sanctions required Western companies to end leases and recall aircraft. And an unprecedented set of export controls imposed by a coalition of 37 countries in Europe, North America and Asia also banned companies from selling new aircraft, parts or software to Russia, servicing aircraft operated in Russia, or providing them with online software updates. Even the refueling of a Boeing aircraft leased by a Russian company was prohibited.
But in March, Russian President Vladimir Putin delayed those problems a little by signing a law allowing airlines to use foreign aircraft for domestic flights. So far, Western companies have returned only about 80 of the 515 aircraft they have leased to Russia, according to Cirium.
“The lessor community as a whole has come to terms with the fact that most of the aircraft they host in Russia will not be seized,” said Mike Stengel, a Michigan-based consultant with AeroDynamic Advisory.
The Irish company, the world's largest commercial aircraft lessor, says it alone has more than 100 aircraft stranded in Russia for which it has filed insurance claims for $3,5 billion.
According to court documents in Sri Lanka, AerCap wrote to Aeroflot demanding the return of the Airbus A330-300 two days after Russia's invasion of Ukraine in February. Five more letters followed by mid-April, but Aeroflot continued to use the $17,3 million jet to and from Sri Lanka, providing the near-bankrupt country with a rare source of income.
When AerCap won a court order to seize the aircraft on June 2, Aeroflot protested by canceling all of its flights to the country and saying Sri Lanka had given Russia a "state guarantee" that its aircraft could enter and depart unhindered. The Moscow Foreign Ministry warned the Ambassador of Sri Lanka about the "negative impact" on bilateral relations.
Among Moscow's threats, according to a European official, was cutting off energy supplies. They proved decisive in at least one case in late May, when a shipment of Russian oil allowed Sri Lanka's only refinery to restart for the first time in more than two months, according to Bloomberg News.
In an interview with a local newspaper published on June 5, Sri Lanka's Justice Minister said he had instructed the Attorney General to "deal with it because there are consequences beyond the law, our country could suffer because of such orders."
The next day, Sri Lankan government lawyers representing the state-run airport joined Aeroflot in petitioning the court to overturn the flight ban. The court agreed, stating that the ban had been improperly served and the plane immediately took off for Moscow.
Last week, a month after the plane took off from Sri Lanka, President Gotabaya Rajapaksa tweeted about a phone call with Putin.
“After thanking him for all his support, I have requested an offer of credit support to import fuel to #lka to overcome the current economic problems,” he tweeted, using the acronym Sri Lanka. .
AerCap is not the only leasing company affected. Maeots, chief executive of Estonian company Magnetic MRO, said he had four Boeing engines leased to a Russian airline before the invasion. With the introduction of European export controls, he had a month to return them. The Russian airline simply refused to return them. “My assets are still there,” he said.
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Even if the companies eventually get their planes back, that's not the end of their worries, said Jason Dickstein, general counsel for the Aviation Suppliers Association, a US group that represents aircraft parts distributors. Since Russia has given its domestic companies permission to manufacture aircraft parts, it is likely that the planes will contain parts that have not been thoroughly tested by Western agencies.
“Leasing companies are afraid that if they ever get their planes back, they won't be able to use them because they won't be able to check their airworthiness,” he said.
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