British firm to market used bizjets in Russia

 - January 26, 2007, 11:08 AM

UK-based Twinjet has forged an alliance with Russian aerospace export agency Aviaexport to sell used business jets in Russia. While conceding that heavy taxes on the importation of foreign-built aircraft will make the sales task harder, Twinjet managing director John Keeble asserted that long-term prospects for the Russian market are promising.

Twinjet will be looking primarily to market larger business jets such as Challengers, Global Expresses, GIVs and Falcon 900s. Many of these will come from the U.S., where the UK firm already has an “exclusive mandate” agreement with sales group Leading Edge (which until the beginning of this month traded as Wings Aviation International). Aviaexport will be the primary interface with Russian clients and will also handle much of the bureaucracy associated with importing aircraft.

Taxes on foreign-built aircraft remain high, despite concerted efforts by major airliner manufacturers Boeing and Airbus to have them reduced. According to Aviaexport, the import duty is 20 percent of the declared contract value of the aircraft. There is an additional charge of 0.15 percent for customs clearance documentation and 18 percent for value added tax (VAT). Since VAT applies to the total amount, including the first two duties, the total tax rate for each import is almost 42 percent of an aircraft’s value.

Nonetheless, Keeble told AIN that a dearth of high-quality Russian-built business aircraft and the growing wealth of the country’s entrepreneurial class ensure that there is still demand for imported equipment–even at these inflated rates. And there are ways for Russians to circumvent the tax burden, such as by registering and basing their western-built aircraft outside Russia. This is an increasingly feasible option since many wealthy Russians now spend a significant amount of time living outside their homeland.

Under the terms of its agreement with Aviaexport, Twinjet is also now marketing executive-configured versions of Russian jetliners such as the Yakovlev Yak-42 in Africa, as well as Mil Mi-17 helicopters. Its deal with Leading Edge allows it to offer pre-owned U.S. aircraft in both Africa and the Middle East.

Keeble does not expect pre-owned aircraft sales in Russia to start coming fast and furious, but he does expect the market to become an important one in the future. In fact, he has already sold a Hawker to a Russian client this year. He made the deal in April last year, before Twinjet partnered with Aviaexport.