EBACE Convention News

Russian business aviation sector in ‘deep shock’

 - May 19, 2022, 12:00 PM
Business aviation traffic at Russian airports has declined 50 to 70 percent since Russia’s invasion of Ukraine in late February, while costs of operation have skyrocketed.

The Russian business aviation sector is going into a tailspin as the ever-tightening Western sanctions over the war in Ukraine cripple the industry. At present, three Russian business aviation charter operators have ceased flying, while a third of private jet owners in the country are selling their aircraft at discounted prices to cut their losses. 

The situation is further exacerbated by bans of Russian-owned business aircraft also being observed in “friendly countries” to Russia, limiting most flights in Russia to domestic-only routes. That’s even if they can fly at all, as Ukraine war-related sanctions prohibit Western companies from refueling, servicing, or providing parts for business aircraft owned by Russians. 

Alexei Butrimov—the CEO of Moscow-based business aircraft broker, maintenance, and management company BJet—said the entire business aviation sector in Russia is under the threat of “actual destruction.” He further explained that transferring business aircraft to the Russian register—prompted by foreign registries canceling the registrations of Russia-owned aircraft—essentially grounds the airplane since maintenance is virtually nonexistent.

This is also due to the almost complete absence of any aftermarket for parts. And even the slim gray market for aircraft parts that does exist requires up to one month for delivery and costs 10 to 20 times more, he said. 

Still, in contrast to commercial aviation, the business aviation sector in Russia was less affected by the problem of returning aircraft to lessors. EBAA previously reported that Russian citizens own fewer than 500 business jets. According to experts, the actual number of aircraft affiliated with owners from Russia is between 600 and 800, of which about 100 are owned by airlines—no more than 10 to 20 percent. 

Meanwhile, business aviation traffic in Russia has decreased by 50 to 70 percent since Russia invaded Ukraine in late February, according to flight activity data from WingX Advance. At the same time, the cost of a flight abroad doubled and within the country, the cost grew by 1.5 times. For example, a business jet charter flight from Moscow to St. Petersburg that cost $25,000 in February now runs about $40,000.

However, some Russian business aviation players still expect to continue operations by looking toward Eastern countries. Regarding aircraft maintenance, these operators are pinning their hopes on such countries as China, India, and Iran.

In addition, many technical centers in Russia have already received certificates for conducting maintenance work in the field of business aviation and expanded the list of work. They are hoping that the supply of components can be arranged from countries that have not joined sanctions against Russia. 

Market players hope that, amid crisis times, Russia’s business elite will need to fly more often, as new problems require their personal presence. That could provide an impetus for business aviation flights within Russia. 

Meanwhile, leading Russian FBOs are preparing for tough times. Oleg Ivanov of UTG Private Aviation—part of the UTG Group and operator of the FBO at Moscow Domodedovo Airport—said his facility is seeing much less business aircraft traffic. However, he told AIN that while the economic effect of the war is “catastrophic,” the group is faring better than other Russian FBOs because it handles both business aircraft and airliners on the field.

“We see a possible decrease in traffic in the coming months as an opportunity for a faster implementation of the project for the reconstruction of the Business Aviation Center in Domodedovo,” Ivanov added. “We have made significant progress during the year, and we are not going to pause the development of infrastructure for business aviation in Domodedovo. [We are] continuing to invest in updating and expanding our FBO, improving service, and introducing new services for customers.”

According to Ivanov, the Russian business aviation market is still in a state of deep shock. He said that for most business aircraft owners and operators, the situation varies depending on state of aircraft registry, restrictions, and other factors.

While Ivanov is somewhat optimistic, industry analysts outside of the country remain more skeptical about the future prospects for business aviation in Russia. In fact, WingX Advance managing director Richard Koe believes that business aviation in Russia will go downhill further, with not much prospect of recovery in the near term.

“Links to the West will be broken, and it will be interesting to see what Turkey and Middle Eastern countries do in terms of sanctions targeting oligarchs,” he told AIN. “The other factor is that Russian-owned aircraft will be starved of maintenance support and may not be able to fly.”