Sanctioned Jets Proving a Problem for Service Providers

 - July 5, 2022, 8:00 AM
Jet Aviation is among the service providers that are playing host to Russian private aircraft that were undergoing maintenance in its facilities when sanctions were imposed as a result of the war in Ukraine. The grounded aircraft have left the companies, with many wondering who will be paying bills that continue to mount. (Photo: Jet Aviation)

While the political fallout from Russia’s attack on Ukraine has had a deleterious effect on private aviation, with flights in the region down by 60-70 percent from pre-pandemic levels, it is not just aircraft operators that are being affected but service providers as well.

In a conversation at EBACE in May, David Paddock, president of Jet Aviation, noted that “less than 20” Russian-owned business jets were on its properties undergoing maintenance when the sanctions resulting from Russia’s February invasion were imposed. “We had to immediately stop work on those airplanes,” he told AIN, adding that a completions project for one of the sanctioned Russian individuals was also halted. “The impact on us is a mix of sanctioned customers as well as Russian persons, and we’re restricted obviously from doing business with both of those groups. We have a few hundred Russian customers that we are not touching at all right now.”

Due to U.S. export control restrictions, the company cannot even obtain new parts for those impacted aircraft in most cases. “For example, our sister company Gulfstream will not supply parts for Russian airplanes, either sanctioned or Russian-person controlled, so, therefore, we are not able to install any parts or touch those airplanes, not just in EU or UK or U.S. airspace, but anywhere including places like Dubai and Singapore, so the U.S. export control restriction is global,” explained Paddock.

Those aircraft that were in Jet Aviation’s hangars at the time the sanctions were imposed have been removed and parked on the apron. While some service providers may be turning a blind eye toward the challenging process required to determine the ultimate ownership of the aircraft brought to them, the General Dynamics subsidiary is taking its obligations seriously.

“What we’ve done in the past two months is work through with all of the aviation regulatory authorities with our parent company [and] with the customers,” said Paddock, adding that each case is being handled on a separate basis. The company is also relying upon guidance from its internal and external counsels, as well as compliance resources from the U.S. Commerce and State Departments.

“Some peers in the industry have been accepting basically a blanket waiver from whoever is bringing the airplane to them, saying “we as the maintenance provider are accepting whatever you are saying and we’re not doing any due diligence, we’re just signing and doing the work,” Paddock said. “That’s not the legal advice we’ve been getting.”

Some of the aircraft in Jet Aviation’s care at its facilities in Basel and Geneva, Switzerland, as well as Vienna, Austria, are in the process of being sold. “Either a bank will repossess an airplane or a Russian owner will sell,” explained Paddock. “We’re trying, to the degree that we can, to facilitate a legitimate transaction amongst a Russian seller and a non-Russian buyer, really to address the fact that otherwise, this airplane will sit in our facilities and nobody is paying for rent.”

Under EASA regulations, the service provider would be allowed to do preservation maintenance on the aircraft as they sit, but nothing that would add value to the airplane, yet Switzerland’s Federal Office of Civil Aviation later informed Jet Aviation in writing that any such preservation work on those aircraft at any of its Swiss locations is strictly prohibited. Paddock stated that those aircraft will likely remain grounded for some time to come and that the situation his company is seeing is just a small subset of what the industry is experiencing. “We’re working with EASA, the FAA, and the Swiss authorities on how we’re able to maintain these airplanes in the future,” he said, adding the matter was a topic of discussion during a recent board meeting of the General Aircraft Manufacturers Association for those seeking further clarity.