Author: Dina Salman, Aircraft Leasing Specialist
Caught Between a Rock and a Hard Place: Foreign Owners of Aircraft Based in Russia
Following Russia’s invasion of Ukraine on the 24th February, there was strong international condemnation of the attack and fresh sanctions from the West.
Aircraft lessors based in the European Union were given a month’s notice to terminate their lease contracts with Russian operators, to comply with EU sanctions which will come into effect on the 28th March 2022.
Almost all Western owned aircraft in Russia are registered offshore, primarily in Bermuda and Ireland. Both registries have revoked airworthiness certificates of these aircraft, citing that they no longer had the ability to oversee the safety of them.
The EU also moved to immediately restrict the provision of insurance and reinsurance to Russian entities from the 26th February, a move adopted by the UK on the 3rd March. In a move widely seen as retaliatory to the upcoming sanctions on leased aircraft, President Putin signed a new law this week. Under the new legislation, if a foreign lessor terminates the lease, hand back of the aircraft will only be allowed with the approval of a Russian government special committee.
Furthermore, the law provides that cancelling the lease will enable the aircraft to be re registered, insured, overseen and operated under Russian civil Aviation rules, and provision will be made to change ownership of the aircraft.
The ramifications are obvious: Western based lessors are caught in an impossible situation, being required to terminate leases to avoid falling foul of sanctions, in the full knowledge that in doing so, their aircraft are surrendered to Russian state control. They face the loss of their assets in Russia for as long as the invasion continues and sanctions remain in place.
Download the full report to read more : Putin Patrols the Skies – New Russian Law Imposed on Foreign Leased Aircraft