On March 15th, authorities in Russia announced that they had allocated about 300 billion rubles (about $3.9 billion) to buy aircraft from foreign leasing companies. The announcement was made by Transport Minister Vitaly Savelyev during an expanded meeting of the State Duma Transport Committee, Russian news agency Interfax reported.
A portion of these funds has already been used by Aeroflot to purchase 10 Boeing 777 long-haul aircraft late last year. The purchase of these aircraft was possible due to the relaxation of sanctions imposed by Western countries since the start of the military operation in Ukraine, the news agency reports. The announcement was made by the European Union, which allowed leasing companies to continue fulfilling aircraft finance leasing contracts made with Russian airlines before February 26, 2022. Aeroflot reported last year that it bought 18 aircraft from foreign lessors: eight long-haul Airbus A330s and the referred 10 Boeing 777s.
We are trying to buy planes from foreign lessors. The government has already allocated about 300 billion rubles.
Committee on Transport and the Development of Transport Infrastructure
The residual value of these aircraft is estimated at $20 billion, according to Savelyev. Financial leasing is a lease agreement whereby the airline pays the full cost of the aircraft for several years, becoming its owner at the end of the period. On the other hand, operational leasing allows the company to pay part of the cost of the aircraft only for the period of operation, returning it to the lessor at the end of the contract.
The Russian government’s measure is aimed at increasing the fleet of Russian airlines, improving the quality and safety of air transport services to meet increasing safety and other requirements.
In September of 2022, state technology company Rostec told Reuters that it wanted to produce 1,000 passenger aircraft by 2030 using locally made parts. The strategy of self-sufficiency in the aviation industry is a departure from the situation before the start of the Ukrainian war, when aircraft purchased from Boeing and Airbus carried 95% of Russian passenger traffic, according to Reuters.
Rostec has announced that it intends to replace imported parts with local ones. “Starting this year, we will not depend on international cooperation with Western countries,” Rostec told Reuters. “Foreign aircraft will leave the fleet. We believe that this process is irreversible and Boeing and Airbus aircraft will never be delivered to Russia.”
Rostec’s optimism contrasts with recent comments by Oleg Vyugin, a former senior Finance Ministry and Central Bank official, who told Reuters that Russia could be in for years of decline in technological development due to sanctions.
According to Business Insider, Russia has tried to counter sanctions by substituting Western imports with those from non-sanctioning countries or seeking options of its own. But success has been limited, analysts at Bruegel, a Brussels-based think tank, said in late March of last year.
“High-tech products are developed using inputs from many countries, but few of them can function without those from the European Union or the United States,” the analysts commented. “As a result, a single economy cannot replicate global network capabilities.”
Russia’s state-owned airline Aeroflot has already begun removing spare parts from operating aircraft due to supply shortages caused by the sanctions, Reuters reported in August 2022.
