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Sanctions May Ground Russia's Major Airlines

Published: August 7, 2014 (Issue # 1823)



  • Dobrolyot had been flying a month before EU sanctions sunk its leasing agreement with an Irish company.
    Photo: Dobrolot.com

The grounding this week of Russia's low-cost airline, Dobrolyot, by European Union sanctions has exposed the vulnerability of Russia's airline industry, which relies on aircraft leased from abroad that can be withdrawn at the push of a pen in Brussels or Washington.

Russian airlines lease 90 percent of their planes from international leasers, meaning any carrier to be blacklisted could lose most of its fleet overnight. Removing that dependence would take time, cost money and likely see Western leasing companies lose out to Asian competitors, industry experts said. As a result, air travel in Russia — already notoriously expensive — could become even less affordable.

"Because of their better fuel economy, most aircraft in the fleets of Russian airlines are Western-made … and these planes are leased by American and European leasing companies," said Andrei Rozhkov, a transport analyst at investment company Metropol. "Technically speaking, all these airlines could be targeted with the same sanctions [as Dobrolyot]," he said.

Dobrolyot, a subsidiary of Aeroflot that began flying in June, was blacklisted by the EU last week for flying to Crimea, the annexation of which by Russia in March sparked outrage in the West.

On Sunday, the company suspended all flights after its leasing contract with Ireland's AWAS for its Boeing-737-800 aircraft was annulled. Lufthansa Technik, the German company that serviced Dobrolyot's planes, also refused to deal with the company.

Dobrolyot said Wednesday it had placed a deposit to buy 16 Boeing 737-800 planes directly from the plane maker, which is not subject to EU sanctions, Interfax reported. The first planes are scheduled to arrive in 2017.

Most of Russia's major airlines fly to Crimea. Aeroflot, S7 Airlines, Uralskiye Avialinii and Red Wings offer regular flights.

Only Red Wings is insulated, as it flies Russian-made Tu-204-100 planes. All other airlines operate either Boeing or Airbus planes acquired through operational leasing.

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ALL ABOUT TOWN

Monday, Oct. 20


Amateur pictures from World War I are on display for only one more day at Rosphoto’s exhibition “On Both Sides,” chronicling the conflict through the eyes of observers on both sides of the trenches. The price of entrance to the exhibition is 100 rubles ($2.50).



Tuesday, Oct. 21


The Environment, Health and Safety Committee of AmCham convenes this morning at 9 a.m. in the organization’s office.


Take the chance to pick the brains of Dmitry V. Krivenok, the deputy director of the Economic Development Agency of the Leningrad region, and Mikhail D. Sergeev, the head of the Investment Projects Department, during the meeting with them this morning hosted by SPIBA. RSVP for the event by emailing office@spiba.ru before Oct. 17 if you wish to attend.


Improve your English at Interactive English, the British Book Center’s series of lessons on vocabulary and grammar in an informal atmosphere. Starting at 6 p.m., each month draws attention to different topics in English, with the topic for this month’s lessons being “visual arts.”



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