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- Flight zone: the Russian Federation has prepared amendments to expand "wet" aircraft leasing
Flight zone: the Russian Federation has prepared amendments to expand "wet" aircraft leasing
The agencies have prepared amendments to the Air Code to extend the mechanism of "wet" leasing, i.e. the transfer of aircraft into operation together with crews, to international air transportation. This was announced by Deputy Minister of Transportation Vladimir Poteshkin. Russia has already legally allowed the use of this mechanism from September 1, 2024, but so far only on domestic routes. Izvestia has analyzed whether Russia may encounter problems when using this mechanism abroad and whether the innovation will affect the cost of tickets.
Nuances of application
Russian airlines may encounter problems when using this mechanism when flying to unfriendly countries, Alexander Borodin, honorary transport worker of the Russian Federation, associate professor of the basic department of state and municipal property management at the Presidential Academy, told Izvestia.
- Although formally both the aircraft and the crew will be non-Russian, but we see how international legislation is ignored today if it concerns Russia," the expert noted.
According to him, "wet" leasing will have an insignificant impact on the price of tickets.
- The price of an air ticket is formed of several main components: airline tariff, taxes and fees, commissions. For the first quarter of 2024, airfare prices increased by 25% compared to the first quarter of last year without any "wet" leasing. The growth of fuel costs also affects, and this is 30-40% of the cost of the flight, - said the expert.
According to his data, of the available air fleet in Russia, the carrying capacity is almost fully utilized. Seat occupancy rate exceeds 90%. This means that the supply does not keep up with the demand.
- It is difficult to assess the implementation of "wet" leasing in Russia now, there is still very little practice, but the world experience is quite good, - says Alexander Borodin.
Earlier Aeroflot proposed to the Ministry of Transport to allow Russian airlines to take airplanes in "wet" leasing (i.e. to rent them together with the crew) from foreign carriers.
Mobile use
"Wet" leasing solves the problem of increasing the number of flights, and its main feature is the transfer of aircraft for lease with crew, maintenance and insurance, explained Ekaterina Avdeeva, professor of the Department of Corporate Economics at the Volga Region Institute of Management of the Presidential Academy.
- Until recently, "wet" leasing was not considered by Russian legislation. On August 8, 2024, the President of the Russian Federation signed a number of amendments to the Air Code concerning this type of leasing, which came into force on September 1, 2024," the expert reminded Izvestia. - This will allow for a more mobile use of the aircraft fleet, especially during seasonal fluctuations in demand. Ensuring the flight readiness of aircraft is the responsibility of lessors, but both parties must have operators' certificates.
According to her, one of the positive aspects of using this tool in air transportation is to ensure stability and preservation of the aircraft fleet, as well as jobs of airlines.
- Lessees will be able to make up for the fleet deficit in a timely manner, which will provide them with an increase in passenger traffic. For the lessor the advantage of using this instrument is the transfer of the main expenses on maintenance of vehicles to the lessee, - said Ekaterina Avdeeva.
Market limitation
Expansion of the "wet" leasing mechanism for international air transportation will improve the technical capabilities of aviation and reduce logistical congestion of temporary corridors. Such an innovation is especially relevant for the Far East, where there are certain difficulties, said Boris Gladkikh, a deputy of the State Duma of the Russian Federation.
- Now there is wear and tear of the operating boards. Also, less capacious and slower units are used. That, taking into account the cost of insurance, staff and fuel, not only increases the cost of the flight for the passenger, but also significantly increases the duration of the flight," the politician told Izvestia.
Amendments to the Air Code are an interesting solution, for example, for Aeroflot in terms of replenishing its fleet. However, the possibilities of "wet" leasing are limited by the capacity of available airplanes on the market. First of all, we are talking about wide-body and medium-body airplanes, which are profitable for airlines because they can fly directly to the Far East.
- In light of the Russian President's decree "On measures for the socio-economic development of the Far East", the introduction of support for housing lending and the distribution of hectares of land for such flights, there are already "flat" fares with a fixed price of air tickets, which does not depend on the date of purchase and the season, - said the deputy. - We continue to develop and support the domestic air service sector with the aim of its overall development and strengthening.
However, he said, it is worth taking into account the general geopolitical situation in the world, which directly affects the cost of consumables for air carriers.
First application
In early November, it became known about the first possible wet leasing deal in Russia. According to media reports, the former charter carrier iFly discussed with Aeroflot the transfer of its aircraft fleet into "wet" leasing. The aircraft in question are three long-range Airbus A330s, which are 13-16 years old. They are dually registered as they are still owned by the US Air Lease Corporation.
In 2023, they were valued at 8-10 billion rubles. At that time, iFly considered the possibility of buying out these airplanes at the expense of the National Welfare Fund (NWF). The air carrier managed to negotiate the terms of the deal with foreign insurers and owners, but it failed to secure financing.
The transfer of three Airbus A330s into "wet" leasing to Aeroflot may bring them closer to being reissued into Russian ownership. As a result, the new owner is likely to be NLC-Finance, subordinate to Rosaviatsia.
Earlier, the expert community noted that to reduce the risks of aircraft fleet deficit in the Russian Federation in the conditions of sanctions and shift of domestic aircraft deliveries could be the creation or involvement of the existing state structure for the purchase of foreign aircraft. However, Fyodor Borisov, chief expert of the GA State Research Institute of Aviation, called the worst way to solve this problem the authorities' discussion of granting the right to foreign airlines to perform cabotage transportation within the Russian Federation (now only Russian companies can fly within the country).
"Izvestia sent a request to the Ministry of Transport, but at the time of publication no response had been received.
