Russian President Vladimir Putin has signed a law authorising the seizure of 543 Boeing and Airbus aircraft worth $13bn to support Russia’s own inventory.
The Russian government has justified the law as necessary to secure sufficient collateral for its aviation sector, which has been crippled by sanctions that have impacted its ability to secure UK-based insurance and aircraft parts for maintenance.
Putin’s move this week is expected to further deepen the war between Russia and Ukraine and its relationship with the West. This comes after the EU forced aircraft leasing companies to cancel their contracts with Russian airlines by March 28, requiring them to return the foreign aircraft to their international owners.
Bermuda also revoked the airworthiness of more than 700 leased aircraft in Russia on Saturday night.
However, Russian authorities and airlines have attempted to prevent the return of the aircraft by banning some international flights, with the latest move now to legalise the seizure of the aircraft.
According to Reuters, the jets will be added to the country’s aircraft register and be deployed on domestic routes.
A UK-based data and analytics firm for the commercial insurance and underwriting sector, said a total of 543 Boeing and Airbus aircraft with an estimated market value of $13 billion, would be seized by the Russian government under the new legislation.
Smaller groups of aircraft valued below that figure or at smaller airports may be excluded from the estimate.
According to UK research conglomerate, Russel Group, Russia’s aviation sector has been crippled by the conflict, as the country’s largest flight operator, Aeroflot, has been blocked from European and North American airspace. Russian aviation and space industry companies have also been blocked from accessing British-based insurance or reinsurance services directly or indirectly.
“The nightmare scenario that has kept many of our clients awake at night has now finally happened and it will leave a significant mark on the aviation war market on a par with 9/11,” said Suki Basi, Russell Group managing director.
“We are stepping up our efforts here at Russell to help our clients through this difficult moment, as it is absolutely crucial for good accurate data that can help an aviation underwriter understand and know their exposures better.”
Boeing and Airbus are banned from shipping spare parts to Russia, which could lead to Russian airlines turning to risky alternatives, such as stripping seized planes for parts or buying uncertified parts from China.
Information Courtesy of FTW.