Recent Russian government changes to rules governing the use of business aircraft are seriously disrupting charter flight availability and the ability of foreign operators to fly into and within the country. An amendment to the existing NR 527 regulations introduced in May appears to be intended to induce operators to register their aircraft in Russia. The regulatory changes and more aggressive enforcement of customs rules appear to be a concerted effort to force owners and operators to register their aircraft in Russia.

Today, the majority of business aircraft regularly operating within Russia are registered in other countries, due to high rates on customs duties on imported aircraft and the complexity of adding them to the national registry. Since there are very few Russian-made aircraft suitable for executive charter services, most aircraft are supplied by foreign manufacturers. Accordingly, the new restrictions have significantly limited the available supply of aircraft for charter.

A Western executive charter broker active in the Russian market, speaking with AIN on condition of anonymity, reported that customers now have a very limited choice of aircraft, with many of those legally available being unsuitable to trip requirements. “There is almost no choice at the moment and some operators have had to stop making charter flights in Russia,” he commented.

When NR 527 was introduced on April 28, 2018, it did not have much impact on the private charter sector. However, amendment 652 appears to have shut down any latitude that operators previously had to provide charter services. The amendment was introduced on May 24, took effect on June 21 and is backed by supplement 14/19 of Russia’s Aeronautical Information Publications (AIP).

The Russian United Business Aviation Association (RUBAA) immediately protested the new amendment to the Kremlin’s deputy transportation minister Alexander Yurchik. The industry group proposed changes, but the minister appears not to have responded since, as of mid-October, the amendment was still in place, according to the Russian government’s legislative website.

'Non-objection' Approval Required

RUBAA, under the leadership of executive director Anna Serezhkina, is pushing authorities to abandon the amendment’s controversial requirement for foreign aircraft operators to seek written “non-objection” approval from Russian competitors for any proposed one-off charter booking into, from or within Russia. According to NR 527, all international charter flights in Russian airspace may only be conducted with approval from the Rosaviatsiya federal air transport agency. All foreign operators must fill in an application form (available via the Russian AIPs) and attach full details of aircraft registration, airworthiness certificates, insurance, crew members, and availability of slots confirmed by airport administrations.

At face value, NR 527 does not appear to impact private flights being made by aircraft owners in their own aircraft, although these flights do require an approval process that can take two or three hours. However, according to the aforementioned charter broker, the definition of a private flight in Russia can be obscured by complex aircraft ownership structures.

For would-be charter operations with aircraft having fewer than 20 passenger seats, foreign companies are now required to file their “non-objection” applications five days prior to the planned flight and send these to a defined list of the following eight Russian operators: Aviaservis, AviaTIS, GazProm Avia, Jet Air Group, Meridian, RusJet, Sirius Aero, and Tulpar Air. The application must include full information covering the date of the flight, departure and destination airports (with any en-route stops), the aircraft type and registration, a full description of passengers and cargo to be carried, and all associated contact information (including the customers’ nationalities and place of residence).

If none of the eight operators object within five days, Rosaviatsiya may accept the application. However, the agency reserves the right to subsequently block the flight with just three hours’ notice ahead of the planned departure time.

According to Russian operators approached by AIN, there is now high demand for charter flights in the relatively small number of Russia-registered aircraft, since these are now the only types available on short notice and without significant paperwork having to be completed. About half of the 50 or so business aircraft carrying Russia’s RA tail registrations are available for charter today.

Rosaviatsia officials have insisted that the non-objection notification process is currently used in many countries of the world, including such mature markets such as France and Germany. However, they have acknowledged that the deadline for approval should be significantly shorter than five business days, as in the majority of the European Union states it usually takes only several hours. 

New Customs Enforcement

Making the situation worse is what appears to be a new government initiative to enforce customs regulations covering aircraft imported into Russia. In March and September 2019, respectively, local operators Sphere Jet and Sirius Aero were charged with non-payment of import taxes. In the case of Sphere Jet, it did not pay just over $10 million in taxes due on a Bombardier Challenger 300, an Embraer Legacy 650, and a Gulfstream G150 and a G450. The company has ceased charter flights for now, but it is still running its FBO at Moscow’s Domodedovo Airport.  

Sirius is facing charges for non-payment of import taxes on four Embraer EMB 135s and 145s, four Hawker 750s, as well as two 850XPs and a 1000. For now, it is only able to operate its Bombardier Challenger 850 and a Russian-made Yakovlev Yak-42D jet.

Although the recent customs enforcement activities are not directly linked to the NR 527 issue, they have had the effect of further diminishing the fleet of business jets in Russia that are available for charter. This increases dependence on a limited stock of converted Soviet-era airliners. Russian manufacturer Superjet is offering its SJ-100 twinjet for VIP conversion but has yet to make available the additional fuel tanks needed to provided satisfactory range for this market.

“All this is causing a big turmoil in our sector, and this has been the case for several months now,” the head of a Russian air taxi company told AIN on condition of anonymity.

The European Business Aviation Association (EBAA) has supported demands by RUBAA for Russian authorities to moderate or reverse the regulatory changes. It has warned of possible reciprocal action that would require Russian operators to seek non-objection approvals from hundreds of European operators.

However, the path to reform is far from straightforward, since Amendment 652 was personally signed by Russian Prime Minister Dmitry Medvedev and would require his personal intervention to reverse it. Rosaviatsiya has no authority to even simplify the process for the new requirements.

Russian business aviation executives have been reluctant to speak on the record about their objections to the new rules and enforcement activity for fear of attracting unwelcome attention from officials. But some have indicated to AIN that Amendment 652 may be a temporary, tactical measure on the part of the Kremlin to drive a wider campaign to force business jet owners to register their equipment in Russia.

Putin Pushes For Russian Registration

In an apparent carrot-and-stick move on September 30, Russian President Vladimir Putin signed a decree lifting a requirement for Russian individuals and companies to pay VAT tax on newly acquired aircraft and engines, as long as these go straight onto the Russian registry. Aircraft registered in Russia also benefit from lower airport and air navigation charges.

Russia has a number of FAR Part 145-certified centers qualified to do maintenance on foreign-made aircraft and to issue all necessary documents in both Russian and English. This, in theory, makes it easier for local operators to buy and sell Western-made business jets.

However, according to reports from within Russia, it is becoming hard to source spares and support services from Western suppliers who are nervous about the possible legal ramifications of sanctions legislation.

On some levels, Russian laws covering the placement of imported aircraft on the national register are straightforward and can be arranged through lease or management arrangements with a local operator, even for aircraft owned by foreigners. But one local operator explained to AIN that the full array of aviation and customs restrictions can still prove daunting overall, such as the headaches associated with adding a new pilot to an air operator’s certificate or removing former personnel from the records—processes that he said can take many months. “These may look like small things, but these small things spoil the whole picture. Should these [issues] be removed, many more owners would place their aircraft into Russian register,” he claimed.

Is a Downturn Coming?

Some in the Russian business aviation community take the view that government officials may have initiated regulatory changes in a bid to protect the domestic industry from an anticipated downturn. The business climate in Russia is generally worsening and some local experts are predicting a decline in business aircraft activity in Russian airspace of as much as 30 to 40 percent over the next few years.

However, statistics provided to AIN by specialist data group WingX Advance show that during the first eight months of 2019, traffic levels in Russian airspace generally remained relatively stable. The overall year-to-date trend for Russia through the end of August 2019 was a decline in flights of 4.9 percent. However, August itself showed growth of around 4 percent and the figures for June and July may have been skewed by unfavorable comparison with the same months in 2018 when traffic was significantly boosted by the FIFA World Cup soccer tournament that Russia hosted.

One-third of the just-over 15,000 flights in Russian airspace in the first eight months of 2019 were entirely domestic, and this number increased by 173 to 5,286. Perhaps indicative of declining business fortunes and political tensions, flights to western Europe appeared to have declined across the board, with a 25 percent drop to the UK, 17 percent to France and between 9 and 11 percent to Germany, Switzerland, and Austria. Once popular destinations such as Nice on France’s Côte d’Azur have seen 135 fewer flights so far this year, but so too has the Russian Black Sea resort of Sochi.

According to various market assessments, the overall Russian business jet fleet is estimated at 800 aircraft with a value of $3 billion. Of these, about 600 have Russian ownership but are registered in foreign jurisdictions. The remaining 200 jets are owned by foreign citizens and are registered in foreign jurisdictions.