Eugene Gerden

Russian FBOs are hoping for at least a partial recovery in the fourth quarter after a sharp drop in traffic due to Ukraine war-related sanctions imposed on Russia earlier this year.&nbsp;As the Russian business aviation industry was starting to&nbsp;recover&nbsp;after the pandemic, it was shocked in March by tightening sanctions against Russia for its aggression against Ukraine. These sanctions have had a direct effect on the industry.
In March and April, business aircraft flying dropped about 75 percent year-over-year. While traffic began to gradually stabilize in the second quarter, the situation in the sector remains complex and most Russian FBOs continue to feel the pressure of the sanctions.&nbsp;
Business aviation infrastructure in Russia is still represented by specialized terminals only in Moscow and St. Petersburg. Among them are Vnukovo-3, the A-Group terminal in Sheremetyevo,&nbsp;UTG PA Business Aviation Center&nbsp;(Domodedovo), International Business Aviation Center in Ramenskoye, and Pulkovo-3 and A-Group Pulkovo in St. Petersburg.&nbsp;
As a rule, Russian FBOs do not disclose the results of their performance. According to the Russian Federal Air Transport Agency, Vnukovo-3 remains a market leader, accounting for about 30 to 40 percent of all business aviation flights in Russia.&nbsp;
The pandemic and economic fallout from the ongoing military conflict in Ukraine have had a negative effect on the performance of Vnukovo-3 and other Russian FBOs this year. In the case of Vnukovo-3, Russian media reported&nbsp;that its&nbsp;business aviation traffic decreased threefold year-over-year this summer.&nbsp;
As Vitaly Vantsev, a co-owner of Vnukovo-3, said in an interview with Russia's&nbsp;RBC business paper, despite the hobbling sanctions the industry still exists, although the percentage of flights from outside of Russia is insignificant.&nbsp;Prior to March, Vnukovo-3 was not only the most active FBO in Russia but one of the busiest in Europe. According to Vnukovo-3’s data,&nbsp;in the past there were 120 to 130 daily flights to the terminal, but now this figure is estimated at 30 to 40 flights. However, these are mainly domestic flights within Russia.
International business flights are mostly to and from&nbsp;countries friendly to Russia, which include&nbsp;Turkey, United Arab Emirates, Maldives, Thailand, and others in Southeast Asia.
As for Vnukovo-3, 2021 was its most successful in the last six years. The FBO served 17,340 flights and 105,800 thousand passengers—a 27 and 35 percent increase, respectively, compared to 2020.&nbsp;Last year, traffic to international destinations accounted for about 65 percent of flights completed and passengers served at Vnukovo-3. In January, Russian market participants expected that the growth of the business flight market would continue in 2022, albeit at a more modest pace. Those projections were dashed by the international sanctions.
Meanwhile, other Russian FBOs are also suffering from Russia’s isolation. However, they are hoping that the beginning of the holiday period in the coming weeks will allow them to at least partially compensate for their huge losses in the current year.&nbsp;
One such FBO&nbsp;is Domodedovo UTG PA Business Aviation Center, which is operated by the local UTG Group. Daria Korshunova, marketing and communications director for UTG Group,&nbsp;told AIN that despite the current crisis in the industry, the company continues to expand&nbsp;its capacities in accordance with earlier announced plans.&nbsp;
“At the beginning of this year...the first stage of the reconstruction of the passenger terminal of the UTG PA Business Aviation Center in Domodedovo was completed,” she said. “The deadlines for the completion of the next stages are being adjusted due to the transformation of both the business aviation market and the market for building materials and works. We have taken a break to review the procurement plans.”
According to Korshunova, UTG PA Business Aviation Center has certainly felt the decline of traffic volume due to current events. She added that while the situation in the industry as a whole is not easy, the company—like other market players—is adapting to the new realities of the domestic business aviation market, dealing with the price by optimizing costs and other expenditures.
Industry analysts with expertise in the Russian business aviation field are&nbsp;optimistic&nbsp;that the situation will stabilize and the market will gradually recover, but the parameters of this process largely depend on the situation in foreign economic activities and the&nbsp;geopolitical situation in Europe.&nbsp;

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