Russia being asked to Legalize "Wet Leasing" by their airlines.

 I have been super busy with Overtime and have been unable to blog, sleeping is been more my interest since returning from Florida.

The War in the Ukraine has raised havoc with the Russian Commercial Aviation Industry, and they have bent the rules like a pretzel trying to keep flying.

Credit: Sipa US/Alamy Live News

Russia’s two largest airline groups—government-controlled Aeroflot Group and privately owned S7 Airlines—are calling on Moscow to legalize wet leasing in the country.

Wet leasing—when one airline provides an aircraft with crew, maintenance and insurance to another airline, which pays by hours operated—is prohibited in Russia. 

“An airline can’t use an aircraft of another carrier for its flight now unless it has a codeshare agreement for this particular route,” Fyodor Borisov, a senior expert at the Institute of Transport Economics and Transport Policy Studies at Moscow’s HSE University, tells Aviation Week.

Russia’s Federal Air Transport Agency, or Rosaviatsiya, banned wet leasing at one time because it misinterpreted ICAO recommendations on safety threats in operational leasing, of which wet leasing is a variant, Borisov says. “But the ICAO document explicitly states that, given the liberalization in the aviation transport sector, the volumes of operational leasing will increase, and this should be taken into account when developing national requirements,” Borisov continues. To legalize wet leasing, amendments would need to be made to existing federal aviation regulations.

Speaking at the St. Petersburg International Legal Forum (SPBILF 2023) earlier in May, Anna Khomyakova, the head of Aeroflot’s legal department, advocated in favor of legalizing wet leasing. She argued it could open up options to carriers which have taken financial hits due to external factors, such as Western sanctions and the pandemic. Wet leasing aircraft out would help maintain fleets and workforce, providing stability for a certain period due to a guaranteed flow of lease payments, she said. 

“There is [also] an opportunity for the lessee to make up for the shortage of the aircraft [in its] fleet when new destinations appear and passenger traffic grows,” Khomyakova added.

Maxim Astafiev, deputy general director for legal support of the S7 group, backed rival Aeroflot’s position. “Today this form of contractual relations is in high demand,” Astafiev says.

Borisov says both Aeroflot and S7 would benefit from the legalization of wet leasing as it would allow them to redistribute aircraft more freely between their AOCs, which they are currently doing on dry lease—minus crew. 

In the event of legalization, aircraft could be wet leased outside of airline groups as well, which could mitigate against the gradually shrinking number of airworthy aircraft within Russia due to the shortage of spare parts and maintenance services. Despite the problems the country’s airlines are contending with, the Russian government expects carriers to maintain services and increase passenger traffic by 6%, up to 101.2 million people, in 2023.

As Russian airlines struggle to maintain their fleets, “there is a risk that more countries, including such popular destinations with Russian leisure and business travelers like Turkey and the UAE, may not allow Russian operators’ flights into their airspace due to the unknown airworthiness condition of their aircraft,” warns Seattle-based aviation consultant Boris Rybak. A recent white paper from the Flight Safety Foundation (FSF) called on states not to allow Russian flights into their airspace if they could not provide adequate safety oversight of Russian-operated aircraft. 

The Russian government is working to expand the country’s international air service beyond the 22 countries where Russian airlines can currently fly to, and in May opened up service to Georgia. Further expansion is limited as long as airspace over Europe, the U.S. and Canada remains closed to Russian carriers, while the use of Russian-operated commercial aircraft outside the country is restricted either by western sanctions or because of their dual registration.

Legalizing wet leasing could help Russian carriers keep international operations, Rybak suggests. Wet leasing has been used in the past by other nations placed under sanctions or which have experienced airworthiness problems. Iran used to operate Tu-154 and Il-62 passenger aircraft wet leased from Russia and other post-Soviet states until the end of the 2000s. And in Cuba, Cubana de Aviacion still attracts foreign aircraft under wet lease contracts to operate international flights when it runs out of airworthy airliners.

However, the sources of wet leased aircraft for Russia are particularly limited. A European leasing expert tells Aviation Week that European companies would not risk providing their aircraft to Russian operators due to the risk of secondary sanctions. “Everything which involves Russian money is toxic,” he says. 

Rybak says the aircraft needed for Russian international services are likely to be wet leased from friendly states with proven airworthiness. Relationships like this have already formed on the maintenance side. In April, Aeroflot sent one of its Airbus A330-300 widebody airliners to Iran for technical maintenance for the first time