On 1 September 2024, provisions of the Russian Air Code came into force, according to which airlines will be able to lease their aircraft to other carriers together with crews – the wet leasing regime. The federal law on introducing relevant amendments to the Air Code was signed by President Vladimir Putin on 8 August.
‘Under a contract of lease (time charter) of a civil aircraft with crew, one party (the lessor) provides the other party (the lessee) with a civil aircraft for a fee and for a certain period of time for use, as well as renders the services of crew members for domestic air transport of passengers, baggage, cargo and mail,’ the new version of Article 104 of the Air Code of the Russian Federation says.
Flight and cabin crew members remain employees of the lessor. It also retains all salary payment obligations. In addition, the lessor provides all other expenses, in particular for fuel, maintaining the aircraft’s airworthiness and its maintenance.
Such leasing terms will allow airlines to respond quickly to changes in demand and open new destinations without having to make significant investments in their own fleet and personnel.
The new amendments to the Air Code allow the use of chartered aircraft on wet leasing terms only on domestic airlines. But Aeroflot has already come out with a proposal to the Ministry of Transport to allow airlines to lease aircraft from friendly countries. During the Eastern Economic Forum EEF-2024, Aeroflot CEO Sergei Alexandrovsky announced plans to take foreign aircraft on wet leasing, and to re-lease old and new Superjets to other companies. The Ministry of Transport is discussing this initiative. According to the head of the ministry Roman Starovoit, the international scheme can be implemented according to the same principles as in the country, but there is still to be a detailed elaboration of the regulation.
Let’s take a closer look at how, in the conditions of sanctions restrictions, shortage of flight and cabin crews, delays in the start of domestic equipment deliveries, the need to exempt imported aircraft from double registration and at the same time to increase passenger traffic, wet leasing can help Russian airlines to carry out their operations in the next 5-7 years and achieve the target of 126.8 million passengers in 2030.
Dual registration of foreign-made aircraft
One of the serious problems faced by Russian airlines is the exemption from dual registration of foreign aircraft. Many aircraft in service in Russia were registered in registries in Ireland and Bermuda. The process of exemption from dual registration is complex and requires considerable time and resources.
For example, on 5 September in Vladivostok at EEF-2024, Sergei Alexandrovsky said that to complete Aeroflot Group’s transactions on all 133 unsettled aircraft with dual registration, about 350 billion rubles is needed. According to Alexandrovsky, the issue of financing is at the stage of discussion and agreement, the most likely being the first to settle the dispute over 36 aircraft with Chinese lessors.
To cover the cost of the insurance settlement, the Ministry of Transport has requested the allocation of funds from the National Welfare Fund in the amount of 295bn rubles, most of which should cover Aeroflot’s needs, but many other Russian airlines also have dual-registered aircraft that are not allowed to fly outside Russia, even in friendly and neutral countries. The aviation authorities of such countries have the right to consider the legal status of dual-registered aircraft of Russian airlines uncertain.
According to the Chicago Convention of the International Civil Aviation Organisation (ICAO), which is a specialised agency of the United Nations, the operation of aircraft with dual registration is not allowed. They can be arrested, prohibited from overflight and landing, and denied maintenance and refuelling.
Shortage of pilots and flight attendants
In the coming years, Russian civil aviation may face a serious shortage of pilots. The main reason is their departure abroad, where higher salaries and better working conditions are offered. Miroslav Boychuk, president of the Russian Flight Staff Trade Union, told the Public News Service about this.
According to him, before the pandemic, the salary of pilots in Russia in leading airlines was about 70% of the world average, now it does not even reach 40%. If nothing is done, i.e., if salaries are not raised, the shortage of pilots will have a negative impact on the aviation industry as early as 2026-2027. ‘They are going abroad. This is a fact, and it must be reckoned with,’ said Miroslav Boychuk.
But in Aeroflot the shortage of co-pilots is already affecting the regularity of flights. So on June 29 and 30 of this year in Sheremetyevo about 330 flights of the carrier were delayed for departure and arrival, and more than 20 – and cancelled altogether. The reason was given as a shortage of crews. The company’s management had to redistribute employees from later flights to earlier ones, sometimes crews boarded flights after passengers had boarded. By the end of the month, the majority of employees had exhausted their 90-hour flight time over three decades. The additional workload led to an increase in sick leave and layoffs among flight attendants, further exacerbating the staff shortage.
In addition, Aeroflot’s co-pilots complain about low career prospects; they have little chance of becoming an aircraft commander. If a co-pilot does not sign a document agreeing to be based not only at Sheremetyevo, but also at other airports, which excludes salary increments, or is not prepared to work overtime, he is not considered for promotion due to disloyalty.
Not only Aeroflot has staffing problems, but also its subsidiary Rossiya, whose flight attendants complain of low wages, difficult working conditions and overwork. A shuttle service between Moscow and St Petersburg was launched in early summer 2024. The frequency of flights from Sheremetyevo to Pulkovo and back is 15 minutes, and from Vnukovo to Pulkovo and back – 30 minutes. The total number of shuttle flights reaches 70 per day. To ensure a high frequency of flights, many flight attendants have to fly the route 3-4 times every day with minimal staff and rest. Often flights Moscow – St. Petersburg – Moscow are operated by one female flight attendant with a full trolley for 75 passengers or working alone on flights lasting 2-3 hours.
If employees of the flagship carrier and its subsidiaries complain about working conditions, it is logical to assume that the situation is not much different in other airlines. The shortage of pilots and flight attendants leads to flight cancellations, deterioration of passenger service quality and does not meet the regulatory requirements for the number of crew members to ensure flight safety. To solve the problem, it is necessary to improve labour conditions, increase salaries, provide benefits and social guarantees to airline employees. It is impossible to solve these issues overnight, so wet leasing, including with the involvement of partners from friendly countries, may become a temporary solution to the problem.
Sanctions, ban on flights to Europe, and delays in the production of domestic aircraft
In the spring of 2022, after the start of the special military operation in Ukraine, Europe, the USA, Canada and some Asian countries broke all contractual obligations to supply Russia with aircraft, materials and components for aircraft construction. In this regard projects that were being implemented with the extensive involvement of foreign suppliers were stopped: serial production of Superjet 100 aircraft and Ansat helicopters was terminated. The serial production of the MC-21 aircraft was interrupted after the first airliner was manufactured for Rossiya Airlines – it was the aircraft with the factory number MC.0013, which was to receive the registration RA-73361, later re-registered as 73057.
Russia’s civil aviation industry has suffered the most. Everything that was previously supplied within the framework of international cooperation: composite materials, on-board equipment and avionics, aircraft systems and units, engines – had to be created independently. The process of import substitution is complicated and expensive; the deadline shift for the MC-21 is at least six years, and if we take into account the original plans of UAC and Irkut, it is eight years. The first MC-21-310 aircraft may start arriving to Aeroflot Group in the first half of 2026, at the same time we can predict the start of deliveries of the SJ-100 aircraft.
In addition, the European Commission banned Russian airlines from flying to Europe or transiting in the airspace of EU countries, Rosaviatsia responded in a mirror-like manner. However, the need for reciprocal travel from Europe to Russia and in the opposite direction exists. For this purpose one can use transit via Belgrade or Istanbul or choose more exotic routes, for example, via Dubai, Morocco or Tunisia. Wet leasing could help circumvent some of these restrictions by providing access to foreign aircraft and crews on a temporary basis to operate certain routes to countries closed to Russia.
Overall, wet leasing in Russia could become a tool to solve a number of problems faced by airlines in the current economic and legal environment. Roman Starovoit believes that leasing aircraft together with the crew will help curb the growth of ticket prices and develop short sea air transportations – the right of a foreign company to perform flights between points within another country or between third countries.
The Minister told EEF-2024 that in order to curb ticket prices, Aeroflot intends to offer Aurora Airlines to wet lease a part of the Superjet 100 aircraft to Rossiya Airlines to increase the volume of traffic within the Far Eastern Federal District. Regarding short sea air transportations between countries, the head of the Ministry of Transport explained that this issue is already being studied by foreign partners, but did not specify which countries they are talking about. However, for cabotage air transportations to become possible, the Air Code should be amended accordingly.
In the context of the discussed issues, the use of wet leasing may become a solution that will provide Russian airlines with a stable existence. Attracting additional aircraft with trained crews will help to reduce the load on their crews, which, however, will not solve the problems with salaries and training. Also, wet leasing would promote regularity of flights on domestic routes, and on closed international routes airlines would be able to operate without having to complete the process of full exemption from dual registration.
