It is a tricky task to get statistics on private and
corporate aircraft movements in Russia, as well as data on fleet size. Even for
State officials such information remains an enigma. The only guideline is a
Russian Business Aviation Association (ADA) analysis, which says that 2005
traffic on international and domestic Russian routes shows a 40-50% increase.
This exceeds previous years' results. Charter traffic rose by about 30-40% in
2004, 15-30% in 2003 and 12% in 2002. The fleet size in 2005 is expected to
grow at that same 40% rate, adds ADA.
Meanwhile, strong local demand brings fleet growth in
Europe, but not in Russia. Only six Russian domestic operators boast a dozen
Western-built bizjets on their Air Operator Certificates. Of these, only a
scant few carry Russian registrations. The main barriers are unbearable import
and value added taxes, which impose a 41.6% price increase on imported bizjets.
Unfriendly aviation and real estate legislation are additional reasons to use a
'flag of convenience'.
The tax barrier was created to protect national aircraft
manufacturers, but they do not produce business jets, and have no serious plans
to enter this market. To date, Soviet-built aircraft in business/corporate
service are some 40 aging Tupolev Tu-134s and about 20 Yakovlev Yak-40s and
Yak-42s in VIP configuration. These obsolete and economically inefficient
aircraft do not meet international noise and emissions standards, so the fleet
is limited to operations within Russia and the Commonwealth of Independent
States (CIS).
For international flights, Western-built equipment is
needed, but all these aircraft are traditionally registered and stored close to
Russian borders, not within the country. The most popular locations are
Austria, Finland and Baltic States. This helps to reduce taxes but causes some
difficulties for owners — for example, officially such aircraft cannot operate
on Russian domestic routes. Meanwhile, there are a variety of unofficial ways
to use bizjets for cabotage flights.
Bank interest rates are very high in Russia, so customers
prefer to obtain credit in the West. But as the mortgage registry for aircraft
in Russia is still in development, none of the foreign investors can secure
property rights under Russian law, thus they insist on foreign registration.
To fly legally on domestic routes, local operators need
Russian registration, but therefore cannot attract financing from Western
banks. Add those 41.6% import and value-added taxes and it becomes clear why
they opt to buy used aircraft such as Hawker 125s and Falcon 20s/50s. At the
same time, private owners keen to spend big money on brand-new long-range
aircraft such as Gulfstreams, Global Expresses, Legacys and Falcon 900s and
2000s must register and base them abroad.
The developing Russian market attracts foreign operators,
and in a tough competition Russians suffer from their domestic rules. For
example, as Russia requires all aircraft operators to submit flight requests 24
hours in advance, countries such as Finland and Italy require Russians to
submit their flight plans 72 hours ahead.
Illogically, local Russian operators are regulated as for
scheduled commercial airlines, and these rules are very bureaucratic and rigid.
In local law there is no difference between a private aircraft owner, a
business aviation operator and a commercial carrier — all are treated as
'airlines'.
