Aeroflot entered into Russia’s first wet leasing agreement with another airline. The Federal Air Transport Agency Rosaviatsia has reported that Aeroflot has formed a partnership with the Russian carrier iFly in this case.
Wet leasing, also known as ACMI (Aircraft, Crew, Maintenance, and Insurance), is a leasing model where an airline leases an aircraft, along with its crew, maintenance, and insurance policies, to another airline. This arrangement permits airlines to share aircraft and personnel, thereby allowing for the flexible adjustment of capacity in proportion to seasonal demand.
Russia imported a significant number of aircraft under operating leases, also known as “dry leases,” where airlines solely rent the aircraft and bear the responsibility for its operations, maintenance, and airworthiness. Russian banks or airlines owned only a limited number of the leased aircraft.
Many aircraft maintained dual registrations—foreign owner registration and Rosaviatsiya registration—when sanctions were implemented, which prohibited the import of Western aircraft and their maintenance. This increases the likelihood of aircraft seizures when they operate overseas. At present, Russian airlines are unable to acquire new aircraft or lease them from foreign leasing companies.
In November of this year, the Russian administration introduced a law to initiate wet leases, as the number of Western jets is decreasing and Russian-made aircraft will begin arriving only after 2025.
Despite the 2014 sanctions imposed in response to the Crimean crisis, the Russian government continued to stubbornly oppose wet leasing. Despite the legal permission for Russian pilots to operate abroad, an airline could not lease a plane with a crew to a foreign company.
This issue was also present in Russia. This resulted in unusual circumstances. It was impossible to reallocate aircraft within the Aeroflot group. For example, Aeroflot would be unable to transfer an identical operational aircraft to cover the gap if a subsidiary airline, such as Rossiya or Pobeda, had a grounded aircraft.
In contrast, the United States experienced a significant decrease in demand following 9/11, which prompted the country to legalize wet leasing.
However, this does not imply that Russia did not follow the practice. Russian Airlines operated in Iran. Planes flew there with Russian crews, but the law did not explicitly allow it.
In another instance, Russian aircraft were involved in wet leasing programs abroad, such as in Ireland, where CityJet leased Sukhoi Superjet 100 planes to Brussels Airlines until 2019. However, maintenance issues led to the termination of these leases.
Returning to the current lease details, Aeroflot plans to acquire three Airbus A330 liners. This addition will bring the total number of A330 aircraft in Aeroflot’s fleet to 15.
Flights operated by iFly’s aircraft will initially be available during periods of high demand on routes from Moscow to the Far East, specifically between Moscow and Vladivostok, Petropavlovsk-Kamchatsky, Khabarovsk, and Yuzhno-Sakhalinsk.
Note that an American company still owns these aircraft, despite their registration with two different entities.
iFly specialized in international charter flights; however, they are unable to operate these aircraft abroad as a result of dual registration after sanctions. The company attempted to transition to regular domestic flights in Russia; however, this has been a difficult task due to the limited number of profitable routes in Russia that are suitable for such large aircraft. Aeroflot primarily dominates the Far East routes. It is not feasible to compete with Aeroflot because any commercially viable fare would be more expensive and less competitive.
It is theoretically feasible to transfer ownership of these aircraft to Russia; however, this necessitates negotiations with the current owner and funding. Aeroflot, as a larger airline, may find this process more straightforward.
iFly will continue operating, as they still have three planes flying, for example, on the Moscow-Sochi route. Leasing planes under wet lease agreements does not mark the end of iFly’s operations.
The Russian industry has taken a positive move forward with the agreement between iFly and Aeroflot. The first wet lease deal became possible only after September 1 of this year, following amendments to the Air Code that allowed such contracts.
Additionally, Russia is attempting to wet lease aircraft from foreign nations. At the “Transport Week 2024” forum, Deputy Minister Vladimir Poteshkin disclosed that the ministry is presently in the process of developing a notification framework for Rosaviatsiya with respect to wet lease agreements with foreign companies for international operations. The necessary amendments to the Air Code have been prepared, and it is anticipated that this initiative will be implemented in 2025.
Aeroflot initially proposed the idea of allowing Russian airlines to lease aircraft under wet lease agreements from foreign carriers earlier this year. The Ministry of Transport provided its endorsement of the initiative in September. Minister Roman Starovoit informed journalists that negotiations regarding this possibility are currently underway with friendly nations.
Two Kazakhstani airlines, according to the Russian media, were not interested in leasing aircraft to Russian airlines. Concurrently, negotiations are underway with Kuwait and Qatar.
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