Putin permits Russian airlines to operate foreign-owned planes worth $10 billion domestically.
- Foreign businesses hold around 500 planes worth $10 billion that have been placed with Russian airlines.
- Planes lessors have until March 28 to reclaim their aircraft.
- Foreign lessors have been unable to repossess aircraft due to a slew of restrictions imposed in response to President Putin's invasion of Ukraine.
Foreign aircraft lessors trying to reclaim jets worth $10 billion in Russia were dealt a new setback on Monday when President Vladimir Putin signed a rule allowing Russian carriers to operate the planes domestically.
The country's air travel market has been cut off as a result of sanctions and reciprocal airspace closures imposed in reaction to Russia's invasion of Ukraine last month. Boeing and Airbus have announced that they will stop supplying parts to their airlines. As a result, carriers may be forced to cannibalise other planes for spare components.
The country's airlines have 728 Western-built aircraft in their fleets, with 515 of them leased by international lessors, according to Jefferies. Aircraft lessors, some of whom are domiciled in EU member Ireland, have until March 28 to retrieve the planes under European Union sanctions.
According to Russian news agency Tass, the Kremlin's new guidelines will allow the country to issue airworthiness certificates to planes and register them in Russia. Last week, the legislation was in the works.
"There's the occasional nightmare," said Richard Aboulafia, managing director of aviation consultancy firm AeroDynamic Advisory. "But the thought of an entire aviation industry being knocked offline and flouting international regulations, that's novel."
Aeroflot and S7, two of Russia's largest airlines, ceased international flights last week. Lessors may seek to reclaim planes on international flights.