Of around 900 passenger and cargo aircraft in service with Russian airlines, at least 515 units come from lessors in the EU, particularly Ireland, and the USA. Since the beginning of March, Russia has re-registered approximately 360 of these aircraft and added them to its own aviation register. This removes them from the reach of their owners. According to international legal experts, the government in Moscow is thus committing theft on a large scale. A leading expert in this field is Professor Elmar Giemulla (E.G.) He is a professor at the universities of Berlin, Germany, and Daytona, USA. CFG spoke to him about Russia's breach of law and the consequences for leasing companies, but also for Russia as an aviation location in the longer term.
CFG: Mr. Giemulla, is the transfer of foreign aircraft to the Russian aviation registry, against the expressed will of the rightful owners, the greatest state theft in the history of
E.G.: That's one way of putting it. Because the more than 500 aircraft leased by Russian airlines are out of the reach of the leasing companies, i.e. the owners of these aircraft, because they are to be used exclusively in domestic Russian traffic in the future. It remains to be seen whether the Russian airlines can (and want to) continue to pay the agreed leasing rates and thus, at least in this respect, behave in accordance with the contract. However, this is unlikely, as the aircraft concerned were previously used on the more lucrative routes abroad. If this calculation fails, it is hard to imagine that the aircraft will then be voluntarily returned to the leasing companies. The state-ordered transfer of these aircraft to the Russian aviation register also indicates the opposite, namely that they are to remain permanently in Russia.
CFG: Doesn't this move represent a clear violation of international aviation law?
E.G.: Absolutely, because according to the Convention on International Civil Aviation (Chicago Convention), a re-registration requires that the previous registrar state agrees to it, not to mention the owner.
This is intended to ensure that the responsibility for the airworthiness of the respective aircraft is clearly and consistently assigned to a single state. This means that registration in Russia is invalid under international law. In addition, the states in which the aircraft are still registered are no longer able to exercise their supervisory power, thus calling into question the airworthiness. Consequently, the states concerned have already started to revoke the airworthiness certificates.
How Russia deals with the operation of non-airworthy aircraft is up to the decision-makers there. In any case, these aircraft can no longer be used in international traffic; they would have to be grounded immediately.
CFG: How do you assess the step: as an act of desperation by the Russian state to be able to maintain air traffic within the country in the absence of aircraft from its own Russian production? Or do you see the re-registration more as an act of defiance against the multiple sanctions imposed by Western countries against the Putin regime?
E.G.: This looks very much like a countermeasure against the Western sanctions. However, one has to see that these sanctions also affect spare parts. This means that if you want to maintain domestic Russian traffic in the long term, you have to use part of the fleet as a spare parts depot. In this way, the fleet will shrink more and more unless bogus parts are used, which of course will definitely end airworthiness.
CFG: Will third countries recognize the re-registration or would the aircraft confiscated by Russia be impounded if they were to land outside Russian territory?
E.G.: Recognition of the re-registration by third countries is not possible, as this is excluded under the Chicago Convention. As long as the previous registrar countries do not de-register, the aircraft concerned are still formally and legally registered there. A unilateral measure does not change this at all. Even if the airspaces of the Western states were to be re-opened to Russian aircraft one day, the affected aircraft would most likely be blacklisted by the EU Commission. A violation of such an entry ban would result in an immediate impoundment.
CFG: Presumably, the Russification of the aircraft means an enormous loss of value for the leasing companies, i.e. the rightful owners. How will they react legally?
E.G.: The decline in value starts immediately and is dramatic. The leasing companies can no longer do anything with these aircraft. Legally, they are not much more than scrap heaps. Billions of dollars are at stake here, and they have to be compensated. An action in a non-Russian civil court is ruled out because of the principle of "sovereign immunity," unless the court seized were to presume an act of state terrorism. As regards a lawsuit filed in a Russian court against one's own government, this needs no further comment. Leasing companies would be advised to file suit before an arbitration court on the basis of the investment protection agreements that Russia has concluded with many countries.
CFG: Are leasing companies reinsured against such losses or do they have no choice but to write off the aircraft?
E.G.: That depends on the underlying insurance conditions. Even if war damage is included, the question would be whether this is such war damage. Typically, this is destruction due to hostilities. There is still considerable need for clarification here.
CFG: Looking at the longer term: Will a leasing company ever lease an aircraft to a Russian airline again?
E.G.: The damage to Russia's image that it has inflicted on itself will be lasting. The trust that has been so thoroughly destroyed will take years to rebuild - apart from the fact that this is obviously not the intention of the current Russian government. That will probably be a matter of decades. And it will be expensive - if at all - for Russian airlines because the risk would, of course, have to be appropriately cushioned financially.
CFG: Bottom line: doesn't the mass expropriation of Western aircraft do more harm to Russian aviation than it does short term benefit, if any?
E.G.: The damage is immeasurable. Nor is it apparent that aircraft of Russian provenance could remedy the situation in the short term. And should the sanctions be lifted one day, the demand of Russian passengers and the country's economy for transport capacity to move international goods flows will have to be met largely by Western airlines in the long run. Aside from the implosion effect of the sanctions and Russian countermeasures on the entire Russian economy and the purchasing power of its citizens, Russian foreign aviation is heading for a phase of decline.
CFG: Thank you very much for your explanations.
Professor Elmar Giemulla is an internationally recognized expert in aviation law. He teaches at the TU Berlin, Germany, and at Embry-Riddle Aeronautical University Daytona/USA. In addition, he is a lawyer (Berlin) and Attorney-at-Law (New York). He has also written several books and papers on various aviation law issues, and advises governmental institutions as well as private companies on aviation law issues. In the 1990s, Mr. Giemulla, together with the former German Minister of the Interior Gerhart Baum, advised the Russian government on the reorganization of Russian aviation law and structures.
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