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Russia Has Spent $12 Billion to Keep its Aviation Sector Alive Amid Western Sanctions

Russia Has Spent $12 Billion to Keep its Aviation Sector Alive Amid Western Sanctions

BY ADNAN SHAHEED December 24, 2023 0 COMMENTS

Russia has allocated over $12 billion in state financing to sustain its aviation sector amid reduced supplies of key parts and maintenance services. The United States and European Union imposed sanctions on Russia after it invaded Ukraine in February 2022, with the war now approaching its third year.

 

Photo: Gautham Kurup | AeroXplorer


Since March 2022, Russia has faced the challenge of developing its aviation industry independently with domestically sourced components. The two largest Western aircraft manufacturers, Airbus and Boeing, have halted services and spare parts supply due to sanctions. The country, heavily dependent on foreign-made aircraft, aims to navigate these challenges while also buying aircraft from foreign lessors to prevent more of its fleet from being seized.

 



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Data from Russia's Ministry of Finance and the Accounts Chamber overseeing budget execution shows that the country has spent around 1.09 trillion rubles ($12.07 billion) on its civil aviation industry. This budget, nearly double the 547 billion rubles ($6.97 billion) spent on accommodating the sector during the COVID-19 pandemic, underscores the scale of Russia's efforts to keep such a crucial industry afloat.

 

Photo: Adam Jackson | AeroXplorer


Russian President Vladimir Putin acknowledged his country's reliance on Western-made aircraft, stating, "Our fleet of aircraft is very overloaded... with foreign-made planes." His goal to produce more than 1,000 aircraft domestically by 2030 highlights the need to develop an indigenous aviation sector.


Swiss aviation intelligence provider ch-aviation states that Russian airlines currently operate 991 aircraft. Of these aircraft, only 133 are Superjets made by the state-owned United Aircraft Corporation. Other Russian-produced aircraft, such as Tupolev, Yakovlev, and Ilyushin, are rarely used for commercial flights. Russia's plan for developing its aviation industry in the coming years involves supporting sales, expanding production capacity to accommodate additional aircraft manufacturing, and creating a post-sales service system.

 

Photo: Lum Wei Tuck | AeroXplorer


Russia views its aviation sector as essential for transporting people and goods across its vast territory. This reinforces its narrative that sanctions have had only a minimal impact on the Russian economy. As the country approaches elections in three months, with Putin running for office once again, the collapse of an airline could significantly affect Putin's reputation as a strongman who can "save" Russia.


While Russia has maintained strong technical capabilities in aviation since Soviet times, Western aviation analysts are skeptical about Russian-made aircraft returning to Western markets anytime soon, even if the Russia-Ukraine war ends. When reconstructing an aircraft fleet with a clean and traceable safety record, one must deal with extensive costs and bureaucracy.

 

Photo: Thomas Tse | AeroXplorer


Russia has tapped into reserve funds to fund these efforts, spending $1.5 billion in 2022 to compensate airlines for losses resulting from significantly higher fuel costs. In 2023, the National Wealth Fund (NWF) played a more substantial role, with the NWF allocating almost $5.6 billion for the aviation sector. These expenditures, equivalent to just under 1% of the projected gross domestic product (GDP) for 2023, underscore the financial commitment needed to keep the industry afloat. Russia also spent $31.4 billion in the same period on developing other forms of transport outside the aviation sector.

 



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While domestic air passenger traffic has rebounded, concerns about aircraft safety have risen due to the loss of foreign parts and maintenance expertise. Russian airlines have kept their Western-made aircraft in the air by importing spare parts through a gray import scheme without the manufacturers' consent.

 

Photo: Sebasian Gigot | AeroXplorer


Moscow has used NWF funds to register its Western-made aircraft locally by repurchasing aircraft from foreign lessors to reduce the risk of confiscation when flying abroad. Transport Minister Vitaly Savelyev indicated that purchasing aircraft from foreign lessors could cost up to 300 billion roubles, with 190 billion already spent. The government's strategic spending plans highlighted that the aviation industry requires at least 711 billion roubles to achieve complete technological independence from foreign suppliers.


Despite these challenges and substantial investments, the return of Russian-made aircraft to Western markets remains uncertain, reflecting the complex dynamics and costs associated with rebuilding a fleet to meet international safety standards.

 



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Adnan Shaheed
Hi! I'm an aspiring engineering student with an interest in aviation. I really took an interest in Aeroxplorer because it lets me do what I love: talk about planes to people.

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