Russian aviation is yet another industry that has suffered major collateral damage as a consequence of the country’s invasion of Ukraine in February 2022. Within days of the invasion, European countries started closing their airspace to Russian planes. The United States followed suit on March 2, suspending—among others—its Moscow–New York flights, which had taken almost ten years to negotiate back in Soviet times. Russian airlines have never been more isolated, even during the bleakest periods of the Cold War.
After the breakup of the Soviet Union, Russian air travel became one of the biggest beneficiaries of the country’s opening up to the world and switch over to a market economy. The airline market was divided into a few national-level entities and dozens of small regional carriers, which quickly attained new quality standards. Leading companies joined global airline alliances and actively upgraded their fleets, replacing old Soviet aircraft with new Airbuses and Boeings.
The Western sanctions imposed on Russia after its annexation of Crimea in 2014 did put pressure on Russian airplane manufacturers, but flights to Europe and the United States continued, and airplane purchase contracts remained in effect. Aeroflot received its first Airbus A350 in early 2020.
In 2019, on the eve of the COVID pandemic, Russian airlines flew a record 128 million people: 43 percent on international flights, and 57 percent on domestic routes. International flights brought in far more revenue, but the numerous domestic routes allowed the industry to stay afloat even in the years of the pandemic.
The 2022 sanctions have turned out to be far more difficult to digest. In the space of just a few days, Russian airlines, which had been closely integrated into the global market, lost international destinations, leasing contracts and technical support for their foreign planes, partnerships with other carriers, foreign software, insurance, and other services.
The heaviest losses were sustained by Aeroflot. The country’s biggest airline and flag carrier had just begun recovering from its pandemic slump, having increased its passenger numbers by almost a third in annual terms in February 2022. The company had previously planned to focus on its premium and high-revenue flights, but that segment accounted for only 20 percent of total revenues at the end of 2022. In addition, when Russia closed its own airspace to Western airlines in retaliation, Aeroflot lost flyover royalties from European carriers, which had amounted to $500–$800 million a year before the pandemic.
Russia’s airlines are once again obliged to rely on domestic routes, but unlike in the pandemic years, even this sector is facing difficulties. Eleven airports in southern Russia—including in several popular holiday destinations—have been closed to civilian aircraft since February 24 last year, when Russia launched its “special military operation.”
All of this has left Russian airlines increasingly dependent on government handouts. In 2022, the state spent around $4.5 billion propping up the industry, with most of that going on domestic flight subsidies, the partial reimbursement of increased fuel costs, and purchase of Aeroflot shares, which boosted state ownership of the company to almost 74 percent.
Russian airlines flew 95 million passengers in 2022, 90 percent of them on domestic flights. That was 14 percent lower than the year before, and five million fewer people than the goal set by the government. According to the Russian Airline Traffic Association, without government subsidies the number of passengers would have dropped to 74 million: a level last seen ten years ago.
One aspect of Russia’s response to Western sanctions was to appropriate the foreign-made aircraft that Russian carriers were leasing. Leasing is a common practice in the aviation industry, in which the aircraft’s owner remains responsible for its servicing, insurance, and registration, among other things. As of late February 2022, 1,290 civilian aircraft were in use in Russia, 70 percent of which were foreign-made and responsible for 95 percent of the country’s air traffic. At that point, the total market value of Russia’s leased aircraft fleet exceeded $10 billion.
Following the outbreak of war and ensuing sanctions, which outlawed supplying Russia with civilian aircraft and spare parts, aircraft lessors managed to impound seventy-seven jets leased by Russian airlines before the rest were grounded in Russia and swiftly re-registered there to allow their use within the country, though that process precludes them from being used on international routes, since planes with dual registration are considered a safety risk. Even China and Turkey have prohibited aircraft with dual registration from flying to their countries.
As of February this year, Russian has managed to remove dual registration from 180 re-registered aircraft, and the government promises to continue that process. But those planes stripped of dual registration will still have problems with international flights, because the United States blacklists foreign aircraft with at least 25 percent U.S.-origin content. Those aircraft may face service restrictions or encounter difficulties refueling at their destination.
Consequently, Russian airlines are left with no choice but to focus on the domestic market. By 2030, Aeroflot plans to increase its share of that market from 38 to 50 percent and attract 60 percent more passengers. Nonetheless, international flights are still two or three times more profitable for Aeroflot than domestic ones. In June 2022, Russia adopted a program for the aviation industry’s development through 2030. Based on the premise that the country will remain isolated, it envisages that only 10 percent of Russian airline passengers will fly internationally.
The West, for its part, has also been impacted by Russia’s isolation. While Russian carriers lost routes and memberships in global alliances, their Western counterparts were deprived of convenient flight paths to Asia via Russian airspace over Siberia and the Arctic.
Circumventing Russia extends European routes to Asia by three hours and adds over $17,000 in fuel costs for the Airbus A350. Flights between Tokyo and Helsinki, for instance, now take thirteen hours instead of nine and a half. European airlines might also face tough competition from China once it reopens after the pandemic and its planes start flying over Russian territory.
American companies are in no better position vis-à-vis their Asian competitors. American Airlines and United have been forced to cancel some flights to India that are no longer cost-efficient, while Air India is able to keep flying via Russian airspace. U.S. flights to Tokyo and Seoul now take an additional sixty to ninety minutes, though the greatest threat looming on the horizon is again that of China reopening.
Russia’s isolation is only set to increase. The United States has threatened Turkey with fines and even prison sentences if it provides services to Russian airlines flying American planes. Turkey then made a statement about the risks entailed in servicing Aeroflot jets—but continues to do so for now. For its part, the European Union has threatened Georgia with sanctions if it restarts flights to Russia.
Last year was a shock for Russian airlines, but they pulled through thanks to hefty government subsidies and extensive experience gained over decades on the global aviation market, in which they adopted skills, procedures, technologies and standards from their Western partners. This accumulated experience will help Russian planes to remain in the air for some time to come: particularly the larger carriers that have young fleets, skilled personnel, and technical centers at their disposal.
Aeroflot has a good spare part supply system even now, and Russian airlines will use the remaining foreign-made fleet for several more years. The government has recently legalized “cannibalization”: the practice of removing parts from one plane to install them on another. Still, by 2025, Russia is expected to be left with just 70 percent of its foreign-made airplanes.
The primary goal for Russian civil aviation right now is to stay afloat until 2030. By that time, the domestic aircraft industry is due to start supplying new planes, though major doubts remain about how realistic those plans are. In any event, Russian aviation will only grow more dependent on the state. Passenger numbers will depend directly on the amount that airlines receive in state subsidies. The sheer scale of those subsidies will make domestic routes as cost-effective as international ones, even though this year’s assistance will only amount to 50 billion rubles: half of what it was last year.
Russian aviation won’t disappear any time soon, but it will become more self-contained. The exclusion from technical support and full-scale industry communication will certainly be felt. Intellectual and technological isolation cannot be a good thing, regardless of what Russian officials say. Russia will also have to part with the Soviet legacy of established international flight routes, convenient time slots, Trans-Siberian royalties, and a certain standing in industry-specific organizations.
Still, Russia cannot be banished entirely from the global transportation system due to its size and geographic location. At some point, negotiations to restore cooperation may get underway, although right now it’s impossible to imagine when and under what circumstances that might happen.
