Russia - Ukraine crisis: impact on aviation

The Russian invasion of Ukraine on 24 February 2022 has led to a number of international sanctions aimed at Russia, Russian individuals and companies. These sanctions will have a considerable impact on the aviation industry outside of Russia, but will also have a particularly severe impact on airlines operating within Russia.

Airspace bans

Following the invasion, the United Kingdom banned the Russian Flag Carrier, Aeroflot, from its airspace; Russia in turn imposed bans on UK based airlines operating into its airspace, starting a reciprocal banning of airlines by both Russia and the EU. At the time of writing, the EU has imposed a blanket flight ban on all Russian owned, Russian-registered or Russian-controlled aircraft.

Russian retaliatory bans on European aircraft are leading to longer flight times on flights to Asian destinations and beyond (and consequently higher fuel costs). Airlines are also avoiding Ukrainian airspace given the potential dangers to aviation.

EU regulation

The EU adopted Regulation 2022/328 (the Regulation) on 25 February 2022, taking effect the following day. Article 3c of the Regulation will have a significant impact on Russian airlines and lessors leasing aircraft to them:

“Article 3c

It shall be prohibited to sell, supply, transfer or export, directly or indirectly, goods and technology suited for use in aviation or the space industry, as listed in Annex XI [Annex XI simply lists “aircraft, spacecraft, and parts thereof], whether or not originating in the Union, to any natural or legal person, entity or body in Russia or for use in Russia.
It shall be prohibited to provide insurance and reinsurance, directly or indirectly, in relation to goods and technology listed in Annex XI to any person, entity or body in Russia or for use in Russia”.

Article 3c also includes prohibitions on repair, overhaul, inspection of an aircraft or component (with the exception of pre-flight checks) and the provision of technical assistance, brokering services or financial assistance in respect of aircraft to any natural or legal person, or entity or body in Russia or for use in Russia.

These prohibitions will not apply to execution until 28 March 2022 in respect of contracts concluded before 26 February 2022, but otherwise the prohibition comes into effect immediately.

Impact

The UK’s position and the EU’s implementation of this Regulation will have a significant impact on companies involved in aviation in a wide range of areas ranging from MROs, charter brokers and of course aircraft leasing and insurance.

This is a fast moving situation and we recommend that clients review their business interests and obtain advice as soon as possible.