Russia’s Aviation Isolation Grows as Planes Stay Put

The action by Russia’s largest airline came shortly after the country’s federal air transport agency, Rosaviatsiya, issued a directive that effectively blocks more than half of the aircraft in Russian fleets from flying on most international routes. It is scheduled to take effect on Sunday.

The measure removes a large part of what international flights Russian airlines could still service after Western countries blocked their airspace to these carriers in response to Russia’s invasion of Ukraine.

“This recommendation is due to the high risk of detention or seizure of Russian airlines’ aircraft abroad,” Rosaviatsiya said. Domestic flights will continue without restrictions.

The government’s action doesn’t affect Russian airlines that operate foreign- or Russian-registered aircraft to locations where there is no risk of them being impounded, the agency said. Domestic flights are unaffected.

Russia’s second-largest carrier, S7 Airlines, on Friday already said it would halt all international flights as of March 5.

Airlines are dealing with the fallout from sanctions that have largely cut off Russia from the global financial system and steps more directly targeting the country’s aviation sector. The European Union has given plane-leasing companies until March 28 to void contracts with Russian airlines. That is causing firms, including the world’s biggest lessor, AerCap Holdings NV, to void agreements with Russian operators.

Russia’s fleet of commercial planes relies heavily on leasing arrangements. Russian operators rent 515 aircraft from foreign leasing companies that are affected by the sanctions, out of 861 planes in service, according to aviation data specialist Cirium. The Russian government agency’s edict increases fears by some lessors and insurers that efforts to repossess planes would become even more challenging.

At least some leasing firms had expected Russia to take steps to keep planes and sought to pre-empt it by trying to repossess them quickly, according to senior industry executives. There have been only a handful of successful attempts at reclaiming property. One example is a Boeing Co. 737-800 aircraft, a predecessor model to the MAX, operated by Aeroflot’s discount unit, Pobeda. The plane was seized last weekend while at an Istanbul airport after the jet’s owner tracked the aircraft’s movements and was able to convince authorities in the country to halt the jet from taking off, according to a person familiar with the repossession.

The financial burden from Russian carriers not returning their planes is principally expected to fall on insurers for the leasing companies, who are likely to face payouts for the full value of the aircraft, according to Phil Seymour, president of aviation consulting firm, IBA Group. The market value of foreign-leased aircraft currently flown by Russian airlines amounts to about $12 billion, according to an analysis by London-based aviation advisory firm, Ishka.

Russia’s aviation sector has faced intense turmoil in response to the country’s military assault on its neighbor. In addition to airspace bans issued by the U.S., EU, Canada, and others, aircraft manufacturers and maintenance firms have been barred from supplying new aircraft and spare parts needed to keep the current fleet flying.

Companies, including Texas-based Sabre Corp. and Spain’s Amadeus IT Group SA, which provide the systems used for distributing fares to the public and travel agencies, have said that they will withdraw support for Aeroflot on their systems. The EU and U.K. have instructed insurance companies to withdraw coverage of Russian airlines. Some insurers have already given clients notice they are canceling their policies that are required to fly under international regulations.

“Due to the unfriendly decisions of a number of foreign governments regarding the civil aviation of the Russian Federation, Russian airlines and passengers have become an instrument and hostages of a political struggle,” Rosaviatsiya said in its statement.

The limits on Russian airlines flying abroad leaves Russians with few flight options. Airlines from countries such as the United Arab Emirates, Turkey, Qatar and Serbia are among the few still regularly serving Russian destinations.

—Doug Cameron contributed to this article.

Write to Benjamin Katz at [email protected] and Mauro Orru at [email protected]