Russia poised to limit import of aircraft older than 12 years

(Photo by Leonid Faerberg / Transport-Photo Images)

Russian authorities plan to restrict import of Western-built passenger aircraft older that 12 years to the country by imposing import duties (7.5 to 15.7% of aircraft cost) or VAT (18%) starting next year, according to Vedomosti business daily. These taxes were lifted on aircraft with the seating capacity for 50 to 300 passengers as a measure to facilitate Russian airlines to expand their fleets. Now the government proposes to cancel that measure for older aircraft.

It has been proposed to extend the current zero-tax regime for 50-300 seat aircraft, which due to expire on December 31, 2016, to January 1, 2020. However there are objections to keep the relief for aircraft which are older than 12 years. Aircraft with 50 to 110 seats should also be excluded from the measure, the government proposed.

The protocol of the meeting chaired by vice-prime minister Arkady Dvorkovich has not yet been completed, so the propositions are subject to further elaboration.

The measure was reportedly proposed by Ministry of Industry and Trade in order to support the  Russian civil aircraft industry, in particular, two of its major programs – 90 seat short-haul Sukhoi Superjet 100 and 180-seat medium-haul MC-21.

The final decision if subject to approval by the Eurasian Economic Commission, which includes Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan.

In the period from 2012 to 2013 about 100 Western-built aircraft were imported to Russia annually, out of which about 75 were medium-range aircraft, which are eligible for the tax relief, according to Boris Rybak, general director of Infomost consulting agency. With the dawn of the economic downturn in 2014 the aircraft import decreased to 30 to 50 aircraft per year, and this is the level at which it remains at the moment and is expected to stay in the next several years. Only the major airlines such as Aeroflot and S7 Group can afford purchasing new aircraft. Average fleet age of other Russian airlines nears 15 years, believe the expert.

According to Russian Air Transport Operators’ Association, local airlines currently operate about 550 Western-built aircraft, 56% of which are older than 10 years, and with Aeroflot’s fleet age not factored in, the share of older aircraft reaches 75%.

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