In a worrying development for Russia’s aviation sector, 30 Russian airlines, which collectively account for more than 25 percent of domestic passenger traffic, may close in 2025 due to mounting financial pressures, according to Russian daily Izvestia. Bankruptcy may occur.

These airlines, particularly small and medium-sized carriers, are struggling with large debts related to leasing foreign aircraft, a situation exacerbated by the economic fallout from international sanctions.

Since the implementation of sanctions in 2022, many of these carriers have stopped making payments on leased aircraft, which has resulted in the accumulation of debt. In response, the Russian government plans to allow these airlines to write off some of these debts in 2025.

However, this relief will come with a heavy tax burden. Airlines will be charged a 25% tax on the amount written, which may be too high for some airlines, possibly driving them out of business.

According to Rosaviatsia, more than 30 airlines are engaged in passenger transportation in Russia. gave The report said That major carriers like Aeroflot, Ural Airlines, and S7 Airlines could weather the storm by buying back their leased aircraft from the National Welfare Fund.

By the first quarter of 2024, these major players had repurchased 165 of the 400 aircraft previously leased. In contrast, smaller carriers, which lack the financial resources to make similar moves, face an uncertain future.

Aircraft maintenance issues further compound the financial struggles of these airlines. Most Russian airlines previously leased aircraft registered in Bermuda, Ireland and Europe.

After sanctions disrupted access to government maintenance services, airlines were forced to rely on companies. IranTurkey, and China, often at much higher prices.

gave Average monthly A used Airbus A320 aircraft costs between US$80,000 and US$150,000. However, aviation experts have pointed out that taxing these unpaid lease proceeds as income is incorrect since a large portion of these funds are now used for maintenance of these aircraft.

Andrei Petrakov, aviation expert and founder of RunAvia flight safety service, pointed out that rising maintenance costs adversely affect the financial stability of airlines.

He added that the tax burden on written loans would further destabilize the industry, as it would be recognized as “non-operating income” and taxed as profit.

Russian industry leaders are calling for amendments to the tax code in hopes of mitigating the damaging financial consequences. They suggest using the saved funds to maintain the airworthiness of its fleet, thereby ensuring the long-term sustainability of Russia’s aviation sector.

Russia’s aviation sector struggles

Since March 2022, major Western manufacturers such as Airbus and Boeing have suspended aircraft parts and maintenance support, severely hurting Russian airlines, including the country’s flagship carrier Aeroflot.

Since the sanctions went into effect, Russia has Investment Over US$12 billion to sustain the civil aviation industry. This amount is earmarked for aircraft production and financing of airlines.

Yet, despite these efforts, the industry is constrained by significant shortages in critical resources, including trained pilots and crews and accessible, reliable aircraft maintenance.

The impact of these shortages was acutely felt in late July, when 68 Aeroflot flights from Sheremetyevo International Airport were canceled due to a pilot shortage, and several others were postponed, as Aviatorshchina reported. According to Radio Free Europe, the unprecedented drop was confirmed by three sources in Russia’s airline industry..

To address these gaps, Moscow has ambitious plans to supply up to 1,000 domestically produced aircraft to Russian airlines by 2030. However, production delays remain a major challenge.

Sergei Chemizov, the head of state-run Rostec, informed parliament that mass production of the new MS-21 and Superjet aircraft models, with expected launch dates now set for 2025 and 2026, has been pushed back.

In addition to efforts at home, Russia is seeking support abroad. Reports last month indicated that Russia was in talks with several Central Asian countries, including Kazakhstan and Uzbekistan, to allow their airlines to operate domestic flights within Russia.

Russian Minister of Transport Roman Starovet Confirmed These reports In October 2024.

This strategy addresses the growing travel demand and acute shortage of operational aircraft. If implemented, this approach may provide limited relief but also highlights the deeper challenges facing Russia’s aviation sector as it seeks infrastructure and manpower amid increasing isolation from Western aviation resources. Trying to recreate the capabilities of

However, there are concerns that Central Asian airlines may be reluctant to participate, fearing potential repercussions from the West in the form of secondary sanctions.