In December 2012 the Interstate Aviation Committee, a civil aviation supervising regulatory body of the Commonwealth of Independent States, issued type certificates for Embraer 190/195 and Bombardier CRJ 700/900/1000 aircraft thus paving the way for large regional jets in the Russian aviation market. Some of these aircraft types had been already introduced in other CIS countries. For instance, E-jets which have been earlier ordered or delivered to carriers in Moldova, Ukraine, Kazakhstan, Azerbaijan and other CIS countries are already roaming the skies. However, the Russian market is pretty well known for its quite protective attitude towards the outside players of the aviation industry, particularly when the topic comes to the latest SSJ100, a locally produced competitor to the smaller Bombradier CRJ 700 series and the larger E-Jets. Although the Russian authorities have eliminated the main obstacle for the aircraft entrance to the market, it is still unclear whether potential buyers are likely show higher interest in the foreign-made aircraft, mainly due to the still existing obstacles, particularly the aircraft import issue.
Today, air companies have a wide range of means to achieve their goals while adjusting their business strategy to satisfy individual requirements. These include adopting a low-cost philosophy, aircraft and crew leasing solutions, e-solutions, and, of course, the possibility to acquire aircraft with a particular seat capacity which is ideally tailored to one’s market. We have been working with customers from Russia and the CIS for many years now, and have been noticing an increasing demand for the leasing or acquisition of various regional jets, including CRJ-200s. With regards to larger regional airplanes, we believe that the 70-120 seaters will prove to be quite helpful in developing sustainable regional aviation markets. The mobility of the local population is constantly rising and triggering a higher demand for short and middle range destinations, including primarily those which connect smaller cities with regional centres,’ commented Gediminas Siaudvytis, the Deputy CEO of AviaAM Leasing.
According to the current Russian regulations, all the commercial aircraft are being divided into 7 groups. Depending on their seat capacities and weight some of the aircraft are subject to full import duty (20%), customs fee (max. ~$3000) and VAT (18%). Meanwhile, some of aircraft are permanently or at least temporarily exempt from such fees. For instance, if imported, a brand new CRJ 1000, which normally costs approx. $27 million, will lighten an operator’s pocket by over $10 million more. At the same time, E-jets in their largest configuration will cost approx. $35 million.
Furthermore, there are additional small expenses like a brokerage-company fee for managing the entire import process as well as the cost of independent asset evaluation by a Russian company, the latter mandatory to all used aircraft. At the same, an operator may import the aircraft on the basis of temporary import (up to 3 years). This will allow the division of the entire tax payment for the overall period, paying approx. 3% of the sum each month.
‘In any case, in order to benefit from the existing import regime, which provides tax benefits to owners of particular aircraft types, operators should act fast, as temporary rules are effective until the 1st of January, 2014 only. Fortunately, the import process itself is not long at all. The value assessment and the preparation of all relevant documents take up to around 2 or 3 weeks. Should the entire documentation prove to be accurate, customs clearance itself shouldn’t take longer than two days, according to the current rules. According to the recent forecast, Russia will require several hundreds of 91-120 seaters over the next 20 years. Therefore this year poses the perfect opportunity to acquire some of these aircraft at a lower price,’ concluded the Deputy CEO of AviaAM Leasing.