Putin Signs Law to Seize Foreign Aircraft Amid Crippling Sanctions

Russian President Vladimir Putin chairs a meeting with members of the Russian government in Moscow, on March 10, 2022. (Mikhail Klimentyev/Sputnik/AFP via Getty Images)

As sanctions cripple Russia’s aviation industry, President Vladimir Putin signed a law on Monday allowing foreign-owned aircraft to be re-registered as Russian for domestic use, according to state-run news agency TASS.

Russian airlines would have the ability to seize and operate aircraft leased by companies that are no longer operating in the country over sanctions imposed due to the Ukraine invasion, TASS reported.

Russian airlines have almost 780 leased jets, with 515 leased from abroad.

The new law, part of Russia's measures to combat the sanctions, says it aims "to ensure the uninterrupted functioning of activities in the field of civil aviation.”

TASS reported that the aircraft will be certified using certification centers and test laboratories.

The bill has rattled global leasing firms days before a March 28 deadline to repossess aircraft worth $10 billion as a result of Western sanctions imposed following Russia's invasion of Ukraine.

It comes after Bermuda and Ireland, where virtually all foreign-leased jets operating in Russia are registered, said they were suspending airworthiness certificates on the jets because they could no longer be sure they were safe.

File photo shows an aircraft of Russia's flagship airline Aeroflot during a media presentation at Sheremetyevo International Airport outside Moscow on March 4, 2020. (Rueters/Maxim Shemetov/File Photo)

Re-registering jets in Russia would aim to keep them flying domestically by granting access to new safety approvals.

But adding Russia as a second host country could put Moscow at odds with international rules barring the registration of civil planes in more than one country at a time.

Unless Western lessors agree to Russian requests to release their jets from foreign registries—widely seen as unlikely while they struggle as it is to regain control of assets—the new policy also paves the way for a major contractual debate.

"It is illegal to register an aircraft without proof of deregistration from the previous registry as well as the agreement of the owner. This would be a default under leasing contracts," said aviation adviser Bertrand Grabowski.

The Wall Street Journal noted that the law is likely to have limited effect, as sanctions prohibit maintenance, updates, support or the supply of spare parts for aircraft. Passengers could be put at risk as modern passenger jets require high levels of maintenance.

The Russian Federal Aviation Agency said 776 planes were registered abroad as of Feb. 24, the day Russia invaded Ukraine. Russia calls its actions in Ukraine a "special operation" to demilitarise and "denazify" its neighbor. Ukraine and the West argue that this is a false pretext to justify its invasion.

Reuters contributed to this report.