RUBAA Executive director, Anna Serezhkina, spoke before the international community about what bizav market now is like, what are perspective and challenges
2-4 February one of the most significant business aviation conference – Corporate Jet Investor – took place in London. This year the agenda comprised a session, dedicated to business aviation market in Russia. This segment grows and interest to it, including from foreign partners, is reasonable.
RUBAA Executive director, Anna Serezhkina, spoke before the international community about what bizav market now is like, what are perspective and challenges.
“Out of saying, like all around the world, business aviation in Russia suffered from crisis and pandemic consequences and limitations. But current situation should be taken only like circumstances, where we have to live and to work. It is not interesting anymore to speak about the time when all was so good and how difficult it is now.
Business aviation as an economy segment, of course, has losses, but could stand through, in many aspects due to the fact, that the Russian market is represent by strong, high-technological organizations in all sectors, and what is not less important, by true professionals.
If we evaluate market with absolute numbers, we offer to turn to number of flights at Vnukovo-3 airport during the period of January-December 2020. We these numbers representative as Moscow is a key destination for business aviation and major part of flights is made through Vnukovo-3.
Thus, the most significant decrease was noted in April 2020: in total 251 flight carrying 670 passengers. The numbers fell four times in comparison with March 2020 (1058 flights, 724 passengers), but right after April activity started to grow dynamically and several times numbers even exceeded ones of the same periods of 2019.
Top activity was fixed in February (1131 flight, 761 passenger), November (1164 flight, 764 passenger), December (1365 flight, 921 passenger).
Like before, international flights prevailed during the year, except April (110 international flights against 141 domestic flight).
Most popular international destinations are Riga, London, Nice, Jebel Ali, Larnaca.
Requested domestic destinations are St. Petersburg, Sochi, Kazan, Simferopol, Ekaterinburg.
At the conference it was announced, that number of aircraft imported to Russia increased. Of course, this is a very good happening. But it is also very important, that during the latest period, a little bit more than a year, there appeared four new commercial operators. We can expect, that exactly this factor is a positive and dynamic indicator – air companies plan development of business and fleet. And this factors reflects positive dynamics of the market.
Getting back to challenges of the last year, as it was said, general situation did influence the market. But our companies reacted to it with new projects and business models. So called “scheduled charters” (though it sounds ridiculous) and sales of seats took their firm position. Maybe, it is a step from “classical model” of business aviation and new principles of business aircraft operation, different from rent of the entire body, own schedule, choice of airport. But now this model works. Probably, after we return to regular life and work this scheme will be less popular, but I think it will be working as a variant of economy variant. For now, it works and helps companies to do business, passengers to get to their destination, and keeps ground infrastructure and service companies busy. And it is good.
One of the questions was registration of business aircraft abroad. Here aircraft “affiliated with Russian owners” are meant. In my point of view, it is a very unclear definition. Speaking about any numbers is possible only if one makes some suggestions. As said earlier, we can speak about positive dynamics in import of aircraft. RUBAA supports policy of bringing aircraft to the Russian register and is ready to assist this process.
We also need to mention that registering aircraft abroad is popular in many countries for very different reasons. Many air companies use intergovernmental agreements, optimize their actives, etc.
Speaking about major happenings in the industry, we need to mention start of implementation of zero VAT for aircraft import. There is an opinion, that this factor, along with limitations due to complicated epidemiological situation, brought to growth of aircraft import in 2020. But purchase and import of aircraft is a complicated procedure, and was hard to predict the situation of 2020, so increase in number of imported aircraft indicates rather the state of the market, and this is to be considered while making any forecasts.
For those who comes with private aircraft, it is important to know about the resolution of the Council of the Eurasian Economic Commission ¹ 119 from 23.11.2020, which increases total period of placement of foreign registered aircraft under customs procedures without payment of customs duties and taxes from 30 to 270 days, and total number of days for such aircraft under procedure during 2021 from 180 to 360 days.
One of opportunities of the period is transfer of a number of business class passengers to business jets due to lack of regular flights. Of course, general situation with aviation increased request for business jet flights, but only partially, as after the opening of boarders and restart of air traffic, airliners will receive part of passengers back. But a good number of population having evaluated of opportunities of business aviation will stay clients of our sector. And increase in number of commercial passengers will lead to number of purchased aircraft.
In this case the market can change its attention from heavy jets, which are popular now, to midsize jets and light jets. But this is a question of time.
With all positive tendencies we should not disregard those challenges, which can slow development of the industry.
Foreign colleagues name political risks, but there is no definition of what these risks are. And any clear risk can be evaluated and insured. I would rather bring attention to some important points, so they do not become risks for business.
Getting back to bringing aircraft to Russia, as said, there are pretty good conditions for both commercial and private aircraft. But, in return, customs and fiscal bodies can more thoroughly check air company activity and facts of aircraft importation, that is why all operations are to be performed with full compliance with current legislation and full documentation. In case necessary, Russian competent specialists are ready to help. Exactly local ones.
Increase of customs procedure placement terms excludes commercial use of aircraft. So, one should not abuse on this opportunity and present commercial flights as private.
Anticovid measures are taken all around the world, but they do not cancel other current requirements, including personal data provision, non-objection procedures for commercial flights, etc. Ignorance of these requirements can bring to very solid problems, including restrictions on flights to Russia.
Like all around the world illegal charters are a problem. Here Russia, which is good, is not on the first place, but unfortunately, this factor exists. RUBAA holds active position against illegal charters and we need to point, that number of such flights goes down.
All participants of the session were asked the question – what will market look like in five years. Here, at least, we need a crystal ball. Of course it is a joke, but all factors, we spoke about today, give us the right to look at the future and make plan “A”, though not forgetting about plan “B” at the same time.
And though Mike Stones from Corporate Jet Investor who led our session referred to words of Sir Winston Churchill about Russia as “a riddle wrapped in a mystery inside an enigma”, and also there was an opinion, that Russian business aviation leaders stand from participating in international conferences, I would like to note, that we are always open for dialogue, exchange of information and development of business contacts.
We specially appreciate efforts of VIPPORT and personally Igor Mudrik for providing data and assisting in preparing the material.