Gaidar Institute experts on the impact of wet leasing on the Russian aviation industry

Anastasia Levchenko, researcher at the Gaidar Institute’s Sectorial Markets and Infrastructure Department believes that this measure will not lead to a decrease in ticket prices. «Most air carriers in Russia use a dynamic pricing system, that is, the price of air tickets increases as seats are booked. The unit costs of leasing an aircraft with a crew may be significantly higher than in servicing routes with their own aircraft, which will also put pressure on prices," the expert explained.

Also, Anastasia Levchenko notes that foreign carriers may be subject to secondary sanctions, which will either deter them from providing «wet» leasing, or lead to an increase in the cost of service.

Dmitry Evdokimov, expert at the Quantitative Analysis of Economic Effects Department of the Gaidar Institute, points to the fact that wet leasing services will be provided by second-tier companies and this will require thorough flight safety and technical checks.

The expert also cited the experience of Belarus and Iran, which could be useful for Russia. «Belarus partially made up for the sanctions restrictions by expanding flights with Asian countries and adapting to new air carriers. Iran, which having been under sanctions for decades, has managed to develop domestic aviation services and maintain the functioning of the national park through the «cannibalization» of equipment and the development of local repairs. However, both experiences show that solving the problem requires time, systematic investments in maintenance and training," Dmitry Evdokimov notes.

«Iran’s aviation industry has been under sanctions for about 40 years. In the 1990s and early 2000s, airlines from Russia and other countries carried out coastal air transportation within Iran. The sanctions pressure on Iran’s aviation industry has led to its decline. Iran’s main problem is the lack of new aircraft, as well as the lack of specialists in the field of aircraft construction," Anastasia Levchenko added.

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