Aeroflot and S7 announce demand for wet leasing of aircraft in Russia

ST. PETERSBURG. May 12 (Interfax) - Wet leasing, whereby one airline (the lessor) provides an aircraft, complete crew, maintenance, and insurance (ACMI) to another airline (the lessee), and which is utilized internationally, should be legalized in Russia, Aeroflot and S7, the country's largest airlines, said in a statement.

The air travel market has been affected by various external factors in recent years, including the Covid-19 pandemic and sanctions, thereby "some airlines could become financially unstable," Anna Khomyakova, director of the legal department at Aeroflot , said at the St. Petersburg International Legal Forum, SPBILF-2023.

"In this situation, the use of wet leasing would allow the airlines to maintain their aircraft fleets, retain jobs, uphold their reputations, and ensure stability for a certain period owing to a guaranteed flow of lease payments. This period allows airlines time to recover, and choose a new business model," Khomyakova said.

Wet leasing in general could be useful for airlines to simplify the procedures for the exchange of aircraft, Khomyakova added. She cited the advantages for the transferring party as being the possibility to reduce the costs of commercial management and payroll without reducing crews, as well as the opportunity to avoid the loss of ownership of aircraft and to maintain leasing agreements.

"For the lessee, this is an opportunity to compensate for shortages in the aircraft fleet, when new destinations appear and passenger traffic grows; the ability to maintain carrying capacity in socially significant directions, and reduce the risks associated with shortages in personnel, since the lessor employs the personnel in wet leasing," Khomyakova noted.

Maxim Astafyev, deputy general director for legal support at the S7 group, said that the company shares Aeroflot's position that, "Today, this form of contractual relations is in high demand."

"Wet leasing allows one to transfer to the lessee, meaning the airline that takes the aircraft of another operator with its crew, the main burden of current expenses. This is payment for fuel, airport fees, and navigation fees, thereby reducing the burden on the temporarily weaker airline, while guaranteeing to the passengers, and to oneself, that maintenance of the aircraft and crew training in the short term will occur according to the required standards," Astafyev said.