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.

As concerns the Embraer E-190 series today, there are over 1100 already delivered aircraft around the world, mostly operated in North America and Europe. Other regions are also increasing their demand for the type of aircraft. Meanwhile, in the CIS region there is only about a dozen of such aircraft and 14 more E-Jets ordered at the moment. Bombardiers are even less popular with only one CRJ 700 being operated in the region today.

‘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.

However, despite successful certification some of the recently approved aircraft are still likely to face additional obstacles while penetrating the Russian market. For instance, Bombardier CRJ 700/900/1000 with any configuration will fall into the 51-110 seat group, meaning that the aircraft is subject to almost 40% tax. Meanwhile, potential buyers of the E-190/195 with the seat configuration of over 110 will be exempt from both the VAT and any additional fees.

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.

Table. 3. Aircraft seat types