Analysts at data and analytics company Russell Group have reported that 589 Western-built aircraft with a market value of approximately $13 billion are currently on the ground in Russian airports.
Flights to and from Russia have been banned by nearly all Western nations in response to the country’s widely-condemned invasion of Ukraine.
The result is that hundreds of leased planes in Russia that are owned by European companies stuck on the ground in the country.
And Russell Group warns that the aviation war market now faces its biggest potential loss since 9/11.
Western sanctions have effectively “crippled” Russia’s aviation sector, analysts say, with the country’s largest flight operator, Aeroflot blocked from European and North American airspace.
And in addition to the airspace restrictions, Russian companies in the aviation or space industry have been blocked from accessing British-based insurance or reinsurance services directly or indirectly.
“There is a large concern in the aviation war market at the moment; clients are all trying to understand the number and value of planes on the ground in Russia, as there are concerns that these aircraft could be confiscated by the Russian government,” noted Suki Basi, Russell Group MD.
“What our analysis can reveal is that there is a sizable number of planes on the ground in Russia with a large market value which reinforces the need for good accurate data that can help an aviation underwriter understand and know his exposures better.”
Russia’s invasion of Ukraine will likely have significant fallout in the capital markets, AM Best says, with impacts for the entire industry expected in the short-to-medium term.
Rating agencies have already turned negative on insurance and reinsurance companies operating in Russia, while firms operating in Western nations such as the UK and the US are likely to face “significant” but “manageable” impacts due to the sanctions.
