Actions Have Consequences  

For domestic air travel in Russia, Western sanctions imposed following Russia's invasion of Ukraine certainly appear to be wreaking havoc on the industry. Russian domestic passenger demand has dropped by approximately 15% on a trailing 12-month basis, while most other developed domestic markets saw growth over the same time period. A shortage of aircraft caused by the sanctions has put a stranglehold on air travel inside Russia, cutting off supplies or new aircraft as well as spare parts for the in-service fleet. The latter has caused an estimated 10-15% of the domestic fleet to be grounded for want of parts. Furthermore, many experts question the true airworthiness of many of the aircraft still flying.

Risky Business

While Russia is courting certain nations to help fly domestic routes, there appear to be few, if any, takers because of concerns about related sanctions being applied to them as well. The sanctions (which include a ban on “dual use” technologic sales to Russia, bans on flights to Russia, a ban on exports of gold and diamonds from Russia, and many others) are designed to hobble the economies on which they are imposed, and they make for an effective deterrent.

Russian Domestic Manufacturers

To make up for the shortfall of aircraft, Russia is looking to domestic producers Sukhoi and Yakovlev (formerly known as Irkut) to produce the Sukhoi Superjet regional jet and the MC-21 single-aisle aircraft in mass quantities, which is improbable. Both models were designed and contemplated before the invasion of Ukraine and the resulting sanctions and, therefore, relied heavily on Western content. Particularly, this includes engines, avionics, and other components that will all need to be developed, tested, certified, and put into mass production in Russia before they have any meaningful impact on the Russian fleet.  

The End of the Boeing/Airbus Duopoly?

While the sanctions are in place, Russian air travel will continue to shrink and become more expensive and less safe.  

How will the industry players fare if the sanctions are lifted?  

The Russians will certainly try to make domestic aircraft, and they will make a few, like the MC-21, which is derived from a Soviet-era military aircraft, but ultimately those products will not be competitive.  

I'd look to the emergent Chinese aircraft producer, COMAC, and its C919 single-aisle offering as the ultimate beneficiaries. The producer would be very happy to take market share from Boeing and Airbus and finally generate sales outside of China. Potentially, this could position COMAC to break the Boeing/Airbus duopoly.