Russia Business Jet Market

An Expert's View about Sales in Russia

Last updated: 13 Mar 2011

Summary

The Russian business jet market saw a sharp fall in activity due to the financial crisis, but recent market data indicates that the market is beginning to recover. Passengers are now, however, opting for less expensive, smaller size jet models. The share of turboprops (vs. heavy jets) is also growing. Major Western jet manufacturers and jet charter flight operators are already present in Russia. Opening representative offices and appointing official distributors for jets and helicopters have become an effective way to penetrate the market. The Russian government has facilitated imports of Western business jets by abolishing prohibitive import duties and is working to facilitate the registration of a larger percentage of Russian-owned, foreign-registered aircraft to Russia.

 

Market Demand

According to 2008 industry data, the Russian business jet market was estimated at $1.5 billion. Prior to the financial crisis, the market had demonstrated an unparalleled high growth rate. In 2007, the market officially grew 30%, while informal industry sources quoted 45% growth. The market growth dynamics were forecasted to remain at the level of 30-35% annually, whereas the European business jet market remained at the low of 10% and demonstrated a tendency for further decrease. Although the jet market experienced a sharp fall in activity in 2008 as a result of the financial crisis, recent market data indicates that the market is beginning to recover, judging by the increase in the number of business jet requests in the chart below.

 

At the same time, the market is seeing a change in passenger preferences regarding the type of business jets to be used. Passengers are opting for less expensive, smaller size jet models. The share of turboprops (vs. heavy jets) is also growing. The forecast report released by Bombardier Aerospace in July 2010 states that Russia and CIS countries will purchase 650 business jets between 2010 and 2029.

 

While accurate statistics on Russian ownership of business jets are impossible to obtain, it is widely accepted that approximately 400 to 450 corporate jets are directly or indirectly owned by Russian corporations and individuals. Of these, approximately 95% of the Russian-owned aircraft are not registered in Russia. This is primarily due to the requirements of foreign bank that prefer their loan/lease agreements be governed by non-Russia law; superior maintenance facilities outside of Russia; lower costs outside of Russia; and greater confidence in the rule of law outside of Russia.

 

By Vladislav Borodulin

 

Read the full market research report


Posted: 23 August 2010, last updated 13 March 2011

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