The demand for business jets owned by Russians who were included in Western sanctions lists remains high, though their sale usually involves serious technical and legal difficulties for buyers.
Inclusion in the U.S. and EU sanctions lists has led to a significant reduction in the fortunes of many Russian businesspeople, many of whom are now finding ownership of a business jet too expensive.
One of them is Oleg Tinkov, who was included in British sanctions in 2022. He sold his bank and dropped out of the list of the richest Russians. Before Russia invaded Ukraine, his fortune, according to Forbes, was $9.5 billion; but by November 2022, it had shrunk to an estimated $860 million. As a result, he had to optimize his expenses and sold his Dassault Falcon 8X jet, which has already changed tail numbers and registration. Its new owner, according to the Russian Moscow Times business paper, is the American company Pacific Connection. The price of the deal is unknown, but the aircraft is valued at €50 million.
Most analysts believe this is just the beginning and that more such deals will be announced later this year.
According to analysts, Russian jets could interest many buyers, as the purchase discount can be 20 to 50 percent. The worst thing is when the name of the final beneficiary appears in the sanctions lists. Most of such deals are classified, however, as buyers are afraid of the consequences because sanctions can threaten even intermediaries.
The transactions are not simple, and deals are rarely finalized. When they are, they often involve mechanisms using family funds, trusts, and offshore companies. According to Russian lawyers, much depends on which list of restrictions include the owner of the jet. Bypassing sanctions can result in a fine ranging from $10,000 to $1 million, and even a prison term of five years or more.
Some potential buyers can choose a much more reliable and safe option and buy the asset of a Russian businessperson not from the owner or an intermediary but at an auction.
Meanwhile, as the sale of Western jets to Russia is currently almost impossible (at least legally), there is a growing interest in domestic alternatives. So far, a number of such projects have been officially presented in Russia. The latest was announced just days ago, as the Russian air carrier Red Wings announced plans to officially present the new version of its business jet based on the Sukhoi Superjet 100 at the MAKS airshow 2023. The company intends to launch it on the market in a unique configuration, completely redoing the internal design. Instead of a single-class economy layout, the aircraft will be converted to full business class seating, with the number of seats reduced to 52.
The new Superjet will fill a niche in the Russian market of domestic jets and will be the first Russian aircraft with a full layout for business class. The company believes it will be in demand among Russian soccer clubs and orchestras, as well as among customers from the large corporate segment.
The Russian business aviation market is experiencing tough times due to the lack of new jets and business flights. A significant number of local jet owners are under sanctions and unable to fly to once-popular destinations in the EU and North America. While this year the market will probably show better results after the catastrophic drop of 2022, it will probably not be able to reach prewar figures for many years.