Indian Airlines in Russian domestic circuit, heres why an offer has been made
Facing ongoing Western sanctions, Russia has extended an invitation to Indian airlines to operate on domestic routes within its borders. This proposal, known as a "cabotage" agreement, would allow foreign airlines to carry passengers within Russia, a move aimed at mitigating local demand pressures that Russian carriers currently struggle to meet. The offer, made to India, China, and several Central Asian nations about a month ago, was further discussed during Prime Minister Modi’s recent visit to Russia for the BRICS summit.
The sanctions have notably restricted Russian airlines from accessing U.S. and European aircraft manufacturers and essential parts, impacting fleet expansion and maintenance. While Russia seeks solutions to these challenges, Indian airlines have voiced concerns over operational feasibility. Many Indian carriers operate leased fleets, and their lessors, constrained by Western sanctions, are hesitant to allow flights to Russia. Additionally, Indian carriers are already managing their own fleet shortages to meet domestic demand, making the proposal even less viable.
Leasing and insurance complications pose significant barriers. Many Indian airlines rely on insurance from Western providers, which could be jeopardized by operations in Russia, creating financial and logistical challenges. A senior airline executive highlighted these issues, emphasizing that the risk of losing insurance and fleet shortages would complicate any agreement with Russia. This shortage is intensified by the sanctions that halted Boeing and Airbus deliveries to Russian airlines, redirecting aircraft originally intended for Russia to other markets, such as Air India, which received Airbus A350s initially allocated to Aeroflot.
These sanctions have stalled Russian aviation growth, with domestic seating capacity now near pre-pandemic levels, and a forecast by CAPA (Centre for Aviation) projecting limited growth in Russian passenger traffic, estimating around 98.8 million passengers by 2027, similar to the current level.
Despite these sanctions, India and Russia maintain strong trade ties, with India among the few countries permitting Russian carriers to operate flights. Benefiting from Russian airspace, Air India continues to operate efficient routes over Russia, reducing travel time compared to European and American carriers. However, while Russia remains keen on Indian participation in its domestic aviation market, operational hurdles make Indian airlines unlikely to proceed with the cabotage plan.