THEO VAN GOGH WATCH: Russia’s Air And Ground Logistics Conundrum

Introduction

As the sanctions against Russia intensify, most observers mainly pay attention to either the financial sanctions that prevent the country’s banks from conducting operations with U.S. dollars or Euros and from using the SWIFT clearing system, or to personal restrictions affecting thousands of Russians who are now banned from traveling to the Western countries or possessing property there. Yet, I would argue that the Russian economy suffers not so much from these financial limitations, but rather, among other factors, from the massive transportation disruptions caused both by direct sanctions and by corpo­rations withdrawing from the Russian market.

Not long ago, Russia was very hopeful about its transit potential, which was secured by the modernization of the continent-long Trans-Siberian corridor, by the One Belt/One Road projects with Chinese investors, and by development of the Northern Sea Route. However, Russia has now became a “black hole” on the global transportation map.

Russia’s Air Transport

First and foremost, the Western sanctions knocked out Russian air transport – not only international but also domestic. Between February 26 and March 3, 2022, Russian air companies were officially banned from flying to the UK, the EU countries, the United States, and Japan. Yet, since the Western powers ordered all the companies in their jurisdiction to discontinue aviation services to Russia, planes that were leased from Western companies or registered abroad had to be returned to the lessees. Prior to the war, up to 93 percent of passenger jets operated by Russian companies had foreign registration.

After 78 planes were seized abroad, due to sanctions, Russian companies can now only fly abroad using their aging Il-96 liners and SSJ-100s, all registered in Russia, while the remaining leased planes serve only domestic destinations. Simultaneously, all Western companies discontinued the use of Russian airspace for flying to Asia, and Airbus and Boeing stopped the supply of aircraft parts and services to Russian airlines. The Russian government announced a massive aid package to the struggling sector amounting to about $1.45 billion, with a major part of it going to the national flag carrier Aeroflot, which had previously also accumulated all the charges paid by Western airlines flying over Siberia.

Furthermore, most of the airports in Russia’s southern regions and in the occupied Crimea have been closed since February 24 due to the security alert. As a result, according to preliminary data, Russian passenger air traffic fell by 23 percent in April compared to February, but only by six percent compared to February 2021, as that was the time of numerous COVID restrictions. If compared to April 2019, Russian air passenger traffic in April 2022 was down 44 percent, and there are more and more reports suggesting that regional companies are experiencing an increasing shortage of planes.

Aurora, a state-controlled company serving Russia’s entire Far East that recently dissociated from Aeroflot, just asked other companies for help and will start flying on An-24 aircraft to four subsidized destinations. It is worth noting that the An-24 is a turboprop machine introduced in 1959, and the last one was built in the Soviet Union in 1979. Its use was outlawed in Russia in 2012 after the aircraft was involved in several deadly crashes. Without spare parts and possessing only domestically produced SSJ-100s, around 70 percent of which are composed of foreign components, Russia is now unable to deliver even a single passenger jet with fewer than 100 seats until at least 2025. Major airports have already sent a significant part of their personnel home on unpaid leave, and Sheremetyevo, the country’s largest international airport, which serves the city of Moscow, closed three of its five terminals and its newly built runway.

Russia’s Rail Transport

No less problematic is the situation in Russian rail transportation, which accounted for up to 86 percent of all domestic freight turnover in 2019, excluding the pipelines that are also mentioned in Russian statistics, before the COVID pandemic broke out. The state-owned railway company Russian Railways used to rely heavily on the transportation of commodity goods (coal’s share of the overall turnover tonnage stood as high as 29.1 percent) but the government also invested billions of dollars into modern container shipping services and into modernizing passenger trains. All these sectors are now being put at risk by international sanctions.

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