Boeing Capital has opened a Moscow office, hoping to support increased Boeing sales in the CIS once import taxes are dropped. Scott Scherer, Boeing Capital's general manager for aircraft financial services, says that, while air travel in Russia is expanding, the Soviet-era fleet is dwindling, and local industry is unable to replace it.
Today, Russia represents less than 1% of Boeing Capital's portfolio, but the company has signed funding deals with Aeroflot, Azerbaijan Airways, Transaero in Russia and Uzbekistan Airways.
"We see some very exciting growth in the Russian and CIS airline industries and we want to be a part of that growth," Scherer says, adding that Boeing Capital's involvement will also help attract investment from foreign banks, including theUS Ex-Im Bank.
The move follows Russia's impending entry to the World Trade Organisation and its signature of the Cape Town Convention on aircraft leasing, but Boeing's forecast of 120 aircraft sales in the CIS in the next five years depends on the government lifting import taxes.
Craig Jones, Boeing's CIS sales director, says that deals for 30 aircraft are "signed or close to signature" with CIS airlines, but adds: "I expect no-one will pay cash, so Boeing Capital will be here to handle financing."
He says Russian sales have been low because the 20% import tax and 20% value-added tax complicate leasing deals. Only Aeroflot and Transaero have import tax exemptions, but Jones says: "Russian airlines and Boeing are lobbying the Russian authorities to ease import tax. We expect the Russian government to fully comply with WTO standards."
He adds that "without elimination of these duties we cannot be sure about the success of the Russian Regional Jet project".
Source: Flight International
