Aircraft

Russian authorities are looking at raising the foreign ownership limits on the country’s aviation enterprises and overhauling its air travel insurance system.

The industry and energy ministry has prepared draft legislation to modify the regulatory regime governing foreign investment in strategically important sectors – a category, which at present embraces practically all companies carrying out aviation-related activities.

Two core propositions suggest amending the law on state regulation of aviation development and the country’s air code. Their common thread is to ease ownership restrictions for foreigners by lifting a ban from owning shareholdings exceeding 25% of Russian aircraft manufacturers and 49% of airlines.

The bill stipulates that “foreign residents have the right to freely invest in domestic enterprises or make transactions aimed at taking control of them.”

An investor should apply to the state for a special permission, only if it wants to buy shares in excess of 50% of the charter capital.

After considering such applications on a case-by-case basis, the state authorities would have the option of either approving a deal unconditionally or predicate it on meeting specific requirements.

The ministry underscores that a number of international projects in the aviation industry already require greater foreign investment and access to ownership rights. In particular, they include work on developing the Superjet 100 (formerly Russian Regional jet) and SaM-146 engine.

In the wake of several fatal air accidents last summer, the government is also intending to revamp rules for providing passenger insurance.

Under a proposed system, carriers will be obliged to fund insurance payments by apportioning a fixed percentage of their revenue. At present, they disburse such payments arbitrarily, while state-guaranteed insurance premiums sourced from airfares are deemed negligible.