RUSSIA HAS REFUSED to back down on its claim for $25 million in excise duty, which, it says, is owed on a Baikalavia-operated Boeing 757, despite intense pressure from the US Government to remove the levy.

The 757-200, leased from International Lease Finance, has been impounded by police, at Bai-kalavia's Irkursk headquarters, because claim Russian customs and excise officials, the airline has exceeded an agreed 364-day period, of tax-free operation.

With the exception of Aeroflot Russian International Airlines (ARIA) and Transaero, Russian carriers must pay excise duty of up to 50% of the value of Western aircraft after the first year of operation. Baikalavia claims, however, that this ruling has been superseded by a memorandum of understanding (MoU) between the USA and Russia, signed on 30 January by US vice-president Al Gore and Russian prime minister Viktor Chernomyrdin, which allows US aircraft manufacturers greater access to the Russian market.

The agreement is linked to a US Export-Import (Exim) Bank scheme to finance ARIA's $1 billion purchase of 20 Ilyushin Il-96M/Ts powered by Pratt & Whitney PW2337s. Exim denies that its deal with ARIA is affected by developments at Irkursk, but Moscow bank officials are said to be "concerned".

A US Government source says that, following high-level discussions with Russia, the initial response appears to be that "...the aircraft will be returned". Russian officials, however, say that the January MoU is not yet law and insist that the 757, brought into the country before the agreement, remains subject to excise duty.

Source: Flight International