Mikhail Sokolov, Anna Arkhipova
and Sergey Seliverstov

Air Transport 2017

1. Which bodies regulate aviation in your country, under what basic laws?
Aviation is regulated in the Russian Federation by the following:
• the Ministry of Transport as the federal body of executive power in the sphere of transport, including air transport. The Ministry of Transport works out the state policy and deals with legal regulation in the sphere of, inter alia, aviation, use of the airspace and aeronavigational services provided to the users of the airspace;
• the Federal Agency of Air Transport (FAAT), a federal body with executive power that provides state services and manages state property in the sphere of air transport (civil aviation), of the use of the airspace and aero-navigational services provided to the users of the airspace. Inter alia, the FAAT conducts certification of airports and keeps the state register of civil aerodromes and airports. Among other things, the FAAT is in charge of registration of aircraft. The FAAT is part of the Ministry of Transport;
• the Federal Service on the Supervision in the Sphere of Transport (FSSST), which is the federal body having mostly control and supervisory functions in different transport sectors, including, among other areas, civil aviation, the use of airspace and aero-navigational services provided to the users of the airspace. The FSSST is also part of the system of the Ministry of Transport; and
• the Ministry of Defence, which performs state regulation of the activity in the area of state aviation.
The main aviation law is the Air Code of the Russian Federation, which is followed by extensive subordinate legislation. The legal status, authority, scope of activity and functions of the above-mentioned federal bodies with executive power are determined by respective government decrees.
Regulation of aviation operations
2. How is air transport regulated in terms of safety?
The following activities, persons and products are subject to obligatory certification:
• aerodromes used for performance of commercial air carriage of aircraft with passenger capacity of more than 20 persons and aerodromes used for performance of international flights of civil aircraft;
• manned civil aircraft (except manned civil aircraft whose airworthiness certificate is issued on the basis of a type certificate or an assessment report and ultralight manned civil aircraft with the dead weight of 115kg or less);
• unmanned aircraft systems and (or) its elements (with certain exceptions as mentioned in question 13);
• aviation engines and certain other aviation equipment;
• lighting and weather equipment installed at the certified aerodromes or radio and electronic communication equipment used for maintenance of air traffic;
• designers and manufacturers of aircraft and other aviation equipment;
• persons performing air navigation maintenance on flights in Russian air space;
• persons maintaining aviation security;
• persons performing or servicing commercial air carriage, or performing aerial works or technical maintenance of civil aircraft;
• the relevant educational institutions; and
• operators of aerodromes of the civil aviation.
Aviation personnel are subject to obligatory attestation. Obligatory certification and obligatory attestation are performed by authorised agencies.
Certain types of activity in the sphere of aviation, in relation to design, production, testing, repairs of aviation equipment and carriage by air of passengers and cargo (except carriage for the carrier's own purposes), are subject to obtaining a licence.
3. What safety regulation is provided for air operations that do not constitute public or commercial transport, and how is the distinction made?
There is no difference in the safety regulations applicable to either air transport or air operations that do not constitute public or commercial transport, such as private operations or aerial works. In fact, aviation is divided in the Russian Federation into civil, state and experimental. Civil aviation is aviation used for the purposes of meeting requirements of the citizens and economy. Civil aviation that is not used for commercial air carriage and performance of aerial works is regarded as general- purpose aviation (which does not include commercial air transport and performance of aerial work). State aviation is divided into military aviation and special-purpose aviation. The same safety regulations are applicable to all types of aviation in the Russian Federation.
4. Is access to the market for the provision of air transport services regulated, and if so how?
Certain types of activity in the sphere of aviation can be undertaken only on the basis of licences issued in accordance with the legislation of the Russian Federation (see question 2). The same applies to foreign entities performing international air transport or aerial work within the territory of the Russian Federation.
Foreign entities do not have the following rights:
• to accept, in the territory of the Russian Federation, aircraft passengers, luggage, cargo or post for air transport to the territory of a foreign state, or to transport such items from the territory of a foreign state to the territory of the Russian Federation, unless otherwise provided for by an international treaty of the Russian Federation or single-voyage permissions issued by the FAAT; or
• to accept, in the territory of the Russian Federation, aircraft passengers, luggage, cargo and post for air transport within the territory of the Russian Federation without permission issued by the FAAT or the FSSST. See also questions 9, 29 and 30.
In addition, the Ministry of Transport establishes the rules for the determination and application of tariffs, charging duties, selling tickets, issuing airway bills and other transportation documents.
5. What requirements apply in the areas of financial fitness and nationality of ownership regarding control of air carriers?
No specific requirements in the area of financial fitness shall be applicable to air carriers in comparison with other spheres of commercial activity. This can be verified at the stage when the necessary licences are being issued, and generally in the course of doing business (proper payment of taxes, performing obligations generally, not being subject to bankruptcy, etc). As to the nationality of ownership, the law provides that establishment on the territory of the Russian Federation of an aviation enterprise (ie, a legal entity having as the main purpose of its activity performance for charge of air carriage of passengers, luggage, cargo, post or of aerial work) shall be allowed on condition that the share of foreign capital shall not exceed 49 per cent of the share capital of the aviation enterprise, its manager shall be a citizen of the Russian Federation, and the number of foreign citizens in the governing body of the aviation enterprise shall not exceed one-third of the composition of the governing body.
6. What procedures are there to obtain licences or other rights to operate particular routes?
The licensing requirements for the carriage of passengers and goods are laid down by the government. To fulfil the requirements, the applicant shall satisfy the following:
• have an operator's certificate;
• abide by the rules of transportation of passengers or goods; and
• have aircraft (including reserve aircraft) sufficient to execute scheduled flights.
The obligation to organise the issuance of licences is vested in the Department of Regulation of Air Transportation of the FAAT of the Ministry of Transport of the Russian Federation.
As to international transportation, the Ministry of Transport has established the routine admittance of air carriers that have the required operator's certificate and a licence for effecting air carriages. To be admitted to international transportation, the interested air carrier sends an application, together with the required documentation, to the FAAT. The application shall be considered by the special commission of the FAAT. The decision of the commission shall be minuted, and on the basis of the said minutes an executive order of the FAAT shall be issued.
7. What procedures are there for hearing or deciding contested applications for licences or other rights to operate particular routes?
A decision of the Department of Regulation of Air Transportation of the FAAT to refuse to issue a licence can be contested to the head of FAAT, to the Ministry of Transport or in court.

A decision of the FAAT to refuse to admit the air carrier to undertake international transportation cannot be contested by any further application to any other state body. However, it may be contested in the courts in accordance with the established procedure if the applicant believes that the refusal violates the rights and lawful interests of persons and legal entities in the sphere of business and other economic activity.
8. Is there a declared policy on airline access or competition, and if so what is it?
There are no specific rules on the access or competition applicable to airlines and air transport. General rules on competition and antimonopoly legislation should obviously be complied with, but no special arrangements are applicable in air transport legislation.
9. What requirements must a foreign air carrier satisfy in order to operate to or from your country?
Flights of foreign aircraft to or from the Russian Federation shall be effected on the basis of international treaties of the Russian Federation with the respective state or states, or on the basis of permissions issued by the FAAT.
The foreign carrier effecting such flights should, inter alia, satisfy the following:
• comply with the respective laws and rules of the Russian Federation, conditions of effecting international carriages;
• not have any indebtedness for the aero-navigational services rendered thereto in the Russian Federation;
• procure availability of necessary documentation on board, as established for international flights, by complying with the aviation standards recognised by the Russian Federation; and
• procure insurance or other security regarding liability for causing harm to third parties and aircraft.
10. Are there specific rules in place to ensure aviation services are offered to remote destinations when vital for the local economy?
No specific public service obligations are stipulated by legislation. However, the Air Code of the Russian Federation provides that issuance of a particular licence (a licence to perform certain types of activity in the sphere of aviation – see question 2) to a legal entity or an individual entrepreneur might oblige such legal entity or individual entrepreneur to perform socially significant air carriage or aerial work.
To ensure availability of flights to some remote destinations, the Russian government offers subsidies to air carriers performing flights to these destinations (see question 34).
11. Are charter services specially regulated?
Prices for charter services are regulated only by the parties of the charter agreement.
12. Are airfares regulated, and if so, how?
Generally, airfares are established by the carriers themselves. In accordance with the Air Code of the Russian Federation rules for the determination and application of tariffs shall be established by the Ministry of Transport.
13. Are there any rules regulating the operation of unmanned aircraft systems (drones)?
On 30 March 2016 the amendments into the Air Code of the Russian Federation regarding unmanned aircraft systems came into legal force. In accordance with such amendments, the term 'unmanned aircraft system' is defined as a complex of integrated elements, including one or several unmanned aircraft, the means of take-off and landing and the means which operate and control the flight of unmanned aircraft.
Unmanned aircraft is defined as an aircraft that is operated and controlled by an external pilot (ie, a pilot who is not present on board the aircraft). Unmanned aircraft systems and (or) its elements are subject to obligatory certification. The law envisages two exceptions to this rule, as follows:
• for unmanned aircraft systems and (or) its elements including civil unmanned aircraft whose airworthiness and environment safety are proved by type certificate or by assessment report of the specific aircraft; and
• for unmanned aircraft systems and (or) its elements including civil unmanned aircraft with a maximum take-off weight of 30kg.
Unmanned aircraft with a take-off weight of more than 30kg are subject to state registration.
The captain of unmanned aircraft (save for unmanned aircraft with a maximum take-off weight of 30kg) shall have a valid pilot certificate as well as the required training and experience to operate an unmanned aircraft of a certain type.
14. Who is entitled to be mentioned in the aircraft register?
Do requirements or limitations apply to the ownership of an aircraft listed on your country's register? The state register of civil aircraft contains data in respect of civil aircraft and owners thereof. Civil aircraft (including unmanned aircraft as mentioned in question 13), except for ultralight aircraft are subject to registration in the state register of civil aircraft. The legislation determines that a ultralight aircraft is an aircraft with a maximum take-off weight of 495kg, not including the weight for aviation salvage means. The registered aircraft acquires Russian Federation nationality. The Law on State Registration of Aircraft came into force in September 2009. The Law establishes a procedure of state registration of aircraft, which is further detailed in the Rules of Keeping the Register of Rights to Aircraft and Transactions Therewith, approved by the government, and in the Rules of Registration of Aircraft approved by the Ministry of Transport. The register should contain data on the owner of the aircraft, where ownership is restricted by lease, mortgage, etc, on the lessee, mortgagee, etc, and, where a transaction with aircraft is registered, on the parties to the transaction. If an aircraft is sold to a foreign party and exported out of Russia, it should be deleted from the registry.
15. Is there a register of aircraft mortgages or charges, and if so how does it function?
Under the Law on State Registration of Aircraft mortgages should be registered in the state registry of aircraft. The information contained in the registry is open to any interested person, and the law provides a procedure for obtaining such information. The mortgage is registered in subsection III of the state registry of civil aircraft. The information contained in the register includes the identification of aircraft, name of the mortgagee, the term of mortgage and the amount of obligation secured by mortgage.
16. What rights are there to detain aircraft, in respect of unpaid airport or air navigation charges, or other unpaid debts?
There are no specific rules established by the internal legislation of the Russian Federation concerning the possibility of the detention of aircraft in respect of unpaid debts. In accordance with the general rules of Russian law it is possible to obtain a court order to arrest assets of a debtor to secure a claim against the debtor.
Also, a creditor (claimant) holding property, which should be transferred to the debtor or a person specified by the debtor, is entitled to a lien on the said property until the debtor performs its obligations, in particular, payment obligations. Claims of a creditor with a lien shall be subject to satisfaction from the value of the property in the same scope and manner as in respect of claims secured by a mortgage.
17. Do specific rules regulate the maintenance of aircraft?
Maintenance of aircraft is regulated to the extent that organisations providing maintenance should be properly certified. When undertaking maintenance, organisations providing maintenance are supposed to comply with mandatory requirements for the airworthiness of aircraft, which are determined by federal aviation rules.
18. Who owns the airports?
A civil airport may be a private, municipal or federal property. As a complex object it may have several owners. However, any airport should have an operator responsible for the operation of the airport in its entirety. Objects that are part of the unified system of air traffic management can be federal property only. Ownership of shares in airport operators and other strategic enterprises is subject to restrictions (see question 30).
19. What system is there for the licensing of airports?
An airport is entitled to operate provided that the airport itself, as well as all radio, lighting and meteorological equipment used in it, has a certificate of fitness. The permission to operate is given by the FAAT. The FAAT also keeps unified registers where all airports and aerodromes should be registered: the State Register of Airports and the State Register of Civil Aerodromes.
20. Is there a system of economic regulation of airports, and, if so, how does it function?
According to the Taxation Code, VAT is not applicable to services rendered at airports within Russia, including aero-navigational services. In addition, fees for aero-navigational services are exempt from the tax on profits. These two exemptions create a specific tax regime for services rendered at airports.
21. Are there laws or rules restricting or qualifying access to airports?
Each airport has a restricted zone where persons or vehicles without special permission are not allowed. The territory of the airport should be fenced and under control of the aviation security division of the airport. The airports must have internal regulations regarding restricted areas and conditions of access. Civil aviation airports can be closed for servicing of aircraft under the decision of the government of the Russian Federation. In wartime, or when a state of martial or emergency law is declared, or in all such circumstances, the use of airports is subject to special regulation.
22. How are slots allocated at congested airports?
The slots are allocated pursuant to the list of priorities, which is set out in the Air Code. They rank as follows (from highest to lowest priority):
• strategic interests of the state;
• rescue services;
• regular carriage of passengers and luggage;
• state operations (ie, military and similar);
• experimental aviation operations;
• regular carriage of cargo and mail;
• non-regular carriage by air or performance of aerial work;
• sports events, demonstrations and similar; and
• private aviation.
23. Are there any laws or rules specifically relating to ground handling?
Ground handling is governed by a number of acts containing mostly technical provisions, such as: monitoring the condition of the runway; handling the airport lighting equipment; dealing with the ornithological safety of the airport; organisation of passengers' boarding and calculation of the aircraft's centring; and use of other special equipment at the airport. Compliance with such regulations is a condition for the certification of an airport.
24. Who provides air traffic control services? And how are they regulated?
There is a unified system of air traffic management. Organisational structure of the unified system of air traffic management includes the governing body and operational bodies. The governing body of the unified system of air traffic management is the FAAT. The unified system of air traffic management unites various buildings, items and equipment that are objects of the system. The operational bodies of the system cover all areas of the country.
Liability and accidents
25. Are there any special rules in respect of death of, or injury to, passengers or loss or damage to baggage or cargo in respect of domestic carriage?
In the case of a death of a passenger, the air carrier shall pay a fixed compensation of 2.025 million roubles. According to the rule implemented on 1 January 2010 (established by article 117 of the Russian Air Code), the air carrier should also pay compensation of up to 2 million roubles in the case of personal injury – the exact amount of such compensation shall be determined depending on the extent of damage to the passenger's health. If the actual damage caused by death or personal injury is higher than the amount of the fixed compensation, the injured party who has received the compensation may claim the balance from the air carrier.
The limits of compensation for luggage are set at its declared value or 600 roubles per kilogram; for other property, the limit of compensation is 11,000 roubles, unless it is not proved that the damage is larger.
The risk of the civil liability of the carrier with regards to death of, or injury to, passengers or loss or damage to luggage or cargo must be insured.
There is an obligatory pre-judicial procedure, which means that before filing the claim to the court the interested party should send a pre-judicial claim to the air carrier. Such pre-judicial claim in cases of domestic carriage must be filed within six months (18 months in cases of international carriage).
26. Are there any special rules about the liability of aircraft operators for surface damage?
The operator is liable to compensate the damage incurred during the operation of the aircraft, unless it is able to prove that the damage arose due to force majeure or the intent of the injured party. The liability of the operator for damage that can be caused as a result of aerial work must also be insured.
It should be noted that for the purposes of personal injury compensation, the air transportation of a passenger includes the period starting from the moment of pre-flight baggage check until the moment when the passenger has left the airfield accompanied by the representatives of the carrier. Russia is a party to the Convention on Damage Caused by Foreign Aircraft to Third Parties on the Surface, 1958, but it neither signed nor ratified the Convention on Compensation for Damage Caused by Aircraft to Third Parties, 2009.
27. What system and procedures are in place for the investigation of air accidents?
There is a mandatory system for the investigation of air accidents and incidents concerning all types of the aircraft. In accordance with the law, the main purpose of the investigation is to clarify the reasons for the accident and to prevent such accidents in future. Finding a person guilty or responsible for the accident is not considered as one of the purposes of the investigation – this should be done by means of common judicial proceedings, which shall be held separately from the investigation.
The investigation is held by a special commission created for accidents by the Interstate Aviation Committee and in case of an incident, by the FAAT. The commission may include representatives of government authorities, scientific, construction and other commercial organisations that are not directly connected with the accident. Members of the commission should not represent the interests of insurance companies.
The Russian government established special rules governing investigation of air accidents with civil, state and experimental aircraft. The rules governing investigation of air accidents with civil aircraft are based on the provisions of Russian legislation, intergovernmental agreement on civil aviation and the usage of airspace, 1991, and standards and recommendations of Annex 13 of the Convention on International Civil Aviation 1944.
The work of the commission shall be executed in accordance with a prescribed plan, which provides for the main direction of the commission's activities, their sequence and the division of the areas of responsibility between groups within the commission. Before the approval of the plan in case of accidents, the commission is only allowed to undertake urgent measures, such as evacuation of persons and preservation of evidence that might disappear, etc.
The investigation period is 30 days for accidents and 10 days for incidents, which can be extended. The investigation shall end with the final report on results. The final report shall be addressed to a mandatory list of entities and may be open to the public. At the end of the investigation the company owning or operating the aircraft shall make an open analysis of the accident in order to inform the interested parties of the grounds and underlying factors of the accident.
28. Is there a mandatory accident and incident reporting system, and if so, how does it operate?
There is a mandatory reporting system, and persons intentionally concealing an accident or an incident, or information or data connected therewith, shall be held responsible.
Upon receipt of initial information, traffic superintendents shall inform the central and regional authorities in the aviation sector. The FAAT shall then forward the information to the authorities in the spheres of security, environment and economy and to the ICAO. If an accident involving a Russian aircraft has taken place over or on the territory of a foreign state or if foreign citizens were on board the aircraft, diplomatic channels are used to convey information.
Three days after arrival at the place of the accident, the chairman of the commission shall forward a follow-up report. The final report on results shall be sent to the addressees within 10 days following its approval.
Competition law
29. Do sector-specific competition rules apply to aviation? If not, do the general competition law rules apply?
Russian competition law does not have a very long history and it tends to follow the European model of regulation (as opposed to the US antitrust model). The first law on competition was enacted in 1991. For these reasons, among others, the overwhelming majority of the competition rules applicable to aviation are of a general nature and are laid down in the set of general legislative acts – the Federal Law on Protection of Competition and the Federal Law on Natural Monopolies. The role of sector-specific rules is not very significant.
It should also be noted that in May 2008 the Law on Foreign Investments in Companies Having Strategic Importance was enacted. This law provides requirements that complement the requirements of the Law on Protection of Competition (see question 30) and is applicable to some of the enterprises in the aviation sector.
30. Is there a sector-specific regulator or are competition rules applied by the general competition authority?
The competition rules are applied by the general competition authority – the Federal Antimonopoly Service and its local bodies. In the sphere of natural monopolies, the tariffs for their services are approved by the Federal Antimonopoly Service.
There is a specific registry of natural monopolies in the transport sector (as well as in other sectors) approved by the Federal Antimonopoly Service, which includes the companies that operate the airports and certain other companies.
In the light of the Law on Foreign Investments in Companies Having Strategic Importance, it should be stressed that transactions and other actions that lead to the establishment of the control of a foreign investor or the group of persons over the entities that have a strategic importance and transactions that lead to acquisition of such entities' property that is considered to be a basic production asset and the value of which is 25 per cent or more of the balance value of assets of such entity need to be ex ante approved by a special commission of the government on control of foreign investments. Foreign investors are also obliged to provide information upon acquisition of at least 5 per cent of shares in strategic companies or upon performance of transactions and other actions that have been preliminarily approved in accordance with the Law on Foreign Investments in Companies Having Strategic Importance. The list of strategic companies within the meaning of the said law includes not only natural monopolies in the transport sector, but also companies exercising activities in the spheres of maintenance of aviation security, engineering, production, repair and testing of aircraft and equipment.
31. How is the relevant market for the purposes of a competition assessment in the aviation sector defined by the competition authorities?
The general definition of the relevant market for goods and services is contained in the Law on Protection of Competition and is as follows: 'a sphere of circulation of such goods (service, work) that cannot be substituted with other goods, or of goods that can be mutually substituted, inside which the buyer can acquire the goods and outside which there is no possibility or practical sense to acquire such'.
In 2007 the Federal Antimonopoly Service started an investigation in the sphere of air fuel. As the result of this some of the air fuel suppliers were fined for their concerted practices. At present the government has increased antimonopoly and administrative control in this sector and is further examining tools to enhance competition.
It should be noted, however, that government policy in the aviation sector is aimed at concentration of the air carriers, thereby diminishing the number of players. This could not leave the airfares for carriage of passengers unaffected. The Federal Antimonopoly Service in its turn recommended the air carriers to increase the transparency of the price formation and to stop selling tickets that could not be refunded (at least partially) in case of the unilateral refusal on the part of the passenger.
Update and trends.
One of the trends of air transport regulation in Russia is further development of regulation regarding access to airport facilities and air transport
for disabled persons. Following substantial novels in the Air Code introduced in 2013, special rules regulating the treatment of disabled persons at airports and on board aircraft came into force in 2016.
Reduction of the VAT rate to zero per cent for flights within the Russian territory is being extensively discussed in mass media, in the Russian government and in corresponding ministries. From 1 July 2015, services for internal air carriage of passengers and luggage within the Russian territory are subject to a 10 per cent VAT rate, except internal air carriage of passengers and luggage to or from the territory of Crimea, which is subject to a zero per cent VAT rate. Before 1 July 2015, a VAT rate of 18 per cent was applied to all air carriage of passengers and luggage. The reduction of the VAT rate in respect of internal air carriage is connected with reported losses of air carriers during 2015 and the first quarter of 2016 and a decline in volume of air carriage, by 8 per cent, for the first half of 2016.
The monopolisation of some areas of air transport services in Russia are worth mentioning. Recently, the supervision procedure within the framework of the bankruptcy legislation was launched in respect of the second largest national carrier, Transaero. Fifty-six international routes on which Transaero had been operating were temporarily handed over to Aeroflot-Russian Airlines (Aeroflot). In the first quarter of 2016 Aeroflot increased its passenger traffic by 13.9 per cent compared with the first quarter of 2015 and its market share has increased to 54 per cent. Aeroflot operates flights to 131 destinations in 50 countries (45 destinations within Russia).
In 2016, a new twin-engine short- to mid-range Russian jet airliner, Irkut MC-21, was presented to the public. It is planned to launch mass production of the airliner in 2017. The manufacturer (Irkut Corporation) hopes that the MC-21 will be able to compete with the Boeing 737 MAX, the Airbus A320neo and the Comac C919.
32. What are the main standards for assessing the competitive effect of a transaction?
As a starting point it should be noted that the Law on Protection of Competition contains a list of prohibited measures, which, in general, is in line with the European tradition. Apart from the prohibition of agreements restricting competition or concerted practices, the list contains prohibition of abuse of a dominant position and prohibition of unfair competition.
The standards for assessing the anticompetitive effect of a transaction may be the following:
• diminishing the number of players in the relevant market;
• price manipulation;
• restricting certain market players from taking independent actions;
• determination of joint conditions for the circulation of goods; and
• other circumstances allowing some of the market players to influence the conditions for the circulation of goods.
33. What types of remedies have been imposed to remedy concerns identified by the competition authorities?
The Federal Antimonopoly Service and its local bodies may issue instructions, which are obligatory for the companies and addressees and may contain a wide variety of remedies, such as: termination of agreements restricting competition, execution of pro-competitive actions, termination of unfair competition, fulfilment of economic, technical and information requirements on elimination of discriminatory conditions, payment of revenues received as a result of the infringement of competition law and restoration of the status quo before the infringement of competition law. In case of mergers, the service may also impose obligatory conditions, such as third-party access to production capacities, infrastructure and information, provision of intellectual property to third parties, requirements for transfer of assets and requirements for the composition of the group of affiliated persons.
Financial support and state aid
34. Are there sector-specific rules regulating direct or indirect financial support to companies by the government or government-controlled agencies or companies (state aid) in the aviation sector? If not, do general state aid rules apply?
The general state aid rules contained in the Law on Protection of Competition are not applicable to the aviation sector. The purposes of state aid contained in the said Law (such as environmental protection and social security) do not coincide with the priorities of the development of aviation. There is also a specific Law on Public Regulation of the Development of Aviation. This Law, however, contains mere references to the main priorities of the public policy in this sector.
State aid in the form of subsidies is distributed in the aviation sector by means of regulations of the government and other public authorities, such as the Ministry of Transport or the FAAT. These regulations usually take the form of 'Rules for Granting Subsidies'. At present the most important subsidies are the following:
• partial compensation to Russian leasing companies for interest on loans, established by the government;
• partial compensation to Russian manufacturers of aircraft engines for the interest on long-term credits for refinancing of earlier credits;
• partial compensation to the Russian manufacturers of aircraft, helicopters and aviation engines for the interest on loans for technical renovation, established by the government;
• compensation to Russian aircraft manufacturing companies for payments of coupon profit arising from bond-secured loans guaranteed by the Russian Federation;
• compensation to Russian air carriers for non-received profit owing to air carriage of passengers who entered into air carriage agreements with air carriers whose air operator certificate has been suspended;
• partial compensation to Russian air companies for leasing payments, established by the government;
• compensation for the costs of salvage operations for the legal entities owning salvage bases, established by the FAAT;
• subsidies to Russian manufacturers of aviation technical equipment engaged in the realisation of projects regarding the production of civil regional aircraft with the capacity of not more than 19 seats; and
• subsidies to air transport organisations that ensure availability of air carriage of passengers from the Far East to the European part of Russia and vice versa.
35. What are the main principles of the state aid rules applicable to the aviation sector?
There are no general principles for state aid rules applicable to the aviation sector.
36. Are there exemptions from the state aid rules or situations in which they do not apply?
As mentioned, state aid in the form of subsidies is provided to enterprises acting in only the specific spheres mentioned, thereby representing an exemption.
37. Must clearance from the competition authorities be obtained before state aid may be granted?
None of the above-mentioned regulations provides for obligatory clearance from the competition authorities. The recipient of the subsidies should file documents confirming the fulfilment of the underlying obligation and the timely payment of taxes with the administrator of funds.
38. If so, what are the main procedural steps to obtain clearance?
39. If no clearance is obtained, what procedures apply to recover unlawfully granted state aid?
Usually the regulation providing for the subsidies does not contain express sanctions for the non-fulfilment of the subsidies' conditions. It is implied that the administrator of funds shall cease to subsidise the company in such cases. Sometimes it is expressly stated that the administrator can stop the subsidies or even recover the funds already granted.
40. Is there any aviation-specific passenger protection legislation?
The rules of carriage of passengers and their luggage by air contain a detailed regulation of carrier-passenger relations. They include specific provisions related to carriage of children, disabled and sick passengers. The rules define the range of service to be provided to passengers under the carriage by air contract, such as transportation from the airport terminal to the aircraft, loading or unloading of luggage, etc. They also provide conditions on which the passenger is entitled to free additional services (hotel, storage of luggage, additional meals, etc). Besides, the rules define the scope of information that the carrier must disclose to the passenger when entering into the contract.
Under the rules, a passenger is entitled to return the money paid for carriage in case of 'forced rejection of carriage', that is, rejection caused by delay or cancellation of flight, change of route, failure to comply with the timetable (except for safety reasons), etc. A partial compensation of the airfare may also be provided in cases of voluntary rejection of carriage.
41. Are there mandatory insurance requirements for the operators of aircraft?
There are several types of mandatory insurance applicable in aviation. In particular, the owner of the aircraft must insure its liability for personal injury or damage to property of third parties (see questions 25 and 26). The air carrier must insure its liability to passengers and cargo owners. In addition, the crew members of an aircraft must have life insurance coverage. The liability of the operator for damage that can be caused as a result of aerial work must also be insured.
42. What legal requirements are there with regard to aviation security?
Aviation security is defined by the Air Code as the protection of aviation from illegal interference. Aviation security may be procured, inter alia, by the following means:
• restriction of access to controlled zones of airports and aerodromes;
• guarding the aircraft while parked at the apron;
• prevention of illegal carriage of dangerous items; and
• pre-flight and post-flight inspections.
Aviation security services are entitled to detain persons who violate aviation security requirements, as well as luggage, cargo or mail containing prohibited items.
Each airport must have an emergency plan identifying actions that should be taken in case of extraordinary situations. On the federal level, the FAAT is in charge of elaborating and taking measures to enhance aviation security.
43. What serious crimes exist with regard to aviation?
The Russian Criminal Code provides a number of specific crimes in the field of aviation. The capture or theft of an aircraft may lead to up to 15 years of imprisonment. Violation of the rules of international flights may result in a fine, arrest of up to six months and deprivation of the right to hold positions connected with aviation for up to three years. Violation of safety rules applicable and non-compliance with the safety instruction of the state authorities in aviation may be a criminal offence if it leads, by negligence, to severe injury or death of one or more persons or substantial damage of property. It can be punished by up to seven years' imprisonment. Finally, poor-quality repair of aircraft and airport facilities, if it leads, by negligence, to severe injury or death can also be punished by up to seven years' imprisonment.
Reproduced with permission from Law Business Research Ltd. Getting the Deal Through: Air Transport 2017, (published in September 2016; contributing editors: John Balfour and Mark Bisset, Clyde & Co LLP) For further information please visit gettingthedealthrough.com