Russian airlines may have a chance to lease aircraft at a discount this year, Kommersant reports.

The Aircraft Operators Association (AOA) has addressed a letter to Transport Committee of the State Duma last week. The association is asking to make changes in the N14653-6 draft bill "About statement of Russian Federation in the context of Protocol to the Convention of International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment", which is being considered by the State Duma. AOA proposes to replace the words “international guarantees” by “security guarantees” in the item 1 of article 1 of Federal Law N361-FZ "About joining of Russian Federation to the Convention of International Interests in Mobile Equipment".

As explained by the lawyers, the AOA’s proposals are technical; however, Russian airlines will not get any discounts for leasing of foreign aircraft without making these changes. This discount is provided to all the participants of Cape Town convention (signed in Cape Town in 2001). It provides international guarantees to banks, leasing and insurance companies, which finance the leasing of aircraft. The risks for the banks are lower in the countries, which participate in the Convention. Thus, the companies of these countries may have a discount on the part of backers of bill and bankers.

The discount is significant. While acquiring Boeing 737-800 with a cost of $80 million on the security of EXIM Bank (USA) (assuming the maturity of the guaranteed credit does not exceed 12 years) the minimum basic commission charged by EXIM Bank for provision of the guarantee will be 8,4-16,2% of the guaranteed credit. At that, the maximum amount of “Cape Town” discount will be 10% of the minimum basic commission, that is to say from $538,000 to $1,1 million per aircraft in this case.

If the State Duma reacts to the AOA’s proposal quickly, the Russian airlines may lease the aircraft with the “Cape Town” discount this year.