March 17 (Reuters) – The shiny new European jet for sale was a rarity in the scorching second-hand business jet market.

It was only after aviation lawyer Amanda Applegate’s client did some further research that they discovered that the plane, although not registered in Russia, was in fact owned by Russians. .

For this buyer, it was a deal breaker, says Applegate, a partner at US firm Soar Aviation Law, as the West imposes sweeping sanctions following Russia’s invasion of Ukraine neighbor.

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The private jet world is on high alert to avoid doing business with Russia at a time when a Twitter account run by a Florida teenager, @RUOligarJets, has drawn popular attention to the fugitive luxury fleets of the ultra-rich.

“When I look at compliance, it’s like a taco, wrapped in a burrito, wrapped in a chalupa,” said a business jet maker executive, who spoke on condition of anonymity. .

According to European data research and consultancy company WINGX, there are only about 100 business jets on the Russian registry. Still, around 400 business jets flew frequently from the country last year, raising questions about the true extent of Russian control of the fleet.

“We believe a good portion of the 400 are owned by Russian-based individuals or entities,” WINGX chief executive Richard Koe said.

Concerned planners are handing out questionnaires and carrying out additional checks to ensure parts being shipped to repair centers outside of Russia aren’t inadvertently supporting sanctioned jets, the manufacturing manager said.

It is far from easy in the ultra-private world of business aviation.

Most Russian-owned business jets are registered outside the country, and ownership is camouflaged behind layers of shell companies and trusts.

Some 5% of European business jets are registered in Russia, according to Jefferies analysts. But those actually owned by Russians could be up to three times that amount, analysts say.

EXPORT VERIFICATION

One of the largest maintenance companies in the world, Germany’s Lufthansa Technik, has set up a task force and created an export approval process to avoid violating sanctions that prohibit technical support as well as shipments parts to Russia.

“This means more complexity for our global supply chain processes,” a spokesperson said.

Aircraft manufacturers must ensure that a part shipped to a maintenance center will not later end up on an aircraft belonging to a sanctioned person or entity.

This is not a problem when it comes to ordering parts for a specific aircraft, identified by its serial number. But in some cases, the order could come from a maintenance center without mentioning a specific jet.

“I expect (manufacturers) and other suppliers to start asking more questions so they can vet end users for parts exports to certain countries,” the aviation attorney said. Jonathan Epstein, partner at Holland & Knight, based in the United States.

Canada’s Bombardier and General Dynamics Corp’s Gulfstream are among the largest jet suppliers with Russian owners, according to analysts and brokers.

Bombardier, which cut ties with Russia, said it was tightening company procedures.

It has suspended some customers’ accounts even though they are not directly covered by sanctions, and will not provide parts or technical support to anyone anywhere if they use the aircraft in Russia. the Canadian aircraft maker said in a customer bulletin seen by Reuters. .

Gulfstream did not respond to a request for comment.

It is also a headache for buyers. Like Applegate’s customer, many avoid all Russian-owned planes, not just those owned by sanctioned owners.

William Quinn, chairman of US consultancy Aviation Management Systems, said he expects more bids for European business jets to come under scrutiny.

He recently represented a lender in a deal for a one-year-old Guernsey-registered Pilatus aircraft. That deal also fell through when the client discovered it belonged to Russia, Quinn said.

A broker has advised clients to “run, don’t walk” from deals with any Russians lest more names end up on blacklists or the deals worry lenders. The Kremlin has warned of anti-Russian sentiments in the West. Read more

“There is a real concern that the ‘list’ is not yet refined and will continue to grow,” the broker said on condition of anonymity. “Much more likely to get caught up than just going the other direction.”

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Reporting By Allison Lampert in Montreal; Additional reporting by Jamie Freed in Sydney; Editing by Tim Hepher and Jan Harvey

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