This is how companies smuggle aircraft parts into Iran, is Russia next?

In March 2022, at a meeting of the Russian Federation Council Committee on Economic Policy, the country’s minister of transport, Vitaly Savelyev, made some interesting comments.

He seemed to be very skeptical of Russia’s domestically-made aircraft, stating that many of them were “economically ineffective”, while there wasn’t enough of the rest of them to make a difference.

As a result, losing any foreign-made aircraft would harm Russia’s aviation strength, according to Savelyev. The statement was referring to the fact that most aircraft used by Russian airlines – and nearly all of the ones operated regularly – have been leased from Western companies. As the sanctions that followed Russia’s invasion of Ukraine went into effect, the lessors demanded their assets back.

Since then, Russia has worked hard to hold on to these aircraft. This has included changing legislation, promptly reregistering the aircraft, and stopping flights to wherever the aircraft can be confiscated. In essence, the aircraft were commandeered by the airlines with the state’s blessing.

This proved to be an effective short-term solution to Russia’s problems. But a long-term plan was needed because aircraft operations are impossible without maintenance, including the parts, resources and services that Russia no longer has access to. Cannibalization – which Russian airlines will likely resort to – can only help so much. A more stable solution needs to be devised, preferably one which allows for maintenance and fleet expansion.

Recent history contains at least one case of this kind of solution.

“As a basis [of a model to follow] we took Iran,” Savelyev said during the meeting in March. “Iran is under sanctions since 1995. They have 15 aviation companies, they repair and maintain them [the aircraft]. They fly to us twice a week from Teheran. And in 2020 they managed to buy 22 Airbus aircraft. This is why they became a basis for us – an example that even under sanctions one can look for solutions.”

What did Savelyev mean? Iran’s solution to the problem posed by sanctions was a complex and multi-faceted one, involving a whole array of illicit activities from smuggling to what was essentially air piracy.

Here we have compiled a list of these actions, as described by official sources, together with the Iranian and non-Iranian companies involved. As Russia possesses far greater resources than Iran and has, arguably, a greater interest in using them due to the importance of aviation in its vast transport network, it seems likely that it may consider some of these methods.

A list of companies involved in these actions is included at the end of this article. The majority of these firms have since been dissolved but some are still active.

Shell companies
Iran’s use of chains of purpose-tailored companies has been well documented. Multiple reports and investigations have alleged a well-developed model of creating fronts in the United Arab Emirates, Turkey, Cyprus, Germany, Canada and elsewhere through which parts, acquired from the US, could be routed and rerouted before eventually reaching Iran.

Between 2011 and 2016, this scheme gave birth to an entire ecosystem with its masterminds, supply chains, and a tightly-knit community of smugglers. In 2013 alone the US Bureau of Industry and Security identified and sanctioned more than 35 companies and individuals involved in the trade.

The sanctions were eventually lifted in 2016 as a result of the 2015 Iran nuclear deal. The smuggling system seemed to disintegrate, giving way to official aircraft orders. In 2018, the US withdrew from the deal and the sanctions were reinstated.

Not all the companies which dealt with Iran’s aviation industry were shell companies, and not all of them were established by Iranians or even involved Iranian individuals. The following examples serve to categorize such cases and highlight some of the parties involved.

Cooperation with third parties
The bulk of the sanctions against Iran were implemented by the US. There hasn’t always been an incentive for the companies established in other countries – especially those that do not fall in line with the US politically – to follow suit. But when it comes to the sale of US-made aircraft parts, there has been a concrete basis for stopping the trade. As for other kinds of services, this kind of enforcement has been difficult to implement.

Flight Travel LLC is one example. Owned by the Armenian entrepreneur Bella Gevorgyan and established in 2018, it provides travel management services, selling tickets, organizing tours and engaging in other kinds of travel-related activities.

In 2019 the company found itself into the crosshairs of the US Department of Treasury (DoT). According to the Department, the Armenian firm was dealing with Mahan Air, one of the biggest Iranian airlines, which was designated as a supporter of terrorism in 2011. According to the Treasury’s statements, Flight Travel LLC acted on behalf of Mahan Air as its General Sales Agent (GSA) and generated revenue for the Iranian company.

Flight Travel LLC was designated under the sanctions and, as a result, its interests and assets in the US were blocked.

When interviewed by an Armenian outlet called Hetq, Gevorgyan appeared to be slightly baffled. She said that her company had no assets in the US and thus nothing can be blocked. She also appealed to the fact that since Armenia did not declare sanctions against Iran, she acted in full accordance with the legislation of her country.

If the activity on the company’s webpage is to be believed, Flight Travel LLC continues its operations. AeroTime contacted the company for comment but, at the time of publishing of this article, had not received a response.

Delta Parts Supply FZC is another example of similar activity which continued for some time due to being based in a third country. Headquartered in the United Arab Emirates, it sold aircraft parts directly to Mahan Air. In 2020 it was designated by DoT, which resulted in the freezing of its assets.

The parts, according to the DoT, had been loaded onto Mahan Air aircraft in Dubai and shipped to Iran, helping the country to sustain its fleet. Delta Parts Supply FZC has left little digital footprint.

A similar case involves another UAE-registered company, Parthia Cargo. Headed by Iranian businessman Amin Mahdavi, the company was alleged to be forwarding US-made aircraft parts from Dubai to Teheran on scheduled Mahan Air flights. Parthia Cargo was sanctioned, as was Mahdavi, and there is little information on whether he continues to do business in the aviation industry. Mahdavi did not respond to a request to comment from AeroTime.

Assistance from friendly actors
There has been at least one documented case of actors friendly to the Iranian regime providing direct assistance which allowed the country to bypass sanctions.

The case involves Sky Blue Bird Aviation. It was owned by Issam Shamout, a prominent Syrian businessman who, according to Pro-Justice NGO, has had close ties with both the Iranian and Syrian regimes. The company closely collaborated with Mahan Air, up to and including providing the Iranian airline with aircraft parts, according to the US Treasury.

Unlike some other companies owned by Shamout, Sky Blue Bird Aviation was registered in the UAE. Al-Najaf International Airport (NJF) in Iraq served as a hub for the airline, through which much of its activity has been conducted.

In 2015, the US Treasury added Sky Blue Bird Aviation to the sanctions list, but not before the airline transferred nine aircraft to Mahan Air: eight Airbus A340s and one A320.

Direct engagement
Sometimes, Iran didn’t need shell companies and the help of friendly neighbors. Despite the sanctions, a number of US companies engaged in the deals directly, and attempted to conduct trade with Iran before being stopped by the Government.

There are numerous accounts of businessmen across the world who were approached by Iranian companies with proposals and requests. For example, according to the results of an investigation conducted by the US Office of Foreign Assets Control (OFAC), in 2016 after multiple rounds of negotiations the Texas-based Aero Sky Aircraft Maintenance signed a memorandum of understanding (MOU) with Mahan Air, agreeing to provide maintenance and repair services to their aircraft. OFAC determined that Aero Sky Aircraft Maintenance was fully aware of Mahan Air being on the sanctions list, however, the American company allegedly considered the deal as fitting under certain exceptions.

Shortly after being found in violation of the sanctions Aero Sky Aircraft Maintenance was dissolved.

In 2016, OFAC accused Florida-based Southern Cross Aviation of agreeing to sell helicopters to an Ecuadorian company owned by an unnamed Iranian businessman. At first, Southern Cross Aviation denied the allegations but, after further pressure from OFAC, the company provided full documentation in the dealings that allegedly breached the sanctions.

OFAC did not determine if the company attempted to violate the sanctions knowingly or unknowingly. But a number of mitigating circumstances were discovered, including the fact that the sale in question had not yet occurred.

Southern Cross Aviation remains active, according to its internet presence. The company did not respond to AeroTime’s request for a comment.

Aircraft smuggling
Possibly the most egregious instances of smuggling involved entire aircraft. In more than one case, it seems that aircraft were delivered to Iran.

One prominent example is that of Bek Air, a Kazakhstan-based airline. It was founded in 1999 and conducted regular services from its base in Oral Ak Zhol Airport (URA). In 2017, Bek Air acquired two ex-Olympic Air Airbus A340s which were stored at Athens International Airport (ATH) for almost a decade.

Bek Air restored the jets to flyable condition. In February 2017, the two aircraft took off for Kazakhstan. However, a short while later they landed at Teheran Mehrabad International Airport (THR). Promptly, both were reregistered and entered service with Mahan Air. One of them was later sold off to Syria’s Arab Airlines.

When the story surfaced, it resulted in a minor diplomatic exchange. It is thought that Bek Air has not appealed to any civil authority to report that its property has been stolen, and neither has the company made any public statements regarding the events. The carrier was stripped of air operator’s certificate in 2020 following an unrelated incident which revealed serious safety violations within the airline. Neither Bek Air’s founder and owner Nurbol Sultan nor anyone else involved with the airline have been sanctioned.

Another less prominent example occurred in 2020. An lawsuit is ongoing meaning that not all of the circumstances are clear.

It concerns Tekh Innovatsiya, a company founded in 2019 by Sergey Sokolov and Nikolai Alehin, Russian businessmen from Voronezh. In early 2020, Tekh Innovatsiya leased a Bombardier Challenger 600 business jet from a Bermuda-based company for the period of three years. According to the information revealed by an investigation, Sokolov then allegedly bribed Federal Agency for Air Transport (Rosaviatsiya) registration department employee Galina Ceveleva for $30.000, convincing her to forge ownership documents. Rosaviatsiya never contacted the original owner and did not try to confirm the ownership of the aircraft through international registers.

Promptly, the jet was transferred to Iran. Due to the beginning of the COVID-19 pandemic the process of the sale stalled. The company, which originally owned the aircraft, noticed the loss and sued Tekh Innovatsiya in Russian court. Sokolov was imprisoned and the aircraft was arrested for the duration of the trial.

The criminal case is still ongoing and it is unclear if the original owner will be able to retrieve the aircraft. As of mid-2022, Sokolov is still in a Russian prison. But several of the companies he owned remain active, according to several Russian commercial registries.

Conclusion
It seems likely that, as the fleets of Russia’s airlines are increasingly starved for parts, the scenario of Iran will repeat itself.

As described above, the Russian Minister of Transport says that the country should follow Iran’s model. And it’s arguable that work has already started.

On May 9, 2022 – the Victory day – the Prime Minister of the Russian Federation, Mikhail Mishustin, signed a decree that significantly widened existing legislation on what kinds of aircraft and parts can be used by country’s airlines.

Most of the previous restrictions were revoked. The parts no longer have to be certified by the FAA, EASA or Transport Canada, as required before. A certification or an equivalent document from any aviation authority of any country is deemed enough, be it issued by Russia, Iran or any entity recognized as an independent state in Russia – such as the Donetsk People’s Republic.

This removed the final roadblock for companies to begin using so-called ‘grey parts’ – ones that have an opaque past but have been given some maintenance locally and approved by the local authority.

It also opened the way for Russia to fully embrace Iran’s experience, as Savelyev noted.