Domodedovo: A seizure in search of a buyer

Friday 23 January 2026

When the Russian state moved to seize Moscow’s Domodedovo Airport in mid 2025, the gesture was presented as one of strategic hygiene. Prosecutors argued that foreign residency or citizenship in the ownership chain created an unacceptable vulnerability in critical infrastructure. A Moscow court duly transferred the asset to the state. 

Yet the sequel has been more revealing than the opening act. In January 2026 the government attempted to sell Domodedovo at auction and failed. There was, in effect, only one would-be bidder and he did not make it to the starting line because he did not submit the required paperwork. Bloomberg reported that the state sought at least 132 billion rubles, a price that, on paper, would have turned an expropriation into a sizeable fiscal receipt. 

The failed sale is not merely a curiosity about one airport. It is a small but precise illustration of Russia’s macroeconomic moment: an economy that still functions, still flies, still collects taxes, but increasingly struggles to convert coercive power into investable confidence.

From strategic asset to distressed holding

Domodedovo is one of Moscow’s principal airports, a piece of infrastructure that under normal conditions would attract a long queue of financial investors, industrial operators and sovereign-linked capital. It has revenue streams in aeronautical charges, retail concessions, property and logistics. The attraction, however, depends on predictable regulation, reliable courts, manageable debt and access to equipment, insurance and finance on tolerable terms.

All four of those pillars have weakened.

The legal narrative of the seizure created immediate uncertainty. The case did not arise from insolvency proceedings in which creditors bargain over a restructuring, or from a consensual privatisation in which a seller offers warranties and disclosures. It arose from state action, justified by strategic considerations and the alleged risks of foreign influence. That is not, in itself, a novelty in contemporary Russia, but it changes the risk calculus for any purchaser. The message to the market is that an asset can be taken on grounds that are, at minimum, politically sensitive and, at maximum, expansively interpreted. A buyer must therefore ask an uncomfortable question: if the state can seize, can she also re-seize, re-regulate, or re-price?

Then there is the debt. Reporting around the airport’s situation has emphasised that Domodedovo is burdened by significant liabilities. Debt is not fatal if refinancing is feasible. In Russia today, refinancing is costly.

The Bank of Russia’s key rate has been held at very high levels, reaching 16 per cent in January 2026. In such an environment leveraged acquisitions become unattractive and long-dated infrastructure finance becomes difficult unless the purchaser has privileged access to state-linked funding. Even for domestic buyers, high rates force a sharper trade-off between buying an airport and funding other parts of their business.

Finally the operational environment for a major airport has been complicated by sanctions and the aviation sector’s wider constraints. Even where passenger numbers are sustained by domestic travel and “friendly” international routes, airports remain integrated into systems of aircraft supply, maintenance, insurance and payments. Restrictions do not stop planes taking off, but they make the long-term economics harder to model.

The auction that did not happen

The January 2026 auction failure was, on its face, procedural: the only applicant, described in reporting as a small business owner, failed to provide the documents required to participate. But auctions fail for deeper reasons than paperwork.

A credible buyer for an asset of this scale normally wants access to detailed financial information, clarity on outstanding litigation, confidence in licences and concessions, and a predictable path to capital expenditure. An auction format can provide some transparency, but only if the underlying asset is clean enough to be valued.

The state’s apparent minimum price, reported as 132 billion rubles, also matters. If investors perceive that they are being asked to pay a politically determined number rather than an economically defensible one, they either stay away or they wait for the price to fall. Bloomberg noted that Russia intended to attempt another sale via a Dutch auction mechanism, in which the price may be reduced to attract interest. A Dutch auction is not shameful. It is a market device. But in the context of a nationalised strategic asset it signals a mismatch between the Kremlin’s fiscal hopes and buyers’ risk appetite.

The macroeconomy behind the micro-failure

Russia’s budget arithmetic has tightened. Reuters reported that Russia ran a 2025 budget deficit of 5.6 trillion rubles, equivalent to 2.6 per cent of gross domestic product, her largest deficit as a share of GDP since 2020 and largest in ruble terms since 2006. Oil and gas revenues, historically the federal budget’s great stabiliser, fell sharply, while spending continued to rise. 

Fiscal pressure creates an incentive to monetise assets. If the state can seize a large business and then sell it, she can raise cash without formally raising headline tax rates, and without cutting expenditure that has become politically and strategically central. That is the logic behind a wave of asset transfers into state hands since the full-scale invasion of Ukraine.

But the Domodedovo episode suggests that monetisation is harder than seizure. A state can take an asset in a single court decision. Selling it requires a buyer with money, confidence and a tolerance for political risk.

Here the macroeconomy bites again. Inflation has been a persistent concern and the central bank has kept monetary policy tight. The Russian government has also increased value added tax from 20 per cent to 22 per cent, seeking additional revenue, a move which, even if fiscally rational, adds to the cost environment facing consumers and businesses. 

High interest rates, tax increases and sanctions are not merely abstract variables. They feed directly into valuation models. They raise discount rates, shrink prospective cashflows and make downside scenarios more plausible.

Why “patriotic capital” may still hesitate

The Kremlin has often relied upon a category of domestic buyers who can be described, without sarcasm, as patriotic capital. These are investors, oligarchic groups, state corporations, banks and regional elites whose prosperity is intertwined with the state’s priorities. They can be mobilised, nudged, rewarded or, in extreme cases, pressured.

Even patriotic capital has limits. Buying a seized airport is not like buying a retail chain. Airports require continuous capital expenditure, compliance with safety regulation and sophisticated management. They also sit at the junction of geopolitics and commerce. If an asset’s difficulties are structural, patriotic rhetoric cannot refinance a bond or replace a jet engine.

Moreover a buyer of Domodedovo would inherit not only an airport but also a set of relationships: with federal regulators, with airlines, with security services, with regional authorities and with creditors. If the debt load is heavy, the new owner may find that much of the purchase price simply recapitalises past obligations rather than funding future development.

A further hesitation is reputational, even within Russia. If the state is seen to be selling seized assets to insiders at discounted prices, she risks public cynicism and elite rivalry. If she insists on a high price, she risks failed auctions. Domodedovo appears, for the moment, to have fallen into the second category.

What this says about Russia’s “war economy”

Russia’s war economy is often described in binary terms: either she is collapsing under sanctions or she is resilient and adapting. Reality is more granular. The state can sustain military spending, maintain macro stability for stretches of time and keep the basic functions of a modern economy running. At the same time she can find herself trapped in a narrowing corridor of options.

Domodedovo illustrates that corridor. Nationalisation can be justified on security grounds and can also serve political discipline. Yet once assets are in state hands they become part of a balance sheet that must be managed. If the state wants cash, she must sell. If she sells, she must convince buyers that ownership is meaningful, that property rights have some durability and that future profits will not be confiscated by new rules or new prosecutors.

This is the paradox of coercive economic management: the more frequently the state demonstrates her power to take, the harder it becomes to persuade anyone to pay full price to own.

The ruble price and the real price

The reported minimum price of 132 billion rubles invites a final reflection. In ruble terms such a figure looks substantial. But it is not merely the ruble price that matters. The real price is the premium a buyer demands for uncertainty.

In stable markets airports are priced as long-term cash-generating assets. In politically stressed markets, they are priced as contingent claims: profitable if conditions remain tolerable, and hazardous if conditions deteriorate. Russia’s macroeconomic woes, including a widening deficit and dependence on volatile energy revenues, make deterioration scenarios harder to dismiss. 

So Domodedovo sits, for now, as an asset that the state has proved she can seize, but not yet proved she can sell.

A conclusion in the form of a warning

The failed Domodedovo sale does not mean that Russia cannot find a buyer. A reduced price, a more carefully curated purchaser or an arrangement involving state banks could yet produce a transaction. 

But the episode does suggest a structural truth about Russia’s present economy. In an environment of high interest rates, fiscal strain and expanding state intervention, the Kremlin’s ability to convert property into revenue is weakening. 

For Russia that is a macroeconomic problem disguised as a corporate auction. For outside observers it is a reminder that the health of an economy is not measured only by whether she can take control, but by whether she can persuade anyone, even her own, that ownership is still worth paying for.