• Wed. May 11th, 2022

Fighting between Russia and Ukraine disrupts the airline industry | Russian-Ukrainian crisis

The fallout on the global aviation industry from Russia’s invasion of Ukraine spread on Friday as two other European countries banned Russian carriers and the European Union said it would restrict exports of parts of plane.

Virgin Atlantic and British Airways began operating flights in Russian airspace after London and Moscow banned each other from airlines in retaliation for invading Ukraine.

Poland and the Czech Republic have also said they are banning Russian airlines from their airspace. Some industry executives have said they are ready for further bans despite the prospect of a costly sanctions war over mutual overflight rights.

The board of the United Nations aviation agency, the International Civil Aviation Organization, was due to discuss the dispute at a meeting on Friday.

Russia’s invasion has “significant potential to derail Europe’s fragile airline recovery”, said Rob Morris, chief consultant at UK-based Ascend by Cirium.

While many airlines still use Russia’s east-west transit corridors, some have begun to ask about capacity in Anchorage, recalling Alaska’s use during the Cold War as a refueling hub for planes banned from entering Soviet airspace.

Western airlines, lessors and manufacturers assessed the growing risks of doing business with Russia as sanctions targeted Russian companies, banks and individuals.

Delta Air Lines has announced that it is suspending a codeshare service with Russia’s Aeroflot.

“It will be more difficult for investors to accept aviation asset portfolios containing Russian airlines. Nobody wants to take Russian risks today,” said aviation adviser Bertrand Grabowski, adding that fears included a lack of insurance coverage.

Russian forces closed in on the Ukrainian capital on Friday in the biggest attack on a European state since World War II.

Airspace in Ukraine, Moldova, parts of Belarus and southern Russia near the Ukrainian border has been closed, giving airlines a narrower range of route options.

Japan Airlines canceled a flight to Moscow on Thursday, citing potential security risks, and the UK closed its airspace to Russian airlines, including Aeroflot, as part of a series of punitive measures.

In response, Moscow banned British airlines from landing at its airports or crossing its airspace, citing “hostile decisions” from London.

Russian airline S7 announced on Friday that it was suspending all flights to Europe, citing sanctions imposed on Moscow following the Kremlin’s invasion of Ukraine.

“Due to the closure of airspace by European countries, S7 Airlines has decided to cancel all flights to Europe from February 26 to March 13,” the company said in a statement released by the agencies. Russian press.

Virgin Atlantic said bypassing Russia would add 15 minutes to an hour to its flights between the UK, India and Pakistan.

American Airlines Group Inc said it had rerouted its Delhi-New York flight. Rival United Airlines, however, still used Russian airspace for Delhi-Chicago and Delhi-Newark flights, according to Flightradar24.

Gulf carrier Emirates said it had made minor changes to its itinerary, resulting in slightly longer flight times. United Parcel Service Inc said it was implementing contingency plans.

OPSGROUP, an aviation industry cooperative that shares information on flight risks, said any aircraft traveling through Russian airspace should have such contingency plans in place for closed airspace due to risks or penalties.

Revenue from Russian overflights goes to state carrier Aeroflot.

“Russia is unlikely to launch its own sanctions and airspace bans as it would not like to see Aeroflot receive reciprocal bans,” OPSGROUP said. “However, they may react in response to sanctions from other states.”

Airlines were also reeling from oil prices rising above $105 a barrel for the first time since 2014.

This increases operating costs at a time when travel demand remains weak due to the coronavirus pandemic.

Rating agency Fitch said airline profits and cash flow could suffer if crude prices continue to rise or remain high.

Jefferies analysts said European airlines were likely to take a longer-term hit in light of the dispute.

A network of millions of coins was also affected.

Washington announced export controls on goods, including aircraft parts. European Commission President Ursula von der Leyen said the EU also plans to stop exporting these coins to Russia. The United States said there would be measures to maintain security.

“(W)e believe sanctions and export control activities should not interfere with the need to maintain safe commercial aircraft flight,” said Eric Fanning, chief executive of the US-based Aerospace Industries Association. -United.

Russian airlines have 980 jets in service, of which 777 are leased, according to analytics firm Cirium. Of these, 515 with an estimated market value of $10 billion are leased overseas.