Airline industry shifts attention to Russia risks after Ukraine airspace
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[February 25, 2022] By
Jamie Freed and Allison Lampert
(Reuters) -The fallout to the global
aviation industry from Russia's invasion of Ukraine is spreading beyond
the airspace closings over the conflict zone as airlines, lessors and
manufacturers face up to growing risks of doing business with Russia.
Alaska's Anchorage Airport, a popular refuelling hub for long-haul
flights when Western airlines were unable to access Russian airspace
during the Cold War, said carriers had started making inquiries about
capacity in case routes over Russia are affected by the Ukraine crisis.
Japan Airlines cancelled its Thursday evening flight to Moscow, citing
potential safety risks, while Britain closed its airspace to Russian
airlines, including Aeroflot.
Ukrainian President Volodymyr Zelenskiy vowed on Friday to stay in Kyiv
as his troops battled Russian invaders advancing toward the capital in
the biggest attack on a European state since World War Two.
Airspace in Ukraine, Moldova, parts of Belarus and in southern Russia
near the Ukraine border was closed when the invasion began on Thursday,
giving airlines a narrower range of routing options.
Emirates said it had made minor routing changes to Stockholm, Moscow,
St. Petersburg and some U.S. flights that were hit by the airspace
closings, leading to slightly longer flight times.
OPSGROUP, an aviation industry cooperative that shares information on
flight risks, said any aircraft travelling through Russian airspace
should have contingency plans in place for closed airspace due to risks
or sanctions.
"Russia are unlikely to initiate their own sanctions and airspace bans
as they would not wish to see Aeroflot receive reciprocal bans,"
OPSGROUP said. "However, they may react in response to sanctions from
other states."
Russia's aviation authority said it reserved the right to respond to
Britain's flight ban with similar measures, the TASS news agency
reported on Friday.
Flight tracking website FlightRadar24 said British Airways and Virgin
Atlantic flights from India and Pakistan to London that normally flew
over Russia were now following a southern route that avoided Russian
airspace.
The governing council of the International Civil Aviation Organization (ICAO),
a U.N. body, will discuss the Ukraine conflict at a meeting on Friday, a
spokesperson said.
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Parked planes are seen at Boryspil International Airport after
Russia launched a massive military operation against Ukraine, in
Boryspil, Ukraine February 24, 2022. REUTERS/Umit Bektas
As airlines assessed the airspace risks, they have also been hit by a spike in
oil prices to more than $105 per barrel for the first time since 2014 as a
result of the conflict. That raises operating costs at a time when travel demand
remains low because of the pandemic.
Jefferies analysts said European airlines were also likely to take a longer-term
hit to demand in light of the conflict, pointing to a 27% fall in travel from
the European Union to Ukraine and Russia over the span of two years after Russia
annexed Crimea in 2014.
Aviation bosses are also worried about the impact on dealings with Russian
companies. Sanctions could disrupt payments to leasing firms and affect the
supply of aircraft parts.
Russian companies have 980 passenger jets in service, of which 777 are leased,
according to analytics firm Cirium. Of these, two thirds, or 515 jets, with an
estimated market value of about $10 billion, are rented from foreign firms.
Russia's domestic market has been among the best performers globally during the
pandemic, with capacity down only 7.5% this week compared to the same week in
2020, according to travel data firm OAG.
The Biden administration announced major export restrictions against Russia on
Thursday, hammering its access to goods, including aircraft parts.
The measures, however, include carveouts for technology necessary for flight
safety, raising the prospect the impact to aerospace could be limited rather
than sweeping.
Eric Fanning, chief executive of the U.S.-based Aerospace Industries
Association, said the industry was reviewing the restrictions.
“Notably, we believe that sanctions and export control activities should not
hinder the need to maintain flight safety of commercial aircraft," he said.
(Reporting by Jamie Freed in Sydney and Allison Lampert in Montreal; Additional
reporting by Maki Shiraki in Tokyo, Guy Falconbridge in London, Alexander
Cornwell in Dubai and Tim Hepher in Paris; Editing by Gerry Doyle)
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