Fight or Flight? How war in Ukraine has affected airlines

Closures, airspace, sanctions and spare parts, subsidies, re-registrations, and re-routing woes plague carriers that used to fly over Russia. Just how has it affected their bottom line? Al Majalla explains.

An Aeroflot-Russian Airlines passenger plane lands at Moscow International Airport, 12 March 2022.
An Aeroflot-Russian Airlines passenger plane lands at Moscow International Airport, 12 March 2022.

Fight or Flight? How war in Ukraine has affected airlines

Just three days after Russia invaded Ukraine, the head of the European Commission said Russian planes were no longer welcome over European skies.

“We are shutting down EU airspace for Russian-owned, Russian-registered or Russian-controlled aircraft,” Ursula von der Leyen announced on 27 February 2022.

In the short term, passengers had to reschedule their travel or find alternative options. It was an annoyance. Many of them would never have suspected that the ban would still be in place two years later.

Closed for the foreseeable

In the days following the invasion, announcements were also being made in Russia, which decided to close several airports in the south-east, given their proximity to the war zone.

RosAviatsia said the closure would be until 2 March 2022 and covered airports in Anapa, Belgorod, Bryansk, Elista, Gelenjik, Krasnodar, Kursk, Lipetsk, Rostov-on-Don, Simferopol, and Voronezh.

Initial optimism of a quick reopening was then tempered when it was pushed back by a week, then by two.

Hope faded when RosAviatsia said the airports would stay closed for the remainder of 2022.

More recently, the governor of Krasnodar Territory, Veniamin Kondratyev, said they would reopen on 15 December 2023, but the Ministry of Defense later vetoed it.

Russian President Vladimir Putin meets with Aeroflot General Director Sergei Alexandrovsky at the Kremlin in Moscow on 29 December 2023.

The airports have been given state allowances to cover residual operational costs despite questions over sustainability.

Others say the airports are usually part of a holding company and that these have adjusted their costs during the crisis.

“They can minimise the negative impact by manoeuvring their staff, sending the people left unemployed from one airport to the other,” said Oleg Pantaleev, executive director of the aviation think-tank AviaPort.

First, they closed the airports for a week. Then two. Then they said they would be closed until the end of 2022. They're still closed.

At the end of 2022, Russian airlines were in profit due in large part to government subsidies worth a whopping 172.3bn Russian Rubles (RUR), equivalent to $1.6bn. Most of these subsidies were for domestic flights.

Interfax reported that while revenues had fallen by around 13% overall for Russian airlines, their overall cost base had come down by only around 3%.

In the first quarter of 2023, the number of tickets sold was up 4.5% compared to the first quarter of 2022, which included the period immediately after the start of the war.

Slipping the sanctions

Another major impact of the sanctions on Russian airlines has been the limited supply of spare parts for planes made in Europe and the United States.

The Russian Government reacted by confiscating and re-registering the planes from other companies that had been left stranded on Russian runways after the invasion of Ukraine triggered airport closures.

A Ukrainian Airlines Embraer ERJ-190LR takes off from Riga International Airport, Latvia, on 15 March 2019.

This applied to over 400 planes from Western leasing companies worth around $10bn.

After Russian strong-arm tactics didn't work, state funds were offered to buy the aircraft.

Reuters has reported that more than $1.2bn of spare aero industry parts reached Russia from Western countries through middlemen in places like Tajikistan, the United Arab Emirates, Turkey, China, and Kyrgyzstan.

Local Russian authorities have also developed plans for the domestic production of aircraft and expect to be able to fully substitute Boeing and Airbus by 2030.

In short, the extent to which sanctions have negatively impacted Russian airlines' ability to source spare parts has been minimal and will be even less in the coming years.

Down to a few friends

Most airlines from Europe and the US stopped flying to Russia after the invasion and subsequent sanctions, but there are a few exceptions from friendlier countries.

Belavia, from Belarus, continues its regular flights. Air Serbia flies to four Russian destinations, and two airlines from Turkey — Turkish Airlines and Pegasus — serve seven destinations.

In fact, Turkish Airlines recently increased the capacity of its flights to and from Russia, with Boeing 777-300ERs reconfigured for more economy-class seats at the expense of several business-class seats.

Bringing Russian tourists to Turkey became big business after the invasion, given that so many other European destinations became closed to Russians after 2022.

Bringing Russians to Turkey became big business from 2022, since so much of Europe was closed to Russians after the invasion.

According to some reports, Turkish Airlines operated 300% more seats to Russia in June 2023 than in June 2019.

While Japan Airlines cancelled flights to Moscow and Vladivostok immediately after the invasion, most Asian airlines chose not to.

An exception was Singapore Airlines, which announced the suspension of flights to and from Moscow on 28 February 2022 and closed its Moscow office in May 2023.

The cost of war

The impact on airlines has been real, not just been in terms of lost business but in terms of added costs.

Due to airspace closures, flights are taking longer, as routes are elongated. British Airways' London-Tokyo route now takes 14 hours, not the 12 it used to take.

Some airlines have had a bigger impact. Finnair and Japan Airlines have borne the brunt of the ill will, forced to fly over the Arctic Ocean to avoid Russia. Helsinki to Tokyo now takes four hours more than it used to.

Meanwhile, Russia charges more to those airlines that continue to use its airspace. Emirates, Qatar Airways, Turkish Airlines, and some Chinese airlines have had to cough up 20% more to fly over Russia since June 2023.

According to reports, Russia made $1.7bn per year from overflight fees before the war. That number must have dropped significantly after February 2022.

Fuel and other costs have shot up for airlines since 2022, largely due to the war itself. In most cases, these price hikes have been passed on to the customer.

The price for an Air Canada ticket from Vancouver to Hong Kong rose 41% between January 2019 and January 2023, while one from Toronto to Delhi went up by 47%.

Fuel and other costs shot up for airlines since 2022, largely due to the war itself. Most price hikes were passed on to the customer.

On the other hand, companies like Cathay Pacific, Korean Air, and Air India — flying from Asia to Canada using Russian airspace — all managed to reduce the price of their tickets during the same time period.

Ross Aimer of Aero Consulting Experts said: "Western airlines that do not go over Russian territory are at a financial disadvantage. Most of the northern part of the world is Russian airspace."

Winners and losers

American airlines have also been hit. Airlines for America, an industry group, says US carriers have lost around $2bn per year since the invasion, noting that some planned routes have been put on hold thanks to the ban.

Yet European carriers seem to have adjusted and to enjoy a relatively good year.

The International Air Transport Association (IATA) said in December 2023 that European airlines would end 2023 with better-than-expected performance figures.

Strong demand for air travel was expected to continue in 2024, too. The IATA thinks European carriers will make a net profit of $7.7bn in 2023, compared to just $4.1bn in 2022, and an expected net profit of $7.9bn in 2024.

Despite the odd rosy tint, things remain politically unpredictable, so take any 2024 forecasts with a pinch of salt.

For carriers and passengers who simply want to travel in the coming year, the best advice would be to buckle up and hope for the best.

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