The conflict between Russia and Ukraine is causing havoc in the airline business

The conflict between Russia and Ukraine is causing havoc in the airline business

The conflict between Russia and Ukraine is causing havoc in the airline business

The conflict between Russia and Ukraine is causing havoc in the airline business

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The impact of Russia’s invasion of Ukraine on the global aviation industry grew on Friday, as two more European countries banned Russian airlines and the European Union warned it would restrict shipments of aircraft parts.

After London and Moscow blacklisted each other’s airlines in response for the Ukraine incursion, Virgin Atlantic and British Airways began routing flights around Russian airspace.

Poland and the Czech Republic have also announced that Russian airlines will be barred from using their airspace. Despite the threat of a costly sanctions war over mutual overflight rights, some industry leaders said they were ready for more prohibitions.

The governing council of the United Nations’ aviation organisation, the International Civil Aviation Organization, was scheduled to convene on Friday to examine the conflict.

According to Rob Morris, principal consultant at UK-based Ascend by Cirium, Russia’s invasion has “huge potential to undermine Europe’s fragile aviation recovery.”

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While many airlines continue to use Russia’s east-west transit lanes, some have begun to inquire about capacity in Anchorage, harkening back to Alaska’s usage as a refuelling base for jets restricted from Soviet airspace during the Cold War.

As sanctions targeted Russian corporations, institutions, and individuals, Western airlines, lessors, and manufacturers were examining the mounting dangers of doing business with Russia.

Delta Air Lines announced the termination of a codeshare agreement with Russia’s Aeroflot.

“Investors will find it more difficult to accept portfolios of aircraft assets comprising Russian airlines.” Nobody wants to take a Russian risk today,” aviation expert Bertrand Grabowski said, adding that one of his concerns is a lack of insurance coverage.

On Friday, Russian forces were closing in on Ukraine’s capital in the worst offensive on a European state since World War II.

The closure of airspace in Ukraine, Moldova, portions of Belarus, and southern Russia along the Ukraine border has limited airlines’ routing options.

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Japan Carriers cancelled a flight to Moscow on Thursday, citing potential safety hazards, while the UK closed its airspace to Russian airlines, including Aeroflot, as part of a slew of retaliatory measures.

In reaction, Moscow stopped UK airlines from landing at its airports or flying across its airspace, citing London’s “unfriendly decisions.”

S7, a Russian airline, stated on Friday that it will cease all flights to Europe, blaming sanctions placed on Moscow as a result of the Kremlin’s invasion of Ukraine.

“S7 Airlines has decided to cancel all flights to Europe from February 26 to March 13 due to the closing of airspace by European countries,” the business stated in a statement reported by Russian news outlets.

Virgin Atlantic stated that avoiding Russia would add 15 minutes to an hour to its flights between the United Kingdom and India and Pakistan.

American Airlines Group Inc said it has rerouted its aircraft from Delhi to New York. According to Flightradar24, rival United Airlines was still using Russia’s airspace for flights between Delhi and Chicago and Delhi and Newark.

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Emirates said it had made modest routing changes, which resulted in slightly longer flight durations. United Parcel Service Inc stated that it was putting emergency procedures in place.

According to OPSGROUP, an aviation industry cooperative that provides flight risk information, each aircraft flying through Russian airspace should have such contingency plans in place for closed airspace due to dangers or sanctions.

Aeroflot, Russia’s governmental carrier, receives revenue from overflights.

“Russia is unlikely to begin their own sanctions and airspace bans since they do not want Aeroflot to face reciprocal bans,” according to OPSGROUP. “However, they may respond in response to penalties imposed by other countries.”

Airlines were also reeling from the first time since 2014 that oil prices had risen beyond $105 per barrel.

This raises operating costs at a time when demand for travel is still low due to the coronavirus outbreak.

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According to Fitch, if petroleum prices continue to climb or remain high, airlines’ profits and cash flows may suffer.

According to Jefferies analysts, European airlines are likely to suffer long-term losses as a result of the crisis.

A network consisting of millions of pieces has also been impacted.

Washington imposed export prohibitions on a variety of items, including aeroplane parts. According to European Commission President Ursula von der Leyen, the EU intends to stop exporting such parts to Russia as well. The United States stated that precautions would be taken to ensure safety.

“(W)e believe that sanctions and export control activities should not impede the requirement to maintain commercial aircraft flight safety,” said Eric Fanning, CEO of the US-based Aerospace Industries Association.

According to the analytics firm Cirium, Russian airlines have 980 jets in service, with 777 being leased. 515 of them, with a market value of $10 billion, are rented from abroad.

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