Impact of Russia-Ukraine crisis on global aviation

Russia has suspended all international flights except neighboring Belarus to prevent billions of dollars worth of air jets from being reclaimed by foreign owners.
More than half of all Russian-based commercial aircraft are leased from foreign companies due to the heavy tax laws set by Moscow. Approximately 700 leased aircraft flying for Russian aircraft carriers are registered in Bermuda and also in Ireland. Of the 160 jets registered in Russia itself, 10 are owned by foreign banks or lenders.
Russia has stronger grounds and the ability of foreign leasing companies / banks to seize jets in the sanctions imposed by the invasion of Ukraine the moment these aircraft leave Russian airspace and fly elsewhere. I am aware that it has.
Due to government moves, Aeroflot and other Russian aircraft carriers attempt to illegally hold hundreds of Airbus and Boeing jets whose owners are demanding their return by March 28. Due to economic sanctions, it is not possible to legally continue to rent and insure aircraft to Russia. Global financial giants Visa and Mastercard have suspended international banking operations with Russia, and European sanctions are being tightened every day of the war in Ukraine.
According to the IBA, Aircap, the world’s largest leasing company, owns the largest number of planes in Russia, with a market value approaching $ 2.5 billion. Aircap said on February 28 that it would attempt to retrieve the plane, but 10 days later it was unlucky. Its airline’s customers include Aeroflot, S7 Airlines, Rossiya Airlines and Ural Airlines.
Russian airlines have been hit by airspace closures that significantly impede westbound operations, but about 65% of the market is made up of domestic flights that are largely unaffected by these measures. This means that demand for aircraft and air travel passengers will remain high across Russia. And Russia has one of the strongest travel rebounds from Covid-19.
Airspace restrictions have a global impact. Russia, along with several other countries, has banned almost all of Europe from airspace. Retaliation after another country banned Russia. Flights between Frankfurt and Beijing will be two hours longer than before, and flights between Helsinki and Tokyo will take up to an additional five hours.
Eurocontrol reports serious disruption to major routes. Korean Air has announced that it will cancel its flight to Russia for the next two weeks and has informed Reuters that it will no longer be able to refuel in Moscow. Koreans usually operate regular weekly flights between Moscow and Seoul. According to IATA, the hardest hits were flights between the United States and Northeast Asia, and between Northern Europe and much of Asia.
Finnair continues to adjust its schedule due to the closure of Russian airspace. The airline relies on Russian airspace to realize its business model as the “shortest route to Asia”. Crossing the Siberian Corridor to reach the Far East faster than other airlines without access to the same Russian airspace. Finnair canceled several Far East routes, including Osaka and Hong Kong, as the war in Ukraine continued and there was no access to Russian airspace due to sanctions against Putin.
Further increases in cargo prices will now allow us to continue passenger service to Finnair’s major Asian markets, even with longer flight times. Finnair is currently serving Seoul and Shanghai from its Helsinki hub. At the same time, Finnair will cancel flights to Osaka and Hong Kong until the end of April. “Avoiding Russian airspace on flights between Europe and Asia has a significant impact on flight time and therefore on fuel, labor and navigation costs,” Finnair said in a statement.
Earlier this week, Finnair announced that it would continue to fly to Tokyo around Russian airspace. This means longer flight times and more fuel required. Finnair also takes longer routes to Bangkok, Delhi, Phuket and Singapore.
In addition to this, oil is at its highest level in 10 years. Airlines are now facing the global impact, rising oil prices, and the uncertainty of ongoing conflicts with longer routes needed to bypass over Russia, which is expected to boost ticket prices and airfares. Facing
Fuel accounts for 35% to 40% of airline operating costs, and it is inevitable that increased costs will ultimately spill over to passengers. Some airlines that have hedged about 80% of fuel demand can give passengers low fares for the upcoming summer season, but eventually fares have risen and the industry has hoped. It’s not that. Recover from the worst pandemic.
Wizz Air currently limits fuel exposure without hedging, but expects the fare environment to be “more broadly strengthened across the industry.” Meanwhile, EasyJet announced at the end of January that it had hedged 60% of its fuel demand for the fiscal year. September 30.
“Our focus is on our customers and to provide the best service and experience at the most competitive prices possible,” a Virgin Atlantic spokeswoman told City AM. “We recently raised the carrier’s surcharge by £ 30 due to rising oil costs. We will continue to monitor the situation and consider additional charges.”
Lufthansa Cargo expects the Ukrainian invasion to reduce global market capacity by about 10%. Lufthansa Cargo CEO Dorothea von Boksburg said this was due to global fleet restrictions. Russian airlines are restricted by airspace sanctions by the European Union, the United Kingdom and the United States, and European airlines cannot fly over Russia and Ukraine.
Middle Eastern airlines have seen little change in their operations, except for the loss of the Ukrainian market. Qatar Airways had previously flown to multiple destinations in Ukraine, but has not been able to fly since the Ukrainian airspace was closed in late February.
Airbus and Boeing, major Russian commercial aircraft suppliers, have made Russian airlines inaccessible to spare parts for aircraft as part of new sanctions against Moscow. Boeing also closed its design center in Moscow and temporarily closed its office in Kyiv, Ukraine during the conflict.
Airlines are dependent on the flow of spare parts, and now that Russian airlines can rely on existing inventory, they can land other aircraft on the fleet and dismantle jets. It may take several months before you have no choice but to get spare parts. Under maintenance. Normally, such practices are strictly prohibited under the terms of leasing for commercial aircraft, but last week I learned that Russian airlines are not involved with European aircraft owners. Depreciated the aircraft leased to a Russian aircraft carrier.

The author is an aviation analyst. Twitter handle: @AlexInAir