Impact of the Russia-Ukraine Conflict on the Aviation Industry
In this article, I explore the profound impact that the ongoing war between Russia and Ukraine has on the industry.
The conflict between Russia and Ukraine has been going on for over half a decade, and was recently intensified when Russia started a military intervention on Ukraine on the 24th of February. This caused shockwaves all over the world and hundreds of men, women and children have suffered / are suffering as a result. One of the vast consequences of this conflict is on the aviation industry, the details of which are described below.
To begin with, we first have to understand Russia’s place in global aviation. In terms of airlines, their national carrier Aeroflot is nothing special and serves limited routes through most of Asia, Europe and the United States. It is primarily used by Russian citizens since most others prefer flying European carriers. However, the Russian airspace is of great value since it provides crucial passages between Asia and Europe and allows polar flights from the United States to significantly shorten their flight times.
The rules for closing airspace during a conflict were tightened since the Russian military allegedly shot down a Malaysian Airlines Boeing 777 over Eastern Ukraine in 2014. Since the beginning of the conflict, the European Union has closed its airspace to all Russian airlines, to which Russia responded by banning all European airlines. More countries like Canada and the United States have followed this and now the space over Russia and as of today Ukraine is almost closed. The most immediate impact of this will be the cancellation of hundreds of flights all over the world. One Aeroflot flight SU124 was near Canadian airspace when the ban was announced and it was forced to return. Due to a loss of Canadian airspace, Aeroflot has cancelled flights to their four US destinations (New York, Washington, Los Angeles and Miami) as well as Cancun, Mexico and Punta Cana in the Dominican Republic. The Americas have essentially been cut off from Russia.
The primary consequence is the increase in fights times and higher fuel costs since flights have to choose longer routes to accommodate for the closure of Russian and Ukrainian airspace. A great example of this is the effect on flights from northern Europe, like the United Kingdom to Asia. They will have to fly much further south not only to avoid Eastern Europe, but also to stay away from the conflict in the Middle East. Virgin Atlantic said that this would add anywhere between 15 minutes to 2 hours of flight time between UK and India and Pakistan. A normal United Airlines flight from New Delhi to Chicago would take 14 hours and 38 minutes, but now it takes 16 hours and 12 minutes. This increased flight time accompanied with astronomical rises in the price of fuel (the price per barrel has reached a record high of $139 from a previously stable price of $105) will undoubtedly increase the cost of air travel almost to the point of unaffordability. According to a study conducted by the Times of India, 46% of consumers who were planning air travel are likely to either use an alternate mode of travel or completely cancel their plans, 14% will wait for airfares to fall to book their travel and 26% will go forward with the booking regardless of price. Due to the numerous sanctions imposed on Russian crude oil, prices are unlikely to drop and analysts say that airlines could see an almost 40% to 50% drop in revenue between the months of March and May.
Flights routes are not simply put out on a map, they are orchestrated considering various factors like time, weather, wind direction, turbulence, but the most important one being diversion airports. ‘Long Range Operational Performance Standards’ say that flights have to have a diversion airport that is within 370 minutes of their flight path. This number is for newer, more fuel-efficient airlines like the Airbus A-350, whereas the limit for smaller twin engines planes is significantly lower. Diversion airports are essentially needed in case of emergencies like engine failure, or hydraulic failure, where the plane needs an airstrip close-by to land and get the passengers to safety. Russia, being the largest country in the world, covering an area of over 17 million km2 contained hundreds of diversion airports. The lack of this airspace has made planning routes significantly more challenging, leading to cancellations. Many operators are now considering going back to the cold war methods where airplanes going from Asia or Europe to the Americas would stop to refuel in Anchorage, Alaska and then continue their journey. While no airline has officially made contact with Alaskan Aviation Authorities, they are preparing the airports, runways and terminals in order to accommodate an influx of tens of thousands of passengers.
A secondary implication is the disruption of a network of millions of airplane parts all over the world. The United States and the EU announced that they would stop exporting any parts to Russia and even Boeing declared that they would stop the servicing airplanes registered under a Russian flag. Aircraft may soon need to be grounded due to lack of maintenance and this will severely hinder the domestic Russian airline market. Boeing has closed operations in Moscow and temporarily closed offices in Kyiv. Most Russian operators fly European and American built aircraft and as a result of the servicing band, they will be in no suitable state to fly.
Additionally, all leased Russian planes are being recalled or seized due to the latest EU sanctions on the supply of planes and technology. While the official ban starts on the 28th March 2022, leasing companies are scrambling for payment since all major Russian banks have been removed from the SWIFT system. Russian companies have over 950 passenger jets, out of which 80% are leased and 67% of those have a market value of about $10 billion. Further, Ukraine International Airlines has confirmed that they have received an official notification from insurance companies to terminate the insurance of any aircraft that touches Russian or Ukrainian airspace.
The Russian Aviation Industry makes up over 1.8% of their HDP, with a valuation of over $22 billion. It also provides employment to over a million people and facilitates the flow of goods, investment and people worth $8.9 billion. Europe is the largest market for passenger flow to and from Russia, followed by Asia-Pacific and then the middle East. In 2021, 52.2 million passengers arrived from Europe, 21.8 million from Asia-Pacific and 1.4 million from the Middle East. While a small fraction of these people are tourists, majority are people conducting business between these two countries. The closure of the Russian airspace, as you can see, not only affects the countries that trade with Russia, but also has a detrimental effect on their own population as it brings a major proportion of their economy to a standstill, resulting in millions unemployed.
The conflict between Russia and Ukraine has hit the aviation industry at a time when it was only just recovering from the pandemic. This blow will severely impact carriers over the world and all we can do is hope for a peaceful ending and for order to be restored.