Russia – Ukraine: the effects on aviation

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Today we will speak from various points of view about the effects that the war between Russia and Ukraine are bringing negatively to the aviation.

With due respect to the victims and losses that this armed conflict has brought and will bring in the coming weeks and understanding that there are more important situations in the midst of these events, I want to share with you another point of view of the events.

Focused as always on the airline industry that until February was advancing at a very good pace in the recovery process in the midst of a global pandemic, the current situations bring a new challenge for this sector, that together with sightseeing have been the hardest hit in recent years.

The Russia vs Ukraine war and its effects on aviation

When everything seemed to walk steadily towards a 2022 history after the start of the pandemic, actors outside aviation have once again generated a new unprecedented air chaos and its negative effects will continue to spread throughout the world.

We must understand that the airline industry, like the rest of the globalized world, it works in a chain and all its actors belong to a single sector: airlines, airports, manufacturers, providers, aeronautical authorities, etc.

I share with you this video where I analyze more details of the topic that we will talk about in this post:

In this way, with the latest events more than known we have been able to see endless news that are affecting everyone, not only to the industry near the conflict zone, but to the airlines of our region.

Thus, We are going to review each of the situations, its immediate and future effects on the industry.

oil price

Immediately and the most important effect (also for everyone) is the sustained increase in the price of oil, which is reflected in the cost of the jet fuel.

Although the increase had been taking place before the conflict, since it began its rise it has accelerated and this is reflected in higher operating costs for airlines that transfer these values ​​to users, I mean: most expensive tickets.

With an increase in the cost of tickets, can generate the phenomenon of demand reduction, putting the industry in a complex situation.

Let's remember that if oil rises, also increases the cost of the logistics chain, so the increase will be seen in several sectors.

safety to fly

Although from our continent the risk or threat to the air safety It is low, people's perception of a situation that is hostile or could escalate to greater use of force, generates a drop in demand, cancellation of flights and reservations.

This situation that if we add it with the increase in the price of oil, puts two aggravating factors in the formula for the airline industry that undoubtedly affect demand, even more so in Europe and countries close to the conflict zone.

To counteract the risks to flight safety, several countries have implemented NOTAMs that restrict, limit or prohibit flying over certain areas between the borders of Ukraine, Russia and Belarus, that in fact every day expands.

Airspace closures

After the increase of Petroleum, The next immediate adverse effect was the closure of the air spaces to avoid possible takedowns unintentional of civil aircraft, as has happened before in conflict zones.

Ukraine was the first country to do so logically, which generated that same moment that hundreds of flights cannot operate in the country and others cannot fly over its airspace.

Do not fly over an airspace, although in this case it is for security, generates large losses for airlines that must find other flight plans and countries to fly over, leading in many times to increase its duration in even, several more hours.

More hours in the air means more fuel consumption, therefore higher operating costs and if we add to this that the flights that today take alternate routes had tickets sold since before the conflict, airlines are operating at a loss or sacrificing their profits.

sanctions

Before the military actions of Russia, various governments have implemented sanctions ranging from financial, commercial collaborations until the prohibition of overflight and operation.

Overflights and operation

In fact, These have been several of the first actions that different governments have taken, prohibiting overflight, takeoff or landing of Russian-owned aircraft, registered in Russia or controlled by Russia.

It should be noted that on his side, Russia has taken the same measures with all countries that implemented the overflight ban, leaving the list as follows:

• Albania, Eel, Austria, Belgium, British Virgin Islands, Bulgaria, Canada, Croatia, Cyprus, Czechia, Denmark (including Greenland, Faroe Islands), Estonia, Finland, France, Germany, Gibraltar, Greece, Hungary, Iceland, Ireland, Italy, Jersey, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom and United States.

When this situation occurs, no airline from the different countries involved will be able to fly for an indefinite time exploiting these markets, which immediately generates a great affectation to its network of destinations, demand in their hub and affectation to the commercial exchange of the countries.

As in the closure of airspaces, airlines from these countries must take even longer alternate routes and less direct, generating what we already talked about, increased operating costs by having their planes longer in the air.

In other cases, airlines have begun to cancel long-haul routes, given that the autonomy of its planes cannot meet the new flight times due to the factors of closed airspaces, wind and load, as is the case with Finnair and its flights to Asia.

trade locks

In the above case, the affectation is equally to each of the airlines that will not be able to fly, but commercial blockades or cancellation of contracts goes further and will put Russian airlines in check especially,

We have already seen how various airlines and even soccer have ended their commercial alliances with Aeroflot by canceling sponsorships, codeshare agreements and more.

But there is a fact that in a short time it is possible to force Russian airlines to suspend most of their flights.. This is component access lock, maintenance and support announced by both Airbus and Boeing.

The non-immediate access to spare parts or support by manufacturers that are also leaders in the Russian market, could put in check the Russian airlines to run out at a certain moment without key components to maintain the day-to-day operation to the countries to which they can still fly.

There will be an alternative, maintain access to spare parts through partner airlines from countries aligned with the Russian cause such as China for instance.

The industry was recovering

IATA itself a few days ago revealed positive numbers and the new projection led us to 2024 let's go back to pre-pandemic numbers as for travelers in the world, but the panorama could be affected again.

Before the situation in Ukraine and thanks to the release from restrictions in many countries of the world, were generating an increase in capacity by more than 1.6 million seats worldwide as shown by AOG.

In the last weeks, South America has been reporting weekly capacity decreases and this has continued with another cut of the 6,6% in capacity with Brazil and Chile reporting losses.

The landscape is not the best, even more so knowing that this conflict can last for months, which will put the recovery at even more risk, affecting revenues and airlines' plans to develop new flights, routes and destinations that have been euphorically announced since January.

Has your intention to travel changed since the start of the conflict?? I read you in the comments.

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