Closure of airspace causing airlines time and money, cargo delay increases

According to airline executives, Russia will likely ban the use of routes across the country after the European Union banned flights for Russian airlines following the fighting in Ukraine.

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Following the EU's ban on Russian airlines and Moscow's pledge to retaliate, the airline industry is bracing for potential lengthy sanctions wars. The crisis affected airline shares, resulting in dozens of flights being cancelled and detoured.

Kazakhstan saw a tripling of its flights in its airspace because of the rerouting. Following the European Union's Sunday ban on Russian airlines as fighting in Ukraine raged, airline executives say Russia is likely to ban their use of their airspace for international flights.

Kremlin officials said on Monday that a response would be forthcoming to Western sanctions against Russia's aviation industry. "The guiding principle will be reciprocity, and our own interests will be at the forefront of that," Kremlin spokesperson Dmitry Peskov told reporters on a conference call.

Without access to Russia`s airspace, carriers will have to divert flights south while also avoiding areas of tension in the Middle East. Shares in European airlines and airport operators were down 3-6% in early trade, while Finnish national carrier Finnair cut its guidance and saw its shares tumble 23%.

Germany`s Lufthansa said 30 flights to Russia would be cancelled this week and its subsidiaries Eurowings and Austrian Airlines, while Latvia`s AirBaltic said it was extending its suspension of flights to Russia until the end of May. Lufthansa said its flights from Europe to Tokyo and Seoul would have to fly detours for which the company had secured necessary flight rights.

In Asia Singapore Airlines said on Monday it was suspending all services between Singapore and Moscow until further notice for "operational reasons". Finnair scrapped its 2022 guidance, fearing significant loss of business as it uses a route across Russian skies from Europe to Asia via its hub in Helsinki.

Korean Air, Japan Airlines and Japan`s ANA Holdings said on Monday they were continuing to use Russian airspace but had no plans to add flights to Russia or Europe to replace flights cancelled by European carriers. Demand to Japan and South Korea has been low due to Covid-related travel restrictions.

Airline Swiss, also owned by Lufthansa Group, said it would continue to fly to Russia as Switzerland has not banned Russian airlines.

MORE SUPPLY CHAIN DISRUPTION

Shutdowns of airspace and flight cancellations will also affect cargo traffic, further aggravating the global supply chain problems caused by the pandemic. "Due to the ongoing dramatic developments in the Russia-Ukraine conflict, Lufthansa will no longer use Russian airspace," Lufthansa Cargo said.

U.S.-based United Parcel Service Inc and FedEx Corp, two of the world`s largest logistics companies, said they were halting deliveries to Russia.

Russia`s Aeroflot said on Sunday it would cancel all flights to European destinations after EU foreign policy chief Josep Borrell said the EU had decided to close its airspace to Russian traffic. The United States is considering similar action, but has yet to make a final decision, according to U.S. officials.

The U.S. government said on Sunday citizens should consider leaving Russia immediately on commercial flights, citing an increasing number of airlines cancelling flights as countries close their airspace to Russia.

With inputs from Reuters