Airline industry shifts attention to Russia risks after Ukraine closure (updated)

US Aerospace

25/02/2022 04:05

* Anchorage Airport getting inquiries about capacity
    * Japan Airlines cancels flight to Moscow citing potential
risks
    * Britain closes its airspace to Russian airlines

 (Adds reported Russian response to British flight ban, U.S.
aerospace sanctions)
    By Jamie Freed and Allison Lampert
    Feb 25 (Reuters) - Alaska's Anchorage Airport said airlines
have started making inquiries about capacity in case routes over
Russia are impacted due to the Ukraine crisis, in a sign of the
conflict's growing fallout for the global aviation industry.
    The airport was a popular refuelling hub for long-haul
flights during the Cold War, when Western airlines were unable
to access Russian airspace on routes from Europe to Asia.
 urn:newsml:reuters.com:*:nL8N2UP6W1
    Japan Airlines  9201.T  cancelled its Thursday evening
flight to Moscow, citing potential safety risks, while Britain
closed its airspace to Russian airlines, including Aeroflot
 AFLT.MM , as the conflict's impact on the industry widened
beyond Ukraine to Russia.  urn:newsml:reuters.com:*:nL1N2UZ150  urn:newsml:reuters.com:*:nS8N2U0024
    Ukrainian forces on Thursday were battling Russian invaders
on three sides after Moscow unleashed the biggest attack on a
European state since World War Two.  urn:newsml:reuters.com:*:nL1N2UZ089
    Airspace in Ukraine, Moldova, parts of Belarus and in
southern Russia near the Ukraine border was closed as a result,
giving airlines a narrower range of routing options.
 urn:newsml:reuters.com:*:nL1N2UZ03H
    Emirates said it had made minor routing changes to
Stockholm, Moscow, St. Petersburg and some U.S. flights that
were hit by the airspace closings, leading to slightly longer
flight times.
    OPSGROUP, an aviation industry cooperative that shares
information on flight risks, said any aircraft travelling
through Russian airspace should have contingency plans in place
for closed airspace due to risks or sanctions.
    "Russia are unlikely to initiate their own sanctions and
airspace bans as they would not wish to see Aeroflot receive
reciprocal bans," OPSGROUP said. "However, they may react in
response to sanctions from other states."
    Russia's aviation authority said it reserved the right to
respond to Britain's flight ban with similar measures, the TASS
news agency reported on Friday.  urn:newsml:reuters.com:*:nS0N2S101P
    The governing council of the International Civil Aviation
Organization (ICAO), a U.N. body, will discuss the Ukraine
conflict at a meeting on Friday, a spokesperson said. 
    Germany's Lufthansa  LHAG.DE  said on Thursday it saw no
need to cancel flights to Moscow.  urn:newsml:reuters.com:*:nS8N2QT0AG
    As airlines assessed the airspace risks, they have also been
hit by a spike in oil  LCOc1  prices to more than $105 per
barrel for the first time since 2014 as a result of the
conflict. That raises operating costs at a time when travel
demand remains low because of the pandemic.
    Jefferies analysts said European airlines were also likely
to take a longer-term hit to demand in light of the conflict,
pointing to a 27% fall in travel from the European Union to
Ukraine and Russia over the span of two years after Russia
annexed Crimea in 2014.
    Aviation bosses are also worried about the impact on
dealings with Russian companies. Sanctions could disrupt
payments to leasing firms and affect the supply of aircraft
parts.
    Russian companies have 980 passenger jets in service, of
which 777 are leased, according to analytics firm Cirium. Of
these, two thirds, or 515 jets, with an estimated market value
of about $10 billion, are rented from foreign firms.
    Russia's domestic market has been among the best performers
globally during the pandemic, with capacity down only 7.5% this
week compared to the same week in 2020, according to travel data
firm OAG.
    The Biden administration announced major export restrictions
against Russia on Thursday, hammering its access to goods,
including aircraft parts.  urn:newsml:reuters.com:*:nL1N2UZ3KE
    The measures, however, include carveouts for technology
necessary for flight safety, raising the prospect the impact to
aerospace could be limited rather than sweeping.
    Eric Fanning, chief executive of the U.S.-based Aerospace
Industries Association, said the industry was reviewing the
export control restrictions and would make the necessary
adjustments to meet the new requirements.

 (Reporting by Jamie Freed in Sydney and Allison Lampert in
Montreal; additional reporting by Maki Shiraki in Tokyo, Guy
Falconbridge in London, Alexander Cornwell in Dubai and Tim
Hepher in Paris. Editing by Gerry Doyle)
 ((Jamie.Freed@thomsonreuters.com;))