Feb 15, 2022: According to a report by Reuters, airlines and aircraft leasing companies that control billions of dollars worth of passenger planes are preparing emergency plans to freeze trade with Russia if a standoff on the Ukrainian border escalates into a military conflict.
U.S officials have warned that Moscow could invade Ukraine after gathering more than 100,000 troops near its neighbor’s border, as the West prepares to impose tougher sanctions. Aviation owners are concerned about the impact on Russian companies. Restrictions could disrupt payments to leasing firms, and any retaliatory measures by Moscow to restrict access to Russian airspace could disrupt East-West trade.
Air routes between Europe or parts of North America and Asia stretch across Russia, making its 26 million square kilometers (10 million square miles) of airspace a major trade intersection with cargo routes particularly active.
U.S carrier FedEx said Monday it was making unscheduled emergency plans. Without access to Russian airways, experts say airlines have to divert flights to the south, avoiding tensions in the Middle East – at a time when airlines are suffering from pandemic effects and is likely to result in a significant increase in costs.
According to some reports, the crisis has revived the possibility of a Cold War, with European jets heading to North America to refuel at Anchorage, then dropping down into destinations like Tokyo, pushing the economy of such flights to the limit. A spokesman said that so far no airline seeking Alaska’s largest airport has been contacted for the option, which would require an increase in ground handling capacity.
But the scenario is a reminder that Russia’s size and position on the aviation map give it an advantage that was not available to the Soviet Union when economies were less integrated.
With Russia’s 8,000 air traffic controllers handled 194,296 transit flights, or 532 overflights a day, on average in 2021, there has been a 16% increase from coronavirus-depressed levels in 2020 but still 37% below pre-crisis traffic in 2019, according to the Federal Agency for Air Transport. The country earns significant fees from overflights.
As tensions rose in recent months, US airlines raised concerns that Russia could refuse to extend overflights, disrupting connections to Asia, India and the Middle East.
In October, U.S. carriers asked the State Department to take “immediate action” to obtain additional rights to overfly Russia, according to a trade group letter. U.S officials are expected to meet with the carriers in a few days.
Russia has so far been a relatively bright spot for the aircraft leasing industry, as airlines have continued to make large payments during pandemic, a leasing company executive said. Even when some airlines began avoiding Ukraine on Monday, leasing companies were looking at major threats in Russia.
The biggest economic concern is that of sanctions which would disrupt international payments according to aviation experts. “If there are sanctions on dealing with Russian companies, this could affect more than 500 aircraft if no exemptions are allowed,” said Rob Morris, head consultant at Ascend by Cirium.
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