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The post How Will The Russian Invasion Of Ukraine Affect The Airline Industry? appeared first on TD (Travel Daily Media) Travel Daily.
Russia’s full-fledged invasion of Ukraine comes at a critical juncture in the commercial aviation industry’s recovery.
Regrettably, the repercussions of the development are likely to be felt throughout the region and beyond for the industry.
In terms of airspace, there is currently a massive swath of eastern Europe that is free of commercial aviation activity, encompassing Belarus, Ukraine, and western Russia.
Because of past occurrences, many airlines were already avoiding overflights over Belarus and eastern Ukraine, so the impact was baked into some level. However, as east-west sectors expand more outwards, more routes have become circuitous, including services heading south from Moscow, for example.
The last aspect is essential, considering that the Ukrainian conflict will likely result in higher aircraft fuel costs as oil prices rise in response to the invasion. Airlines had previously acknowledged that fuel prices would be increased during the Covid-19 recovery phase and that ticket prices would likely rise as a result – this exacerbates the issue and gets us closer to the point where costlier tickets may begin to impact demand.
The influence on a few individual airlines is significant. Ukraine International Airlines and SkyUp have been grounded for the time being. A few weeks ago, UIA announced a summer 2022 timetable that included restoring services to New York and Toronto, among other cities. In December, UIA announced that cost-cutting efforts had returned the airline to significant profitability.
Meanwhile, Ukraine’s Boryspil International Airport, which serves the capital Kyiv, was ranked among the top 30 airports in Europe by passenger traffic in 2021, with a capacity comparable to that of Brussels, Copenhagen, Milan Malpensa, and Oslo.
The news is noteworthy but not life-threatening for other carriers. Cirium scheduling data shows that one month ago today, Ryanair and Wizz Air were the largest operators of international flights into the country in terms of capacity, ahead of UIA. Such flights constituted a minor part of pan-European networks in both cases.
Turkish Airlines, Aeroflot, FlyDubai, Ural Airlines, S7, Lufthansa, Pegasus, KLM, and LOT Polish Airlines were among the other international carriers having substantial operations in the country.
All will be able to bear the loss of Ukrainian services – most having been wary of investing too much to a volatile region in recent years – but any limitations on travel beyond those linked to Covid-19 will be highly detrimental to the sector’s revival.
A shift to domestic services during the Covid-19 recovery gives Russian airlines some hope that any drop in international demand can be handled. The possible consequence of increased diplomatic isolation of Russia, on the other hand, will be something to keep an eye on in terms of flights into the country — whether from domestic or international carriers.
Then there’s the intangible influence on travel confidence if Europe is at war. Increased security in nations bordering Russia and Ukraine, combined with ongoing stop-start Covid restrictions, will put the much-discussed ‘pent-up demand’ for air travel to the test as the pandemic recovery gains traction.
Indeed, Air France-KLM’s outlook for the current quarter was predicated on the situation in Ukraine not deteriorating, according to earnings briefing last week.
There are several implications for the wider industry to consider, most notably the impact of sanctions on the aerospace supply chain. Russia, for example, is a significant metal producer.
Two years into the pandemic, the aviation industry’s resilience to external influences will be put to the test once more, far sooner than anyone would have anticipated.
The post How Will The Russian Invasion Of Ukraine Affect The Airline Industry? appeared first on Travel Daily.
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