Issue No. 854
The Gathering Storm
Russia's Invasion of Ukraine Clouds Airlines' Recovery
Pushing Back: Inside The Issue
As the war in Ukraine enters its third week, its implications for the global airline industry — an industry that was only just beginning to emerge from two years of the Covid crisis — are becoming clearer and more alarming. With Russian airspace closed to many North American and European airlines, and others avoiding it for safety and other concerns, flights to Asia are longer and burn more fuel.
And that pain is only just becoming known as oil prices surge and become more volatile. Russia produces 10 percent of the world's oil. At the ISTAT Americas and Raymond James conferences last week, industry executives said they were keeping an eye on fuel prices, but added it could take a few months before fares begin to rise. Transat said it expects summer fares to be higher if the current volatility persists. Malaysia Airlines became one of the first global carriers to announce a fuel surcharge.
Meanwhile, what will happen to the more than 500 foreign-owned leased aircraft in Russia's fleet, which must be returned to lessors by March 28? No one knows. What is known now is that Russian airlines have all but halted international flights for fear that their aircraft may be repossessed. With most suppliers and manufacturers now saying they won't support aircraft in the country, maintenance becomes a problem. The aircraft stranded in Russia could be almost uninsurable, leasing executives said at ISTAT.
Meanwhile and as war grinds on, airlines are adding routes by the spadeful. But also, in the U.S., the pilot shortage is forcing some carriers to cut routes. That latest is regional SkyWest, which asked the federal government for permission to end service at 29 smaller cities.
"They just invaded Ukraine. I don’t think they’re worried about the Chicago Convention."Aircastle Chief Legal Officer Christopher Beers on Russia
The Airline Weekly Lounge Podcast
How does a country that spans 11 time zones function without long-haul aircraft? That is among the questions Edward “Ned” Russell and Madhu Unnikrishnan consider in this week’s episode. Russia’s invasion of Ukraine continues to roil the airline and aerospace industries, as lessors write off their assets in the country and a growing list of companies say they no longer will support Russian airlines. Meanwhile, the war’s economic effects are only now beginning to come into focus. A full archive of the 'Lounge is here.