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What impact will the Russia-Ukraine conflict have on the aviation sector?

The aviation sector was still recovering from the Covid-19 pandemic when it was hit by numerous challenges related to the Ukraine-Russia conflict.

By Sofia Karadima

The Russian invasion of Ukraine and the subsequent sanctions imposed upon the country have brought with them myriad challenges for the aviation industry, just as it was recovering from the crippling effects of the Covid-19 lockdowns.

The pandemic had negatively impacted the global revenue from full-service and low-cost airlines, according to GlobalData. The data shows that the industry enjoyed steady growth in the pre-pandemic years, but global revenues from full-service and low-cost airlines recorded a sharp decline in 2020, before showing signs of recovery in 2021 (which still fell short of pre-pandemic levels).

This struggle to bounce back has been compounded by the sanctions and the air restrictions imposed both by and against Russia.

Since the invasion of Ukraine commenced, Canada, the EU, the UK, the US and various other countries have banned Russian aircraft from their airspace. Russia has retaliated by banning 36 countries from flying through its skies.

The mutual sanctions and air restrictions have shaken up the aviation sector, leading to the cancellation or rerouting of flights, increased air ticket prices, higher fuel costs and issues with titanium sourcing, among other issues.

The cancellation or rerouting of flights

The combination of the sanctions and the air bans has forced several airline companies to either suspend or reroute their flights. Russia’s flagship airline, Aeroflot, has announced it is halting all its international flights, except those to Belarus, and the country’s second-biggest airline, S7, has also suspended its international flights.

Many non-Russian airlines are having to make diversions to avoid flying through Russian airspace, with some European companies cancelling their flights to Asia altogether. Finnish airline Finnair had initially cancelled its flights to Japan, China and South Korea but has since resumed journeys to Seoul, Tokyo and Shanghai, taking a route that avoids Russian airspace. Its flights to Osaka and Hong Kong are cancelled until late April.

The longer routes as well as the flight diversions have a significant impact on costs, including fuel prices the air tickets.

Higher fuel prices

The Russian invasion of Ukraine has also affected oil prices. This will have a severe impact on the aviation sector, with fuel prices being hugely important for airline companies when it comes to operating costs.

Research from GlobalData states that “rising fuel costs will impact the profitability of airlines, which are still recovering after the fall in demand resulting from the pandemic. Simply put, closed airspace means longer flight times, more fuel, more pilot hours, higher costs, and consequently higher fares. Higher fares could further impact the demand recovery.”

Increased air ticket prices

The cancellation of flights, the longer routes, the higher fuel costs and rising inflation are only some of the reasons behind the increase in air ticket prices.

In fact, data from Google Flights shows that the prices of flights out of Russia are soaring following the sanctions.

As a result, Russians looking to travel to Europe are faced with often unaffordable prices for their tickets. This will also harm several touristic destinations that are favoured by Russian tourists.

Titanium shortage

The Russian invasion of Ukraine is also raising concerns about a potential titanium supply shortages. The GlobalData research states that “titanium is a key metal used in the manufacturing of aircraft. Ukraine and Russia are among the leading producers of titanium, and the ongoing conflict could impact supply in the near term.”

These examples show how the Russia-Ukraine conflict is going to heavily shape the future outlook of the aviation sector in many different ways. Coming on the back of a hugely disruptive two years related to the Covid-19 pandemic, the industry's hopes of emerging into a 'new normal' may have to be put on ice.

Understand the impact of the Ukraine conflict from a cross-sector perspective with the Global Data Executive Briefing: Ukraine Conflict.

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