U.S. follows Canada, Europe on Russian aircraft ban

An AirBridgeCargo Airlines Boeing 747-87U arrives at Paris Charles de Gaulle airport in Roissy-en-France carrying 21 million face masks during the coronavirus disease (COVID-19) outbreak in France May 25, 2020. REUTERS /Charles Platiau

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  • United Airlines and UPS halt Russian overflights
  • European airlines cancel cargo flights
  • Air freight rates already high due to the pandemic

March 1 (Reuters) – The United States will follow the European Union and Canada in banning Russian flights from its airspace, President Joe Biden said on Tuesday evening, in a move that could trigger Russian retaliation. Read more

United Airlines and United Parcel Service (UPS) (UPS.N) announced on Tuesday that they have suspended overflights of Russian airspace, joining other major US carriers Delta Air Lines (DAL.N) and American Airlines. Read more

“I am announcing that we will join our allies in closing U.S. airspace to all Russian flights, further isolating Russia and adding further strain to its economy,” Biden said in his state of the art address. ‘Union.

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The White House has had extensive discussions with US airlines on the issue in recent days.

The ban will come into effect on Wednesday at the end of the day.

Russian flights have already been effectively banned from mostly US destinations in recent days due to bans on the use of Canadian and European airspace.

Some foreign governments had privately questioned why the United States had not moved more quickly to ban Russian planes, as some American lawmakers had done.

The European Union had said on Tuesday that it was speaking to its American counterparts about extending the ban, as it gave more details of the EU’s closure of airspace to Russian planes imposed after the invasion of Ukraine via Moscow.

Airlines are already facing potentially long lockdowns of key east-west flight corridors after the EU and Moscow issued tit-for-tat airspace bans. Read more

A senior EU official said Russian oligarchs, even those with dual nationality, would not be able to circumvent the ban on EU airspace. Read more

“It doesn’t matter if they are EU residents, if they are Russian nationals they will be covered,” the official said.

“Russian nationals or a Russian company cannot charter, own or control an aircraft that will fly into the EU, out of the EU or overfly the EU. So that’s the rule.”

SUPPLY CHAIN ​​PAIN

Global supply chains, already hard hit by the pandemic, will face increasing disruption and cost pressure from closed skies, which will affect more than a fifth of air cargo.

The hardest hit will likely be Russian carriers, which account for around 70% of flights between Russia and the EU.

Transport between Europe and North Asian destinations like Japan, South Korea and China is at the forefront of disruption after reciprocal bans barred European carriers from flying over Siberia and prevented Russian airlines from fly to Europe.

Airlines responsible for transporting around 20% of global air cargo are affected by the bans, Frederic Horst, managing director of Cargo Facts Consulting, told Reuters on Tuesday.

German carriers Lufthansa (LHAG.DE), Air France KLM (AIRF.PA), Finnair and Virgin Atlantic have already canceled North Asian cargo flights due to closed airspace access.

Scandinavian airline SAS (SAS.ST) said it would reroute its Copenhagen-Shanghai service once a week to avoid Russian airspace, and had also suspended its Copenhagen-Tokyo service.

However, major Asian carriers like Korean Air Lines (003490.KS) and Japan’s ANA Holdings (9202.T) still use Russian airspace, as do Middle Eastern airlines.

RUSSIAN CARRIERS

Russian airlines are also feeling the pinch with Pobeda Airlines, the low-cost carrier of national flag carrier Aeroflot (AFLT.MM), facing demands from a number of leasing companies to return their planes, a reported the Interfax news agency. Read more

Pure cargo carriers like AirBridgeCargo Airlines in Russia and Cargolux in Luxembourg are subject to the bans in a move that could drive up air cargo fares – already high due to a lack of passenger capacity during the pandemic – even further.

“Flights are getting more expensive due to longer journeys,” said Stefan Maichl, an analyst at Landesbank Baden-Wuerttemberg in Germany.

In December, air freight rates were 150% above 2019 levels, according to the International Air Transport Association.

Sanctions imposed on Russia following its invasion of Ukraine are expected to further disrupt global supply chains.

Russia’s AirBridgeCargo alone carries just under 4% of the world’s international air cargo, most of it between Europe and Asia, Horst said.

“In total, you could be looking at a quarter of air cargo between Asia and Europe needing to find other means of transportation,” Horst said.

“The yields are high enough that flying a longer route via Southeast Asia, South Asia or the Middle East is an option, but it will still take capacity out of the market.”

INCREASE IN AIR FREIGHT

Shipping container shortages and port bottlenecks mean more products are transported by air. Last year, air freight demand was 6.9% above 2019 levels, according to IATA.

Taiwan’s EVA Airways (2618.TW) said on Tuesday its cargo flights to and from Europe were operating normally and it would consider adding more services to meet market demand.

Asia-North America cargo routes are expected to be less affected than European routes, analysts say, as many carriers already use Anchorage, Alaska, as a cargo hub and stopover point.

UPS and FedEx Corp had previously halted deliveries to Russia. Deutsche Post said its DHL unit was halting inbound shipments to Russia.

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Reporting by David Shephardson in Washington, Jamie Freed in Sydney, Matthias Inverardi and Ilona Wissenbach in Berlin and Foo Yun Chee in Brussels; Additional reporting by Satoshi Sugiyama in Tokyo and Ben Blanchard in Taipei; Editing by Matthew Lewis, Stephen Coates and Richard Pullin

Our standards: The Thomson Reuters Trust Principles.

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