Russia Hikes Overflight Charges By 20% In Bid To Raise Cash
Henry Wood
14 hours ago
As President Vladimir Putin strives to sustain his military initiatives, the price of overflights has just increased by 20%. The Kremlin rubber-stamped the price increase of one-fifth, as the nation looks to shore up its finances for a drawn-out war, well into its second year already.
According to the Telegraph, the increased fees will be levied on those airlines from ally nations or neutrals. The decision will negatively affect Chinese airlines in particular, who still traverse Russian skies on a daily basis to connect with many key destinations.
Emirates, Qatar Airways, Air India and Turkish Airlines, Ethiopian Cargo, and most Chinese carriers have continued to fly over and to Russia. As China reopened to foreign travel following three years of stringent border closures, European airlines expressed their feelings over Chinese carriers having an unfair advantage - more direct routes equate to wider profit margins, after all.
Before 2022, roughly $1.7 billion per annum was generated for the Kremlin from flights traversing Russian airspace. Evidently, the downturn in footfall on Russian skies will have been significantly felt.
No traffic from the west
For the last sixteen months, Western airlines have avoided flying over Russia at all costs. Ensuring there are no overflights is one of many sanctions against the nation and its own retaliatory sanctions against others. As such, airlines had no choice but to divert to flight paths that avoid Russian airspace. So now, for example, a Japan Airlines flight between Tokyo and London takes an additional three hours.
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Due to their hub locations, some airlines have made the most of the restrictions by offloading and leasing their unused aircraft to other airlines in need of the capacity. One such airline is Finnair which overcame significant airspace challenges and recently entered an agreement with Qantas for two Airbus A330s.
Valuable airspace
Uniquely placed between Europe and Asia, Russia allows for significantly more efficient east-west routings between the two continents than trajectories bypassing its skies. This means it holds some pretty valuable cards. But, faced with the price of fuel and the competition for customers, airlines must make economically viable choices.
Those airlines operating across Russian skies now face the penalty: a 20% higher charge. This could further alter flight paths, but, more importantly, could impact ticket prices. Although, given the insurmountable demand for flights out of Moscow this weekend and the limited route options available, airlines are likely to stay put, cement their stake in the market, and begrudgingly pay the new fees.
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While the decision to fly over or to Russia remains controversial and hotly contentious, Air India's CEO Campbell Wilson has defended such business. At the same time, his counterpart at Qatar Airways, Akbar Al Baker, has declined to comment and fodder the discourse.
By boosting fees on overflights, Putin is seeking compensation, by any means necessary. Overflights could either become highly unattractive or, if intent on maintaining the upper hand against the competition, airlines might stump up the cash. As the situation develops, all eyes are on Moscow.
Henry Wood
14 hours ago
As President Vladimir Putin strives to sustain his military initiatives, the price of overflights has just increased by 20%. The Kremlin rubber-stamped the price increase of one-fifth, as the nation looks to shore up its finances for a drawn-out war, well into its second year already.
According to the Telegraph, the increased fees will be levied on those airlines from ally nations or neutrals. The decision will negatively affect Chinese airlines in particular, who still traverse Russian skies on a daily basis to connect with many key destinations.
Emirates, Qatar Airways, Air India and Turkish Airlines, Ethiopian Cargo, and most Chinese carriers have continued to fly over and to Russia. As China reopened to foreign travel following three years of stringent border closures, European airlines expressed their feelings over Chinese carriers having an unfair advantage - more direct routes equate to wider profit margins, after all.
Before 2022, roughly $1.7 billion per annum was generated for the Kremlin from flights traversing Russian airspace. Evidently, the downturn in footfall on Russian skies will have been significantly felt.
No traffic from the west
For the last sixteen months, Western airlines have avoided flying over Russia at all costs. Ensuring there are no overflights is one of many sanctions against the nation and its own retaliatory sanctions against others. As such, airlines had no choice but to divert to flight paths that avoid Russian airspace. So now, for example, a Japan Airlines flight between Tokyo and London takes an additional three hours.
Did you know we also have an aviation YouTube channel here?
Due to their hub locations, some airlines have made the most of the restrictions by offloading and leasing their unused aircraft to other airlines in need of the capacity. One such airline is Finnair which overcame significant airspace challenges and recently entered an agreement with Qantas for two Airbus A330s.
Valuable airspace
Uniquely placed between Europe and Asia, Russia allows for significantly more efficient east-west routings between the two continents than trajectories bypassing its skies. This means it holds some pretty valuable cards. But, faced with the price of fuel and the competition for customers, airlines must make economically viable choices.
Those airlines operating across Russian skies now face the penalty: a 20% higher charge. This could further alter flight paths, but, more importantly, could impact ticket prices. Although, given the insurmountable demand for flights out of Moscow this weekend and the limited route options available, airlines are likely to stay put, cement their stake in the market, and begrudgingly pay the new fees.
Have you heard the Simple Flying podcast recently?
While the decision to fly over or to Russia remains controversial and hotly contentious, Air India's CEO Campbell Wilson has defended such business. At the same time, his counterpart at Qatar Airways, Akbar Al Baker, has declined to comment and fodder the discourse.
By boosting fees on overflights, Putin is seeking compensation, by any means necessary. Overflights could either become highly unattractive or, if intent on maintaining the upper hand against the competition, airlines might stump up the cash. As the situation develops, all eyes are on Moscow.
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Summary
Russia raised overflight charges by 20% to generate revenue for military initiatives and war expenses. This increase affects allied and neutral airlines, particularly Chinese carriers. Previously generating $1.7B annually, the decline in flights could significantly impact Russia's income due to