Local conflict, global impact
Stefan Mohamed looks at the ripple effects from this vicious conflict, and the impact on travel trends and assistance provision
For the global travel industry, 2022 was supposed to be a time of healing. After two years of chaos caused by Covid-19 – during which the United Nations World Tourism Organization (UNWTO) estimated 2.1 billion fewer international arrivals than previous years, equating to global losses of US$2.1 trillion – the outlook was cautiously positive. Even with rising inflation, hopes were high that a global population desperate to go on holiday again would pay higher prices for trips, catalysing a much-needed recovery.
But on 24 February, after a prolonged period of rising tension, Russia invaded Ukraine. The humanitarian cost of the war has been devastating, with thousands dead and millions displaced – and global travel has found itself weathering a new storm.
Action and reaction
In 2021, according to analytics company GlobalData, Russia accounted for 13.7 million international departures, with a combined spend of US$22.5 billion throughout the year. In terms of source markets, these figures placed the country at number five in the global top 10, with Turkey, Cyprus and Greece the top-three beneficiaries.
However, following the invasion, the international community was quick to impose some of the most stringent sanctions in recorded history. Between economic restrictions on financial institutions such as the Central Bank of Russia and VTB Bank, flight bans and airspace closures – with European sea and airports effectively closed to ships and aircraft registered to, or controlled or owned by Russia – the freedom of Russian nationals to travel to their usual destinations has been severely curtailed.
But there could be more to come, with some European Union (EU) member states heavily lobbying for a total ban on visas for Russian tourists – although the response to these proposals has been far from united, particularly from nations with traditionally close ties to Russia. Estonia has even taken matters into its own hands, banning Russian travellers who hold previously issued Schengen visas and ceasing to grant any new visas for the foreseeable future, while Finland is also planning to tighten application rules. The EU Ministers of Foreign Affairs, meanwhile, have officially suspended the EU’s visa facilitation agreement with the Russian Federation, making it much more complicated – and expensive – for Russian citizens to apply for a visa.
Whether these sanctions continue to ramp up remains to be seen, but many tourist destinations used to Russian visitors have already felt the impact.
Have visa, won’t travel
While Russians are still travelling, numbers have dropped notably. Turkey, for example, is traditionally a major destination for Russian tourists, with 3.75 million visitors in 2019. However, in the first seven months of 2022, the Turkish Ministry of Tourism recorded a drop of around 1.56 million Russian arrivals compared with 2019, pushing Russia from first to second place in terms of source markets.
Cyprus, Bulgaria and Egypt have also welcomed far fewer Russians over the summer than usual. Global Voyager Assistance has an office in Cyprus and has been carrying out operations in Bulgaria, as well as Odessa, Ukraine since the conflict started. Company CEO Costas Danilenko told ITIJ that they had noticed a significant drop in Russian visitors to both countries. Additionally, those who have managed to travel to Cyprus have done so with multi-entry visas granted before the conflict began and were thus still valid.
Danilenko also noted that while it may still be possible in theory for a Russian national to apply for a Cypriot visa, the process has become much more complicated – and even if they do manage to get one, travel itself is difficult, as there are no longer direct flights from Russia to Cyprus. “[Now] they have to travel through Dubai or Serbia,” he explained. “Before, a direct or charter flight could cost €250, but now you have to budget €1,500. And for those who fly via Dubai, that’s a six-hour flight from Russia, then three more hours to Cyprus, plus connecting time at the airport. It’s a whole day’s travel rather than three hours.”
Many tourist destinations used to Russian visitors have already felt the impact
However, while both Cyprus and Bulgaria are seeing fewer Russian visitors, Danilenko said that travellers from other source markets are often picking up the slack.
“After two years of Covid, there is a lot of demand for travel,” he said. “And I noticed a lot more Polish and German tourists in Varna [in Bulgaria] – at the end of August, all the hotels were full. You couldn’t find a room and prices were higher than usual, more like Greece. Bulgaria used to be a very cheap destination, but they have built a lot of five-star and boutique hotels, so they can attract tourists who weren’t visiting Bulgaria before, but were spending time in the Greek islands.
“But because occupancy rates in Greece are at record numbers this year, people have opted to travel to Bulgaria instead, which is still cheaper, but offers the same sort of quality. So, I don’t think hotels are complaining at the moment!”
Lara Helmi, Managing Director of CONNEX Assistance Middle East, noted a similar situation in Egypt. “There has been a considerable drop in the number of Russian tourists since the conflict began,” she said. “This also applies to Ukrainian tourists who, together with Russians, comprised over 30 per cent of the tourists visiting Egypt in 2021 – around two million visitors. It is unfortunate that this conflict began just as the tourism numbers in Egypt (and globally) were starting to recover and move back towards pre-pandemic levels.”
According to Russian online tour booking services, as a way of getting around restrictions, Russians are looking outside of Europe for autumn trips. Bookings have risen for the United Arab Emirates, Maldives and Thailand, and Japan has seen a large increase in arrivals. Russian travellers are also looking increasingly at five-star accommodation, with demand for luxury hotels rising from 27 per cent to 45 per cent. Big spenders, it seems, refuse to be deterred because of the actions of their government.
But even those who do manage to get to their chosen destinations face difficulties. With providers like Mastercard and Visa suspending Russian operations, Apple Pay, Google Pay and PayPal taking a strong stance, and Russian lenders being banned from SWIFT international payments, people are getting creative. Some have found ways to open accounts in other countries – Estonia, for example, offers a system where anyone in the world can apply for a digital ID and open a local bank account, while some got ahead of the sanctions by transferring Russian money to existing foreign accounts.
Of course, there’s always good old-fashioned cash, or even a cryptocurrency like Bitcoin, which is very popular in Russia – offering tech-savvy travellers a way to skirt around the effects of sanctions, in theory. Many libertarian-minded cryptocurrency exchanges have pushed back against demands to block Russian crypto transactions, although US regulators are reportedly tackling this.
Unfortunately, for even the most innovative travellers, they cannot fix the exchange rate. The value of the Russian ruble has fluctuated wildly over the course of 2022, hitting some of its lowest points in history, although paradoxically rising to unprecedented heights on other occasions. But while these rises may seem like good news on the face of it, such ongoing uncertainty will do little to dispel the concerns of those trying to use their home currency to pay for a hotel.
The humanitarian cost of the war has been devastating, with thousands dead and millions displaced
Who assists the assistance companies?
The companies we spoke to all agreed that the conflict has impacted local tourism in the countries in which they operate. But they have also seen more direct impacts on their businesses.
When Global Voyager Assistance started out in 1999, its first three offices were in Cyprus, Russia and Ukraine, and it has been operating in all three countries ever since. However, the company has now been faced with a difficult choice.
“When the war started, we had no choice but to stop trade relations with the Russian Federation,” said Danilenko. “We have two different portfolios, one of which is focused on the maritime business, where Odessa plays an important part. And I’m a shareholder in the Ukrainian company, so by law I could not continue to trade with the Russian Federation.”
As a result, the two offices split, and are now effectively two different companies under the same name – and sharing a logo, albeit now in different colours.
“The Moscow office continues to operate and serve Russian travellers,” explained Danilenko. “But it’s not part of our group any more, and we are no longer serving Russian nationals. We try to maintain diplomatic relations [with the Moscow office], although it’s not always possible, there is still some conflict of interest.”
The company’s Odessa office does still operate, however, organising ground ambulances, nurses and doctors. A contingency office was also opened in Varna, Bulgaria – as Danilenko pointed out, ‘we don’t know about Ukraine’. “Odessa is more or less stable at the moment,” he said. “But anything could happen with telephone, internet [and so on], so we needed another operations centre.”
Helmi said that CONNEX has also had to adapt to deal with the fraught situation. “At the moment we do not handle any volumes from Russian companies,” she said. “And there has been a massive impact on volumes from Ukraine. Not only that, but many global partners have spun off their Russian operations due to the sanctions, [which] means that when they’re eventually lifted, we will have to draft separate agreements for many of the Russian companies or business units we used to work with regularly.”
CONNEX is also drafting agreements with Ukrainian assistance companies and insurers, Helmi added, ‘as much of the Ukrainian business that was traditionally handled by Russian companies will now be handled by Ukrainian (or other Eastern European) companies instead’.
The air ambulance side
Turkish air ambulance provider Redstar Aviation has also been affected. Based at Istanbul Atatürk Airport, ‘at a natural geographical and strategic location in the middle of the routes connecting the continents’, Redstar has minimised airspace closure disruption, continuing operations in both the east and west without having to enter restricted areas. However, due to the increasing severity of economic sanctions against Russia and its citizens, the company is currently unable to offer services to Russian nationals.
“Although we run missions on a global scale, we’ve always been a trusted partner for flight operations to and from Russia, due to our geographical proximity,” a Redstar spokesperson said. “While it did not affect us on a major commercial level, we did experience minor business losses. Within the scope of regulations, we have been continuing our flight operations in accordance with the guidelines of the local and global authorities to which we are affiliated.”