A year on from the Ukraine war – are European and Asian airlines feeling the impact?

The Russian invasion of Ukraine began on 24 February 2022 – exactly one year ago. On this anniversary, Bloomberg Intelligence reveals the impact the war has had on European and Asian airlines.

Large European airlines, such as British Airways and AerLingus, are notgoing to suffer as badly as once feared, said Bloomberg Intelligence.

The price of jet fuel has fallen 43 per cent from its June peak, but the demand remains for consumer subsidies on energy prices.

Conroy Gaynor, industry analyst at Bloomberg Intelligence said: “One year after Russia's invasion of Ukraine, jet fuel in Europe is about one-third more expensive vs. 2019, when the airline industry last operated at normal capacity.

“Fuel can be 25–40 per cent of unit cost so is reflected in higher fares, along with other inflation. We calculate the largest budget airline fares were up 12–14 per cent in calendar 4Q vs. pre-Covid-19. Yet energy costs falling from a peak, plus a stronger euro vs. the dollar since 3Q, may mean a softening of pricing gains.”

Airspace use: China v Europe

The largest Asian impact of the war in Ukraine might be on the China-Europe market where Chinese airlines continue to use Russian airspace unlike European rivals on the same routes, causing an uneven playing field.

Gaynor commented: “Avoiding flying over Russia could be resulting in a time and cost penalty of 15–40 per cent on European airlines, with Finnair the worst-affected at 40 per cent longer flights to China, and British Airways with 20 per cent longer diversions.

“We calculate the added fuel expense impact using average fuel burn rates of the aircraft used by each carrier and filed July 2023 schedules. With the largest capacity among Europeans, Lufthansa Group airlines can expect a $2.8 million higher July fuel bill vs. direct routings, or $33 million annualised.”

Example of the effects

Penalised carriers could also face higher labour and maintenance costs due to longer flights. As an example of the time and cost penalties to European airlines and their passengers, consider the Shanghai-to-Paris route flown recently by Air France and China Eastern Airlines.

On 15 February, China Eastern Flight 7553, utilising Russian airspace, was able to fly a direct routing of 9,461 km, or within two per cent of the great circle route distance.

Air France Flight 193 on 19 February avoided flying over Russia and flew a 12.6 per cent longer path of 10,659 km with an even greater time penalty of 2.4 hours, or 19.5 per cent longer.

Both flights used the same aircraft, a Boeing 777-300ER and, assuming the same fuel burn, we estimate the AF flight burned an extra 6,160 gallons vs. the CEA path, or $15,650 at current jet fuel prices, which falls directly to the bottom line. The extra flying time by European carriers also means higher carbon emissions.