The sanctions-hit Kremlin is seriously considering closing Russian airspace for overflights of European carriers. The sky blockade is likely to come into force as answer to new penalties imposed by the EU due to Moscow’s ongoing military and logistics activities in the eastern Ukraine. If so, the EU seems to have the tools to react with suitable counter measures.
“So far it’s only verbal threats we hear from the Russian government, with no single European airline crossing Siberia having been denied overfly rights by Moscow up to this point,” states an EU official when speaking with CargoForwarder Global. “As long as they don’t ban any of our carriers from their skies we see no reason to table possible counter measures,” she adds.
Diplomatic language, but comprehensible since Brussels hasn’t got the slightest interest to further throw oil on the fire ignited by Russia’s land taking action in the Ukraine and the Crimea, causing a series of economic reactions by the EU. However, in case Moscow should continue destabilizing parts of the Ukraine through martial activities, disguised as brotherly help for the Russian speaking minority living there, the EU has announced a severe strengthening of their sanctions.
EU imposes new penalties
They came into effect last Friday but are subject to the Kremlin‘s further steps in the Ukraine conflict. The new package targets vital parts of the Russian economy, particularly financial institutions such as Sberbank, Russia’s largest banking organization and leading energy providers such as Rosneft and Gazprom.
In view of these perils that not only harm these particular business sectors but impair the state revenues directly, both Russian leaders Vladimir Putin and Dmitry Medvedev warned Brussels their government will hit back by imposing severe sanctions against the European industry. Although Moscow announced publishing the toxic list within the next couple of days, the Kremlin might have reacted already by cutting back the supply of natural gas to Poland (-40%), Germany and Austria (-10%). Provider Gazprom refused any comment.
Targeting air traffic
Retaliating against Brussels by reducing the flow of gas from East to West can be considered as being just the first imminent reaction by the Kremlin to stiffer sanctions with more to follow.
These steps could include an array of different businesses, including aviation, as indicated by Medvedev. “We intend to respond asymmetrically,” he told the local paper Vedomosti, by “targeting the transport sector with constraining effects.”
So far, the Russian skies are open for most carriers, he emphasized. His government won’t tolerate to be pushed around by western states through “unfriendly measures” taken against the country, the politician added. “We are full of good will, but our patience is limited. If we are compelled to protect our interests we could put a halt to EU airlines to overfly our territory.” “In that case some of the EU carriers that are already on the brink of insolvency might bite the dust,” assumed Medvedev. He went on to say that whatever sanctions the EU, USA, Canada and other nations might impose on Russia it won’t help to bring peace to the eastern parts of the Ukraine. Circumventing Russian territory would become more expensive for European and also U.S. airlines than paying royalty fees for transits. In case they are forced to take more southerly routes via Turkey and CIS countries like Kazakhstan the flight time between Europe and East Asia would be prolonged by about an hour, upping the cost for fuel burn substantially. Aviation experts speak of additional expenditures in the region of 20,000 euros per flight. Airlines that would suffer most from curbs on flights across Siberia are Finnair, Lufthansa Passenger Airline together with LH Cargo, Air France-KLM, SAS and cargo carrier AeroLogic.
The aviation relations between Russia and the EU have seen a lot of ups and downs in recent times. Things worsened in 2008 when Moscow suddenly prohibited Lufthansa Cargo to further cross Siberian skies. The case was settled some months later after the airline gave in by deciding to transfer its technical stops on return flights between Europe and the Far East from Astana in Kazakhstan to the Siberian city of Krasnoyarsk.
Next, Moscow signed an agreement guaranteeing to terminate cashing royalties from airlines overflying its territory. This was sealed prior to the country joining the World Trade Organization (WTO) in mid-2012. First, levying royalties was supposed to be abolished in 2013, then at the beginning of 2014. However, both deadlines were not met by the Russian Transport Ministry. A clear breach of contract holds Brussels.
Much of the money cashed from these overflight royalties has been transferred by the Russian government into Aeroflot’s coffers. Some say to the amount of €400 million per annum.
Now things might worsen again after the EU imposed additional sanctions, thus risking Moscow’s retaliation by banning western airlines from crossing their territory.
Given that case “which we do not hope it will happen, we have a multi-level system of countermeasures to react,” says an EU official.
No aviation pact between Europe and Russia
However, the Commission is aware of the fact that there is no bilateral treaty on air services between Brussels and Moscow, unlike the one between the EU and the U.S. Therefore, it’s the 27 EU member states that are individually responsible for all air traffic issues in relation to Russia, not Brussels.
Should Medvedev and Putin make their threat come true, much depends on what exactly the measures consist of for the EU members to take any counter steps. “If we determine they reach a level of, say, 60 percent on a scale from zero to one hundred we will react the same way,” announces an official. “Based on this graded approach we have a comprehensive catalogue of measures locked in our drawer that we are determined to put into practice if needed,” he says. Neither did he reveal any details nor did he want his name to be mentioned here. All he said is that there are some key markets that Russian passenger and also cargo airlines might have problems to serve any longer if things should get rougher. These are Poland, Germany, Austria and Finland.
Hopefully, all these sanction and counter sanction threats remain empty words and both sides get back to normal biz again.