2023-04-24 00:40:09
Airline ticket prices have risen since the start of the Russian invasion of Ukraine. One of the reasons: the Russians have banned the airspace of their country to Canadian, American, British and European companies in retaliation for similar measures taken once morest Russian companies.
European airlines are the most affected. They had to make changes to their routes, imposing long detours, for flights to Asia and parts of the Middle East.
Canadian carriers are not spared either. Flights to East Asia and South Asia should avoid Russian airspace. There is no sign of a relaxation on the horizon. These detours mean longer trips, and increase fuel and labor costs. The increase in these costs is passed on to passengers, who must pay more for their ticket.
“It is definitely negative for Canadian and American companies. It’s definitely a problem,” admits Helane Becker, an air transport specialist at TD Cowen.
Previously, planes did not directly cross the Pacific Ocean. They shortened distances by drawing an arc around the Arctic and eastern Russia.
“The optimal route for a flight between Canada and Southeast Asia is through Russian airspace,” says former Air Canada chief operating officer Duncan Dee.
Avoiding Russian airspace increases distance by 10%. This applies in particular for connections between Vancouver and Hong Kong or between Toronto and Delhi, underlines Robert Kokonis, president of the firm AirTrav. Other nonstop flights, including from Vancouver to Bangkok or Seoul, also required changes.
The extra fuel spent is reflected on the invoice. Thus, the price for jet fuel rose to $2.68 a gallon in March, a 41% jump from four years ago.
“This is on top of the airfare paid by the consumer,” says Ms.me Becker.
A one-way flight from Vancouver to Hong Kong grew 41% from January 2019 to January 2023, according to airline data firm Cirium. That of a flight from Toronto to Delhi has increased by 47% over the same period.
Unfair competition ?
If we include all the airlines, including those that can still fly over Russia, such as China Airlines or Air India, the price of the flight from Vancouver to Hong Kong fell by 22% from January 2019 to January 2023. Flights from Toronto to Delhi increased by only a quarter.
The situation places Air Canada and other banned companies at a disadvantage, said Ross Aimer, CEO of Aero Consulting Expert, himself a former airline pilot.
“Every minute you add to a flight increases the cost. If we can go through the North Pole, we can save one to two hours. But now we have to take a route further south. Western companies that can no longer fly over Russian territory are at a financial disadvantage. Much of the northern part of the globe covers Russia. »
While Asia is not Air Canada’s main market, the continent still represents a significant portion of the airline’s revenues. Flights to Pacific countries account for more than 14% of the 17.23 billion in revenue in 2019. Moreover, as tourism between China and North America has picked up since the end of restrictions due to Due to COVID-19, airlines in the West are having to make do with reduced margins due to increased competition.
“Several Air Canada routes to Asia, India and the Middle East had to be diverted due to the ban on Russian airspace,” said company spokesman Peter Fitzpatrick. Some routes, such as Vancouver-Delhi, have been suspended.
“Longer journeys lead to increased costs and fuel consumption. They reduce passenger and cargo capacity. Trips are no longer profitable from an economic point of view. »
Air Canada wants governments to “ensure a level playing field that allows for fair competition and fair opportunities for all carriers”. The company has not specified how this principle can be translated into policy.
The country’s largest airline can take comfort in a codeshare partnership agreement with Air China, which allows both parties to share profits. This type of agreement allows an air carrier to operate a flight whose seats are also marketed by another carrier.
“Codeshare partnerships are obviously advantageous, but not so much that you hand over the link to a partner. You can make a slight profit, but not as much as if you were carrying out this theft yourself,” said Aimer.
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