Russia Hits Back on Sanctions, Bars EU Carriers From Skies

(Bloomberg) -- Russia barred airlines from the European Union, Canada and a host of other countries from its airspace in retaliation to sanctions they imposed in response to its invasion of Ukraine. 

The move announced Monday in Moscow formally puts a wide swath of Russia -- a key route for travel between Europe and Asia -- off-limits for major carriers such as Air France-KLM and Deutsche Lufthansa AG. Those airlines and others, including Finnair Oyj and British Airways owner IAG SA, had already begun going around Russia or removing flights to Seoul, Shanghai and Tokyo from their schedules. 

The number of flights to and from Europe transiting through Russian airspace on Sunday was down 42% from a week earlier, according to aviation consultancy Cirium.

The list of 36 destinations includes the U.K., which was forbidden after becoming the first major nation to bar Aeroflot and other Russian airlines. The British dependency of Jersey and overseas territory Anguilla are also included, though not the U.S., which has stopped short of barring Russian aircraft.

Russia's latest move will make it more expensive and time-consuming for Europe's airlines and air-cargo carriers to make the long transcontinental journeys that have traversed the Siberian route since the 1970s. Finnair, whose main long-haul strategy relies on shuttling European customers from smaller cities through its Helsinki hub, said over the weekend that many flights would no longer make economic sense.

Russia is fighting back against sanctions led by the U.S. and Europe meant to weaken its economy and end the assault on neighboring Ukraine. 

It had already banned a number of individual EU countries, in a series of back-and-forth escalations in the days after it sent troops into Ukraine. Those measures culminated Sunday with a full ban on Russian flights into EU airspace. 

The bans enacted by the EU, Canada and others such as Norway and Iceland over the weekend are part of a series of measures -- from sanctions on commerce and banking to sending medical, humanitarian and military aid to Ukraine -- aimed at punishing Putin, pressuring those closest to him and persuading him to back down.

Together, they create a rapidly deteriorating environment for flying, especially over longer distances, for airlines on both sides of the divide. Commercial tension is already becoming evident far from the area of conflict. Transport Canada said in a tweet earlier Monday that an Aeroflot flight from Miami to Moscow violated its airspace. 

Russian media outlet RBC reported separately that an Irish leasing firm seized a Boeing 737 operated by Aeroflot's Pobeda low-cost unit from Istanbul's Havalimani airport. 

The EU sanctions affect parts, insurance and the supply of “all goods and technology” linked to aircraft in Russia. This means leasing firms will be required to terminate all contracts with Russian airlines on billions of dollars' worth of jets over the next 30 days. 

Irish leasing firm AerCap Holdings NV, by far the biggest foreign lessor in Russia, said Monday that it would stop doing business with airlines in the country. Its shares sank as much as 16% in New York on Monday, the most since March 2020, at the start of the coronavirus pandemic. 

The stock was down 12% as of 1:39 p.m. in New York, while Los Angeles-based Air Lease Corp. fell 5.2%.

The sparring between Russia and Europe and North America has so far spared Asian carriers. But with the number of flights still depressed because of Covid-19 lockdowns in Asia, airlines in Europe said they were seeing less impact than they otherwise would. 

“We only have two flights a week affected, so it will have minimal consequences for our total operations,” SAS AB spokesman John Eckhoff said via phone, adding that Scandinavia's largest airline is now looking how to reroute the affected flights.

Dutch carrier KLM said it's examining alternative routes for currently canceled flights to destinations including Seoul, Shanghai, Beijing and Tokyo.

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With assistance from Bloomberg