Monday

30th May 2016

Russia in sanction threat against EU

Russia may restrict or impose a ban on Asian-bound European airlines from flying over its Siberian territory as part of a retaliatory move against western-imposed sanctions.

On Tuesday (5 August), President Vladimir Putin asked his government to draw up counter measures to EU/US sanctions.

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  • Russian government mulls imposing a flight ban on European airlines (Photo: kremlin.ru)

Putin was quoted by Russian news agencies as saying any retaliatory measures “should be done very carefully to support domestic producers but not hurt consumers”.

He described the western sanctions as “policy instruments aimed at putting pressure on the economy are contrary to all rules and regulations,” reports the Financial Times.

The EU imposed tougher economic sanctions on Russia following the shooting down of a passenger plane over separatist-held territory in eastern Ukraine last month.

The effect of these sanctions is already being felt by Russian tourist agencies, many of which have gone bust, due in part to fluctuating exchange rates. Up to 15,000 Russian tourists are reportedly stranded abroad, with many in Greece, Turkey, and Tunisia, reports the Wall Street Journal.

But the trans-Siberian ban idea was floated after EU sanctions grounded low-cost carrier Dobrolyot, operated by Aeroflot, because it flies to Russia’s annexed Crimea.

The sanctions cancelled the carrier’s leasing agreements, technical maintenance, insurance, and aero-navigation contracts. The budget airline operates two Boeings 737-800 NG and one Sukhoi Superjet-100.

Prime minister Dmitry Medvedev met the Russian transport minister and a deputy chief executive of Aeroflot on Tuesday (5 August) to discuss the possible fall-out from western sanctions on Russian airlines.

Vedomosti, a business daily in Russia, reported talks were underway to restrict or ban European airlines en route to Asia from flying through Russian airspace.

The restrictions or ban would require the airlines to divert their flight paths via the much longer Gulf or polar routes, substantially increasing travel time and fuel costs.

Russia’s air transport agency says the Siberia routes cut travel distance by 4,000 km and fuel and fee costs by €22,000. Lufthansa operates about 180 flights a week through Siberian airspace.

According to experts cited by Reuters, the ban would increase European airline operational costs from 25 to 50 percent or up to €150 million per year.

But it would also mean Aeroflot would lose out on a special overflight fee imposed on European airlines, which fly through Russian airspace.

The paper says Aeroflot stands to lose some €225 million a year in overflight fees if the Russian government follows through with the proposal.

The reported announcement saw Aeroflot shares tumble on Tuesday.

Meanwhile, Putin is calling for “an international humanitarian mission” in eastern Ukraine, seen by Kiev as an excuse to send in Russian troops as peacekeepers.

Around 1,500 Russian troops are stationed in the separatist Moldovan region of Transnistria. Moldova’s pro-EU government on Tuesday told Russia to withdraw its soldiers and weapons.

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