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Russia-Ukraine war, fuel price spike airline costs

By Wole Oyebade
18 March 2022   |   2:50 am
Global airlines have bemoaned the impact of the Russia-Ukraine war and spike in the price of aviation fuel on airline costs.

Airlines seek removal of mask mandates

Global airlines have bemoaned the impact of the Russia-Ukraine war and spike in the price of aviation fuel on airline costs.

The airlines, under the aegis of the International Air Transport Association (IATA), said the positive figures recorded in January have been eroded by crisis and flight disruptions.

IATA noted that the resulting sanctions and airspace closures on account of the Russia-Ukraine crisis are expected to have a negative impact on travel, primarily among neighbouring countries.

The Ukraine market accounted for 3.3 per cent of European passenger traffic and 0.8 per cent of global traffic in 2021. The Russian international market represented 5.7 per cent of European traffic (excluding Russian domestic market) and 1.3 per cent of global traffic in 2021.

Airspace closures have led to rerouting or cancellations of flights on some routes, mostly in Europe-Asia but also in the Asia-North America market. This impact is mitigated owing to greatly diminished flight activity since borders in Asia were largely closed owing to COVID-19.

IATA’s Director-General, Willie Walsh, said in addition to these disruptions, the sudden spike in fuel prices is putting pressure on airline costs.

“When we made our most recent industry financial forecast last autumn, we expected the airline industry to lose $11.6 billion in 2022 with jet fuel at $78/barrel and fuel accounting for 20 per cent of costs. As of March 4, jet fuel is trading at over $140/barrel.

“Absorbing such a massive hit on costs just as the industry is struggling to cut losses as it emerges from the two-year COVID-19 crisis is a huge challenge. If the jet fuel price stays that high, then over time, it is reasonable to expect that it will be reflected in airline yields,” Walsh said.

He added that the past few weeks have seen a dramatic shift by many governments around the world to ease or remove COVID-19-related travel restrictions and requirements as the disease enters its endemic phase.

“It’s vital that this process continue and even accelerate, to more quickly restore damaged global supply chains and enable people to resume their lives. One step to encourage a return to normality is to remove mask mandates for air travel.

“It makes no sense to continue to require masks on aeroplanes when they are no longer being required in shopping malls, theatres or offices. Aircraft are equipped with highly sophisticated hospital quality filtration systems and have much higher airflow and air exchange rates than most other indoor environments where mask mandates already have been removed,” Walsh said.

IATA announced that the recovery in air travel slowed for both domestic and international in January 2022 compared to December 2021, owing to the imposition of travel restrictions following the emergence of Omicron last November.

Total demand for air travel in January 2022 (measured in revenue passenger kilometers or RPKs) was up 82.3 per cent compared to January 2021. However, it was down 4.9 per cent compared to the previous month (December 2021) on a seasonally adjusted basis.

January domestic air travel was up 41.5 per cent compared to the year-ago period but fell 7.2 per cent compared to December 2021 on a seasonally adjusted basis.

International RPKs rose 165.6 per cent versus January 2021 but fell by 2.2 per cent month-on-month between December 2021 and January 2022 on a seasonally adjusted basis.

“The recovery in air travel continued in January, despite hitting a speed bump called Omicron. Strengthened border controls did not stop the spread of the variant. But where population immunity was strong, the public health systems were not overwhelmed. Many governments are now adjusting COVID-19 policies to align with those for other endemic viruses. This includes lifting travel restrictions that have had such a devastating impact on lives, economies and the freedom to travel,” Walsh said.

African airlines’ traffic rose 17.9 per cent in January 2022 versus a year ago, a slowdown compared to the 26.3 per cent year-over-year increase recorded in December 2021. January 2022 capacity was up 6.3 per cent and load factor climbed 6.0 percentage points to 60.5 per cent.

European carriers’ January international traffic rose 225.1 per cent versus January 2021, which was up slightly compared to a 223.3 per cent increase in December 2021 versus the same month in 2020. Capacity rose 129.9 per cent and load factor climbed 19.4 percentage points to 66.4 per cent.