IATA Director General, Willie Walsh has unequivocally condemned the war saying: “I am appalled by the unlawful invasion of Ukraine by Russia and stand in solidarity with the Ukrainian people under siege.”
The war in Ukraine has affected aviation in many ways. First, it is helpful to understand pre-war Ukrainian and Russian traffic.
-Ukraine accounts for 3.3% of total air passenger traffic in Europe, and 0.8% of total traffic globally
-Russian domestic traffic accounts for 4.5% of global RPKs (revenue passenger kilometers)
-International air passengers between Russia and Europe accounted for 5.7% of total European traffic in 2021
Even though a relatively small portion of global traffic directly involved Russia or Ukraine, the war and associated sanctions have global implications for airlines and the work of IATA.
IATA’s settlement systems
The outbreak of war has meant the complete closure of air travel to/from/within Ukraine. And connectivity between Russia and the rest of the world has been dramatically reduced through airspace closures. This has presented a challenge to IATA’s settlement systems, which process transactions between airlines and travel agents.
The IATA settlement systems normally facilitate the transfer of funds from ticket sales to airlines, but in these extraordinary times the focus is on processing refunds for cancelled or altered travel plans. This affects the customers of some 140 airlines participating in IATA’s Russian BSP (Billing and Settlement Plan) as well as thousands of travel agents worldwide. Processing these refunds has been even more challenging due to sanctions.
Since sanctions were announced, IATA has vetted the participants in its settlement systems and the financial institutions used by those participants. The situation is extremely fast-moving, but IATA has extensive experience in dealing with sanctions and is committed to ensuring that consumer refunds (for tickets purchased within IATA systems) are processed efficiently and within the limits of applicable sanctions.
IATA’s settlement systems have also seen shifts in demand characteristics for countries neighboring Ukraine. While there has been a drop for inbound demand, there has been an uptick in bookings for outbound flights as refugees move by air to locations farther afield.
The enormous land mass of Russia means large detours for many airlines that served destinations requiring Russian overflight. Measured in RPKs, this affects over 10% of pre-COVID-19 international travel volumes (RPK basis), including travel from Europe to Asia (4.5%), North America to Asia (3.0%) and North America to the Middle East (4.0%).
As demand is still recovering from COVID-19 restrictions, the actual number of travelers facing longer journey times is limited. But this will increase rapidly as more Asian markets relax restrictions and encourage air travel.
IATA is working closely with authorities and airlines to share information so the re-routings can be well-coordinated. With current low levels of traffic, this has not yet created bottlenecks, but that will need careful management as more of Asia re-opens to travel and volumes pick-up.
Together with the airspace closures and other restrictions, this will doubtless affect slots at key airports worldwide. Many will go unused, and others will be affected by rescheduling and longer flight times.
Maximum flexibility is essential to minimize disruption and enable airlines to operate as much of their planned schedule as possible. IATA is working closely with the Worldwide Airport (Slot) Coordinator Group to ensure such flexibility and to share information on schedule updates among aviation stakeholders and passengers as quickly as possible.
One area that cannot be compromised, regardless of the circumstances, is safety.
IATA has a long-standing policy of opposing sanctions that could see a degradation of aviation safety, such as bans on the export of spare parts for aircraft. Banning the export of these items could impact aviation safety for all aircraft operating into or transiting over or near Russian airspace. This includes, for example, aircraft that may need to divert to Russian airports in an emergency.