(CNN) — This was supposed to be a year of recovery for a travel industry hit hard by the global coronavirus pandemic. But Russia’s invasion of Ukraine may have just changed that.
After two years of disrupted travel due to ever-changing Covid-19 restrictions, airlines and tour operators are once again bracing for closed skies, cancellations and a cloud of uncertainty over international travel.
More than 30 countries have so far closed their airspace to Russia, with Moscow reacting in kind. Russia’s Civil Aviation Authority announced it has closed off its airspace to the carriers of at least 37 countries as of Tuesday. The airspace over Ukraine, Moldova and parts of Belarus also remains closed.
In the short-term this means flight cancellations or a diversion of air routes. But the long-term consequences for the travel industry could be much more far reaching. Here’s why:
Rising fuel costs will hike travel prices
Global crude oil prices surged to more than $110 per barrel on Wednesday as investors fear Russian energy exports will be limited or halted as a result of the conflict in Ukraine.
These price surges will make any type of travel more expensive. Coupled with potentially longer air routes that need more fuel as they circumvent closed Russian air space, the higher prices will eventually need to be passed on to the consumer.
Europe’s biggest airline Lufthansa said the Asia detours will cost a “single-digit-million-euro” amount per month. Addressing reporters during a company earnings update on Thursday, Lufthansa chief financial officer Remco Steenbergen said the carrier will need to hike ticket prices to offset the rise in fuel prices and other costs.
A spike in fares could lead to lower demand — and that spells bad news for an industry already struggling to make up for pandemic-related losses, not to mention inflation.
Safety fears could weaken demand
Rising fuel costs will inflate passenger tickets. As will a drop in demand caused by fears of conflict.
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