Aircraft lessors face the potential loss of hundreds of aircraft in Russia as the country moves quickly to prevent lessors from repossessing Western-owned planes at Russian airlines amid Western economic sanctions. “The door is closing,” Aircastle Chief Legal Officer Christopher Beers said of lessors’ ability to repossess aircraft at the ISTAT Americas conference on Monday. Since the EU imposed sanctions on Russia on February 25, lessors have succeeded in recovering some aircraft. But Russia has moved quickly to protect its aviation assets, including allowing airlines to re-register foreign-registered planes in Russia, which violates international law if an aircraft is registered in more than one jurisdiction. The Russian government has recommended that carriers do not fly foreign-owned jets outside of the country to avoid the risk of repossession. And, in what is in part a move to protect its assets, Aeroflot and its subsidiaries will suspend flights to destinations outside of Russia on March 8. Russian airlines operated 861 aircraft, of which 695 are Western-built — including 304 Airbus and 332 Boeing models — in February prior to the invasion of Ukraine, according to Cirium’s Fleet Analyzer. Foreign lessors owned 515 aircraft with AerCap, SMBC Aviation Capital, and Air Lease Corp. having the most exposure. “You’ve got 500-plus aircraft at risk and maybe a dozen or two seized,” said Dean Gerber, executive vice president and general counsel of aircraft finance firm Valkyrie BTO Aviation. “The reality is those other aircraft are land-locked in Russia right now with significant unlikelihood that you’re going to get them out.”<br/>
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Airlines trying to claw their way out of two bruising pandemic years are now facing the most expensive jet fuel costs in more than 13 years, overshadowing a recent jump in travel demand and sending shares spiraling. Russia’s invasion of Ukraine last month has set off a global panic around fuel supplies. Now, some analysts expect US carriers to trim first-quarter profit and revenue estimates in the coming weeks after fuel costs rose 32% last week alone. The expense is generally airlines’ second biggest, behind labor. “The higher fuel will more than wipe out better revenue near-term resulting in modest reductions to 1Q22 estimates,” wrote MKM Partners airline analyst Conor Cunningham in a note. The surge in fuel prices — more than 50% so far this year — is the latest challenge for carriers that expect travelers to come back in droves this year as Covid-19 cases fall. Airline stocks have been among the hardest-hit industries in recent weeks as Russia’s invasion threw markets into turmoil. The NYSE Arca Airline Index, which tracks 18 airlines, dropped more than 13% on Monday. Shares of United Airlines fell 15% on Monday to finish the day at $31.20, the lowest since July 2020. Delta Air Lines dropped nearly 13% to $30.11, while American Airlines fell 12% to $12.84, those stocks’ lowest closing prices since October 2020 and November 2020, respectively. Airlines are limited in how much they can trim capacity to raise fares as they chase passengers returning to the skies. For the second quarter, U.S. domestic schedules are flat compared with 2019 “and we doubt much capacity will be cut given the increased competition for the leisure customer,” Andrew Didora, Bank of America airline analyst, said in a Monday research note. Didora said travel demand should outpace supply, particularly during peak leisure times, “but it will not create nearly enough pricing to offset the fuel move.” Story has more.<br/>
US airlines are unlikely to raise fares enough to completely offset jet-fuel costs that are at their highest levels in more than a decade, pulling the industry’s shares down the most in the S&P 500. Uncertainty over global oil supply has boosted prices since Russia invaded Ukraine on Feb. 24. The spot jet-fuel price in New York harbor has surged 57% since the start of 2022 to $3.61 a gallon Monday, the highest since 2008. As recently as January, the biggest US airlines forecast jet fuel at no more than $2.50 or so for the first quarter. Fuel can account for as much as a third of airline expenses when the price jumps. The increased cost -- combined with the risk that demand to Europe will suffer because of the war in Ukraine -- is hitting airlines just as they are counting on spring and summer trips to fill planes on domestic flights. International travel remains well below pre-pandemic levels of 2019.<br/>While airlines could raise fares by reducing the number of seats available, carriers are likely to tread carefully, analysts said. Roundtrip domestic tickets are about $305, 4% below the average from the same time in 2019, according to Hopper Inc., a travel search engine. “We do not expect the airlines to reduce significant amount of capacity, so expect tweaks and not cuts, which ultimately means overcoming higher fuel with price is unlikely,” Conor Cunningham, an MKM Partners analyst, said in a report Sunday. “It is certainty a start to get pricing moving in the right direction.”<br/>
Airlines are seeing prospects for a strong profit rebound from two years of coronavirus turmoil rapidly slip away after the price of oil reached $125 a barrel on Monday. An oil shock triggered by Russia’s war in Ukraine is the latest blow to carriers that have already had to cancel flights and reroute long-haul journeys to avoid shuttered airspace. The price of crude spiked after the US said it would consider a boycott of Russian supplies. Earnings are at risk in Europe, where higher fuel costs will add to widespread flight disruption, while carriers in the US and Asia are largely unhedged and will feel the full impact of price rises. Airline shares tumbled in all three regions, extending losses that have been piling up for the past several weeks. Oil neared $140 a barrel at one point after the US said it was mulling a ban on Russian crude imports. Wizz Air reversed its no-hedging policy on Monday to protect from further increases in oil prices. The hedges will cap fuel-cost exposure for the next four months. Other European airlines are feeling the pinch, with Ryanair and Lufthansa altering schedules. Surplus jets will be redeployed into Western Europe, setting up a supply-demand imbalance. That threatens to hurt ticket prices in a peak summer season on which travel firms have been pinning hopes for a rebound. Before the Ukraine conflict, the IATA was considering revising its estimate issued last October for industry-wide losses of $11.6b this year, potentially narrowing the figure. That now seems unlikely. “Investors believe that airlines will likely pass on the spike in crude costs to consumers in the form of fuel surcharge but are worried about the price elasticity of demand,” Citigroup analysts said in a research note Monday after meetings in the US.<br/>
US airlines are redrawing the flight map of America as they cut routes that the Covid-19 pandemic rendered unviable and add new service to cities that have prospered during the pandemic. A widespread reshuffling is under way, with less service to traditional business hubs and jets redeployed to holiday destinations and on-the-rise cities, according to domestic flight data from Cirium, an aviation consultancy. Meanwhile, some less populated regions were further isolated as carriers reduced service. US airlines could also trim more flights to contend with jet fuel prices that have soared since Russia’s invasion of Ukraine affected oil markets. The number of domestic flights scheduled at 11 mainline US airlines was 1.63mn in the first quarter of 2022, down 12 per cent compared with the same period in 2019, a Financial Times analysis of the Cirium data showed. The country’s largest carriers, American Airlines, United Airlines, and Delta, together had 14.8% fewer domestic flights on their rosters and 8.3% fewer seats. Persistent weakness in travel for business has led the declines. US airlines reported in recent earnings calls that business travel was running at about 60% of pre-pandemic levels for United and Delta and only 40% for large corporations flying on American. Domestic flights into Chicago’s two major airports were down more than 20% in Q1 2022, with routes to business centres and international connection hubs such as Boston, New York and Washington particularly affected, according to the Chicago Department of Aviation. Story has more details.<br/>
The US DoT's Office of Inspector General said on Monday it will review progress by regulators in establishing the basis for certifying lower-altitude aircraft known as "flying taxis." While interest in Urban Air Mobility, or highly automated aircraft that can be used for passengers and cargo and are designed to operate in populated areas, has grown substantially, it creates "new and complex safety challenges" for the Federal Aviation Administration (FAA), which is currently reviewing applications for certifying eVTOL aircraft, the watchdog said. The sector includes electric vertical takeoff and landing, or eVTOL, aircraft, which use electrical propulsion to take off, hover and land vertically. The aircraft typically carry only a few passengers per pilot. The FAA said it "will cooperate fully with the Office of the Inspector General’s audit and looks forward to providing information about our extensive safety work in this area." In highlighting the challenges for the FAA, the inspector general's office noted that the existing regulation for aircraft certification that is being used is "still primarily intended for traditional small aircraft with a pilot onboard, whereas eVTOL aircraft may be entirely autonomous." Well-established aviation and automotive manufacturers like Boeing, Embraer, Airbus, United, Toyota Motor Corp and Stellantis are among companies pouring money into the nascent eVTOL sector. Morgan Stanley analysts last year estimated the potential market for eVTOLs could be worth $1 trillion by 2040, assuming favorable regulatory outcomes. But they said regulatory risks were one of the most underestimated for the sector given strict safety requirements, especially for operating in dense urban environments, as well as noise and pollution concerns.<br/>
European safety regulators have unveiled an information sharing and co-operation platform to improve access to conflict-zone information for aircraft operators. The initiative is intended to provide European Union Aviation Safety Agency members with the best data available for flight-planning purposes. Following a nine-month trial project last year, the bespoke platform – developed in partnership with Osprey Flight Solutions – was launched on 3 March. EASA insists the timing is not directly connected to the situation in Ukraine, whose airspace has been closed to traffic. Osprey says a single interface provides threat identification and monitoring, alerting capabilities, and access to advisory and regulatory documentation. It adds that the platform is designed to facilitate collaboration by enabling participants to discuss the information and provide supplementary detail. EASA will administer and fund the platform, meaning users will have free access. Accurate and up-to-date conflict-zone information has been considered crucial to reducing risks to civil aviation, particularly since the destruction of a Boeing 777 over Ukraine in 2014 and a Boeing 737 over Iran in 2020. “Conflict zones are, by their nature, unpredictable,” says EASA director for strategy and safety management Luc Tytgat. “Operators need the very best information available on time to make their risk assessments.”<br/>
Indonesia's resort island of Bali on Monday welcomed its first foreign tourists under relaxed coronavirus rules that no longer require arrivals to quarantine, part of a broader easing of curbs in the Southeast Asian country after infections declined. Known for its surfing, temples, waterfalls and nightlife, Bali drew 6.2m foreign visitors in 2019, the year before COVID-19 struck. But only a trickle of visitors have returned since Bali started opening up to foreign tourists last October, discouraged by the need to quarantine and other rules. Under a pilot programme, fully vaccinated tourists now can skip a mandatory three-day quarantine, though they need to remain on the island for four days. "I think it's good for the island," said Jesse Rayman, 22, a Dutch tourist arriving at Bali's airport on Monday. "I hope everyone is able to travel safely in the future, and coronavirus wouldn't be much an issue anymore." With tourism normally making up over 50% of Bali's economy, many on the island have been desperate to see a faster return of tourists, particularly as some neighbouring countries moved faster.<br/>
Boeing said Monday it will no longer buy titanium from Russia and instead will rely on inventories and alternative suppliers for airplane production. The US company has had a longstanding joint-venture with VSMPO-AVISMA, a Russian titanium supplier chaired by Sergey Chemezov, a close associate of Russian President Vladimir Putin was sanctioned by US authorities. Boeing did not respond to AFP questions on the status of the joint venture. "We have suspended purchasing titanium from Russia," a Boeing spokesperson said. "Our inventory and diversity of titanium sources provide sufficient supply for airplane production, and we will continue to take the right steps to ensure long-term continuity." Boeing last week suspended its support work for Russian airlines and its operations in Moscow, part of a broad retreat by many US companies in the wake of Russia's invasion of Ukraine last month. The US aviation giant has worked with VSMPO-AVISMA since 1997 and established a joint venture with the Russian metal company in 2006. In November 2021, the two companies signed a memorandum of understanding affirming that "VSMPO-AVISMA will remain the largest titanium supplier for current and future Boeing commercial airplanes," according to a joint press release. The agreement ensures titanium supply for the Boeing 737, 767, 787, 777 and 777X airplanes, the companies said.<br/>
German airport operator Fraport has halted its business at Pulkovo Airport in St Petersburg, Russia, following Russia’s invasion of Ukraine. At present, Fraport has a 25% stake in Northern Capital Gateway, which runs Pulkovo Airport. Fraport has been its minority stakeholder since 2009. It holds the minority interest in the form of an asset and is currently exploring all options in order to retrieve these assets. The German firm said: “The concession contract excludes the sale of Fraport’s stake in the company.” The operator is currently assessing the impact of international economic sanctions against Russia on its minority holding. Fraport said that it is currently not involved in any business at Pulkovo Airport or in any operations of the airport that are overseen by Northern Capital Gateway’s management. Besides, it does not have its personnel on-site while Pulkovo’s management board does not incorporate any of its active or former staff. <br/>
The Civil Aviation Authority of Singapore (CAAS) Monday launched a safety charter to uphold standards as the travel industry recovers from the impact of the COVID-19 pandemic. The Charter for a Strong and Positive Safety Culture in Singapore is the first of its kind for the aviation sector here. The launch took place at the annual Aviation Safety Forum at the Pan Pacific Hotel. “Recognising various safety-related challenges posed by the COVID-19 pandemic, the charter expresses the shared commitment by leaders in the sector to jointly uphold safety standards and strengthen safety culture in their respective organisations as air travel recovers,” said CAAS. To date, 80 aviation organisations have signed the charter; more are expected to do so in the coming months, said CAAS. They include major airlines, training organisations, maintenance, repair and overhaul firms, aircraft manufacturers, the airport operator, ground handlers, industry associations and unions. The charter sets out to encourage voluntary reporting of safety hazards, unsafe practices and safety errors, and including self-disclosure of mistakes, slips and lapses. It also aims to promote confidentiality and protection from punitive action for self-disclosure of safety lapses and errors, while “not tolerating conduct that constitutes gross negligence, wilful misconduct or criminal activity”, said CAAS.<br/>
Embraer has launched a passenger to freighter conversion programme for its E190 and E195 regional jets and is aiming for entry into service in early 2024. The Brazilian aircraft manufacturer says the full freighter conversion is available for all pre-owned E190 and E195 jets and that it sees a market for this size of aircraft of around 700 over the next 20 years. Embraer president and chief executive Arjan Meijer says: ”Perfectly positioned to fill the gap in the freighter market between turboprops and larger narrowbody jets, our P2F E-Jet conversion hits the market as the demand for airfreight continues to take off, and as e-commerce and trade, in general, undergoes a global structural transformation.” Conversion work will be carried out at Embraer’s facilities in Brazil and will include aspects such as a main deck forward cargo door, cargo-handling system and floor reinforcement work. The E190F will have a payload of 10,700kg (23,600lb) and the E195F of 12,300kg. The manufacturer believes the P2F programme not only meets the requirement to replace ageing existing small narrowbody freighters and the growing demand for same-day deliveries fueled by e-commerce, but addresses the coming replacement cycle for E-Jets which entered service 10-15 years ago and are emerging from long-term leases. ”The full cargo conversion will extend the life of the most mature E-Jets by another 10 to 15 years, and encourage their replacement with more efficient, more sustainable, and quieter aircraft,” Embraer says.<br/>