LH feels the squeeze as Russia denies flight approval

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Embattled Lufthansa seems to be fighting on all fronts at the moment. If it’s not threatening the German authorities that it will leave the freighter business altogether if Frankfurt’s night flight ban continues, or negotiating its exit from Jade, it is lobbying to get better traffic rights in Russia.

And not very successfully. It discovered on Friday that Russia would not give approval for 11 of its freighter flights to overfly Russia in its summer schedule, which began on Sunday.
A spokesman confirmed that the decision would cost LH Cargo millions of euros, while adding that the flights would now need an extra 50 minutes flying time, and an additional stop at Almaty.

“It is not a question of overflight fees, but simply of the right to overfly Russian territory… but we are of course in talks and hope to see an improvement at some stage,” he added.

Those who believed that the German antitrust authority’s decision to allow Volga Dnepr to take a 49% share in Air Cargo Germany would help Lufthansa achieve its approval in a quid pro quo move were sorely mistaken. Russia is standing its ground. And now ABC no longer needs fifth freedom rights from Germany to the US, yet another negotiating tactic is off the table for LH.
But, according to reports from Russia, the decision isn’t all about Lufthansa. Instead, it’s partly an attempt to gain some leverage over the EU for its ETS scheme. As a series of bilateral talks with individual EU countries starts, it is expected that LH won’t be the only carrier to be denied rights.

However, a further consideration must be what damage this could do to the profitability of Russia’s own air transport businesses. OK, so Aeroflot Cargo and Volga Dnepr’s companies are safe if freighters are banished, or cargo carriers are forced to pay more by flying around Russia. But surely the Russian airports are hardly in favour of banishing flights from the EU? And what about fuel companies and maintenance organisations, which will hurt if flight rights are denied to European carriers?

Another question would be whether this a cargo-only problem, or an across-the-board decision? Or perhaps simply an overflight decision? Because while LH was receiving its bad news on Friday, BA on the other hand received approval to fly a 747 between London Heathrow and Moscow Domodedovo in its summer schedule.

BA had already announced the plan in September, but, according to ATW, Russia denied it had given approval. The dispute was apparently caused by the UK’s refusal for a Transaero flight on the same route. Transaero is now said to have approval, but only during the Olympics.

If only the passenger flights gain approval, conspiracy theorists may wonder how much lobbying the influential Mr Isaikin is doing behind the scenes. He is presumably keen to cut back on cargo competition. But can the affected aviation businesses in Russia lobby harder?

If so, perhaps the decision will be reversed, and LH is just the first to feel Russia’s (temporary) wrath against the EU. Which is clearly what it is hoping for. Russia does love to show its power though. Flights between it and Belarus were suspended briefly last week in another row over the number of flights between Moscow and Minsk.

Whatever the reason behind the decisions, it would be fair to assume that airlines throughout the EU – and possibly beyond – should expect a bumpy ride on bilateral agreements in the near future.

And for LH, it’s just one more in what seems to be an ongoing series of unfortunate decisions that have turned out badly for the carrier.