Air cargo helps Finnair restore some Asia service flying around Russia

Elevated cargo rates are making it possible for Finnair to reinstate several long-haul passenger flights to Asia despite the added cost of detouring around Russia after the nation closed its airspace to Western airlines.

The Helsinki-based carrier said Monday it will resume service to Shanghai once per week beginning Thursday and three times per week to Seoul, South Korea, as of Saturday. It also canceled flights to Osaka, Japan, and Hong Kong until the end of April.

It is the third time in a week that Finnair has adjusted its schedule to the closure of Russian airspace in response to European Union sanctions for the invasion of Ukraine that bar all Russian aircraft.

The company on Feb. 27 temporarily canceled service to Seoul, Osaka, Tokyo, Shanghai and Guangzhou, China — and Hong Kong until the end of March — to determine its options, saying that bypassing Russian airspace was not economically sustainable because the extra flight time adds significant fuel, personnel and navigation costs.

It also has stopped flying to Moscow and St. Petersburg, Russia.

Flight time for the new Shanghai and Seoul routes, which avoid Russian airspace, will be 12 to 14 hours, depending on the direction. Both routes go around Russia from the south, and the return flight from Seoul to Helsinki can also take the northern route, Finnair said.

Flying around Russia between Helsinki and Tokyo adds five hours, according to air traffic management organization Eurocontrol.

“The further increased price of cargo currently enables continuing of passenger services to Finnair’s key Asian markets even with the longer flight times,” the airline said in a news release. 

According to the Freightos Air Index, China-Northern Europe rates jumped 34% in the past week to $8.40 a kilogram, just below the year-ago level when post-Chinese New Year shipping was especially strong. Globally, the average spot rate jumped 26 cents, or 6.4%, to $4.31 per kilogram in the past week. 

Freightos Air Index for China-Europe (100-300 kg)

Finnair flies Airbus A350 aircraft on its long-haul routes. The widebody planes have plenty of space for baggage and large amounts of cargo in the hold.

Finnair last week said it will resume operations to Tokyo four times per week from Helsinki as of  Wednesday because Japan is one of its most important markets for passengers and cargo. 

Finnair continues to fly to Bangkok and Phuket, Thailand; Delhi; and Singapore with routes that avoid Russian airspace.

The airline warned last week that it may put several hundred crew members on leave because of the reduced flying caused by the Russian war over Ukraine. 

Finnair’s challenges are a microcosm of the airline industry as it still tries to recover from the COVID crisis, with expectations for a strong summer season now in jeopardy.

On Friday, Lufthansa Cargo CEO Dorothea von Boxberg said the elimination of Russian all-cargo operators from the Asia-Europe trade lane and the displacement of cargo by fuel to keep planes in the air longer will translate into a 10% loss in cargo capacity.

According to the consultancy Seabury,  the direct air cargo capacity between Europe and North East Asia fell 20% in the immediate aftermath of Russia’s invasion, which translates to more than 1,100 tons per day or the equivalent of nine Boeing 747 freighters that are no longer available. 

The rapid loss of capacity is putting upward pressure on freight rates. 

But the biggest impact on airlines and shippers from the Russia-Ukraine war is the price of jet fuel. On Monday, the average price of a barrel of oil topped $130, and some analysts are forecasting $185 per barrel is on the horizon. Benchmark data from the International Air Transport Association shows the price of jet fuel, through last Friday, jumped 27.5% in one week to $141.70 per barrel and has nearly doubled in the past year. A week earlier, the per barrel price of jet fuel was $111.

Airlines have responded by applying fuel surcharges to their freight invoices.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

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Source: https://www.freightwaves.com/news
Editor: Eric Kulisch, Supply Chain and Air Cargo Editor