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Air industry counts the cost of Malaysian plane shoot down


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Air industry counts the cost of Malaysian plane shoot down

The shooting down of the Malaysian Airlines plane over Ukraine is likely to have big financial repercussions for the aviation world.

This is a much used corridor for long-distance flights between Europe and southeast Asia.

Not passing over that conflict zone means flying a longer alternative route, which will be more expensive in terms of fuel and mean more time in the air.

Carriers could pass those higher operating costs on in the fares they charge passengers.

Commentator John Foley with Reuters BreakingViews said the problem is that many airlines are already under big financial pressure: “They’re facing so many other problems that even the smallest shock can push them over the brink. Issues like [competition from] low-cost airlines, high and rising fuel prices and high levels of government ownership mean that airlines are reluctant to cut capacity, even when they really need to.”

He added this could change the shape of the aviation industry: “Businesses everywhere are recalculating global risk; the world is getting riskier by the day. But for airlines this transition is particularly sharp and many airlines are going to be forced to think about exactly how much capacity they need and ask longer term questions like whether every nation in Asia really needs its own flag carrier at all.”

Experts said changing routes will mean planes burning more aviation fuel, but the airlines will probably just absorb the cost of that.

A number of companies have said they will change their flight paths and no longer fly over eastern Ukraine.

The insurance premiums that global airlines will have to pay are another issue. They are likely to have to shell out more to insure their fleets.

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