Ukraine crisis could impact re/insurance carriers
Airspace closure poses problems for aviation re/insurers
The closure of Ukrainian airspace because of the Russia-Ukraine crisis will affect low-budget airlines more than large carriers, according to flight analysis by risk solutions firm Russell Group.
Meanwhile, some re/insurance carriers, such as capital markets, are vulnerable to what the Ukrainian government infrastructure ministry describes as the “information field”.
In an analysis of more than 4,343 scheduled flights for the entire period of February 2022, Russell Group found 70% of these flights were for lower-tier airlines as opposed to larger carriers, which have a smaller aggregate exposure to the crisis.
According to Russell Group, this difference in the exposure to the Ukrainian crisis may ease the concerns of aviation re/insurers who are scrambling to work out their exposure to Ukraine.
Insurance coverage has already been pulled from Ukraine and with airlines now actively avoiding the country Ukrainian operators are facing operational disruption over a loss of insurance coverage because of the potential risk of armed conflict in the region.
Budget operator SkyUp stopped selling tickets for flights from February 14 to February 16 because aircraft lessors are “demanding the return” of aircraft to the European Union.
Russell Group said according to reports, Ukraine’s infrastructure ministry insists the government has not made any decision in relation to the country’s airspace, and it remains open for flights. The ministry says 29 foreign carriers are still operating services to Ukraine.
“Some carriers have difficulties with fluctuations in insurance markets,” the Ukrainian government said. “The state is ready to support airlines and plans to provide additional financial guarantees to support the air market. Insurance markets, as well as capital markets, are vulnerable to the information field. We expect that the situation will stabilise in the near future.”
Ukraine’s infrastructure ministry also announced a $590m fund to insure aircraft flying through the country’s airspace, amid reports global insurers were suspending coverage because of the threat of a large–scale Russian attack.