Taiga tax – Newspaper Kommersant No. 7 (7452) dated 01/17/2023

Despite the almost complete cessation of air traffic with Russia, as well as the use of Russian airspace by European airlines, the dispute over payments for overflights over Siberia, which has been ongoing since the mid-2000s, as it turns out, not only remained relevant, but also acquired a new meaning. The head of the profile directorate of the European Commission, Henrik Hololei, said on January 16 that if the airspace of the Russian Federation is ever opened for EU carriers, then the “Trans-Siberian royalties” should disappear.

The system of payments for flights over Siberia – through it runs the shortest air route from Western Europe to Southeast Asia – has been operating since the 1970s, Aeroflot remained its main beneficiary. It is believed that in pre-pandemic reality, this route saved airlines about $80,000 per paired flight by reducing the flight by four to five hours compared to the southern route.

According to Kommersant, in 2019 Aeroflot received more than 40 billion rubles for trans-Siberian flights, which amounted to almost a quarter of the EBITDA of the entire group (168.9 billion rubles) with a net profit of 13.5 billion. payments fell to 16-17 billion rubles – and still it was a good help. No one will voluntarily give up this money, but the question is whether it is worth holding on to royalties if the opening of flights to Europe becomes the subject of bargaining.

In 2014, Bloomberg wrote that the closure of flights over Siberia for foreign airlines, which was being discussed at that time in the Russian Federation, did not pose a big threat to them. The experts ironically said that “it’s like a face threatening to cut off its nose in spite of everyone.”

Years later, it seems that everyone is left with a nose. In 2022, Air France-KLM and other European carriers had to lay routes to Japan through Kazakhstan and Mongolia, and Virgin Atlantic announced the closure of flights and offices in Hong Kong after 30 years of presence – just because of the cessation of flights over Russia. The hardest hit was Finnair, which for years has been developing a hub in Helsinki for flights to Asia. Now it is extremely difficult for Europeans to compete in Asian destinations with the “Middle East triad”: Emirates, Qatar Airways and Etihad. The flight from Dubai to Tokyo takes 9.5 hours, from Istanbul – 10.5 hours, from Paris – 14 hours.

One can be glad for the hub prospects of “friendly” Turkey and the UAE, but still I would like to fly directly to Europe again. This would also help Russian airlines: before the pandemic, Germany, Italy and Spain were among the top 5 outbound destinations. When and if the situation returns to normal, it will be possible to threaten again with the return of “flying” or an increase in rates for air navigation for foreigners. But this is later, when the parties stop cutting their noses.