What's Up in SIberia?

Maybe very little, if the Russians have their way. Due to the continuing strife between Ukraine and Russia, the European Union has finally placed numerous sanctions on Russian businesses. One of the sanctions impacted Dobrolot, a new budget airline owned by Aeroflot. The airline just started flying in June, and its key route was a heavily-subsidized route (starting at $29 one-way) between Moscow to Crimea.

The EU, saying the airline was "facilitating the integration of Crimea into Russia" cancelled the leases on the carrier's European-owned Boeing jets and annulled insurance and maintenance contracts. As a result, the airline had to suspend service on August 4.

Now, Russia is pondering retaliation of its own. Should it close airspace over Siberia, European carriers will have to fly thousands of additional miles to get to destinations in Asia. Most nonstops between Europe and Asia save up to four hours and $30,000 by flying over Siberia. Longer routes will mean higher fuel and labor costs, and more strain on the equipment, staff and passengers. According to an article in Forbes, Lufthansa says it could lose 1 billion euro in three months if Siberian airspace is closed.

Both Lufthansa and Air France-KLM send the most planes over Siberia--about 500 a week combined. Interestingly, though, the move could hurt Russian air carrier Aeroflot even more. Currently, Aeroflot collects an overflight fee from all carriers flying in Russian airspace. Last year, it collected $170 million. Given that the airline's profit is around $200 million annually, a vast drop in overflight fees could plunge Aeroflot into the red. Plus, the EU could potentially ban Aeroflot flights to Europe.

Caption: Lake Baikal, Siberia