The Great Wall to Europe and North American East Coast

So How much is Siberian Airspace?

5 November 2013

Philippine Airlines much anticipated return flight to Europe via the Russian Airspace suffered yet again another blow after the Toronto debacle when the Russian Authorities postponed further their scheduled talks for Airway rights another month on the second week of November 2013.

All matters concerning air transport between the Philippines and the Russian Federation, and all matters involving overflight by Philippine Airlines of the territory of the Russian Federation are covered by the bilateral Air Services Agreement between the two States.

The quickest route between Europe and North American East Coast Cities to Manila is a straight shot across Siberia. The Siberian Airspace shave significant amounts of flying time off trips from the US/Canada to Asia, while all flights to Europe overfly central Russia, saving hundreds of gallons of jet fuel.

When Canadian officials opened up the airways to more commercial jets over the North Pole in 2000, they estimated that the route would knock five hours off the usual flying time for a trip from New York to Hong Kong, for instance.

The Siberian Overflight Royalties (SOR), a holdover from Russia's communist past, goes back some 25 years during which European and Asian airlines have poured about $5 billion into Russian coffers.

Siberian Royalty is not a tax or a fee imposed by the Russian Authorities, but is in the nature of "commercial fees" which grants its airline, which in this case is Aeroflot, a commercial chance at competition since it will be denied access to passengers between Asia and Europe as a result of direct flights which was once not possible for airlines to do because of aircraft limitations.

The overflight payments consist of navigation payments and extraordinary royalty payments which have netted considerable income for Russian airlines, particularly Aeroflot.

Russia's flag carrier has kept the monopoly of the levied fees since the Soviet era on foreign airlines like PAL for flying over the territory of the country nonstop from Europe to Asia and vice versa.

The practice of the "Siberian overflights payments" has been an object of long and heated debate considering its legality under public international air law and the European Union has challenged it in the World Trade Organization forcing Russia to reduce the tariff instead of eliminating it contrary to the WTO condition for accession to the world trade order. It has also become a tit-for-tat on the EU Emissions Trading System (ETS) program on carbon reductions.

Aeroflot does not disclose how much exactly it gets in overflight fees, but experts estimate the airline receives $200 million in such payments per year on average.

The European Commission calculated that European airlines paid EUR380 million in overflight fees to Russian airlines in 2008 and EUR350 million in 2009. But estimates of the extent of the fees vary from as high as US500 million to as little as USD200 million per annum as Russia refused to divulged the actual figures.

Hong Kong-based airline Cathay Pacific has publicly admitted that it paid Russia US$5,000.00 for every Siberian overflights to the US. Cathay Pacific pioneered the polar routes by flying to/from New York/Toronto and Chicago. A closely similar figure is paid towards flight to Europe.

While a WallStreet Journal reported that Russia pockets about US$10,000 for every Lufthansa flight from Frankfurt to Tokyo.

According to IATA, the average Siberian overflight fees are around USD3500 per flight, although this varies considerably. IATA has been pushing to ensure non-discrimination for infrastructure charges, and urging Russian authorities to equalise charges among Russian and foreign carriers.

Boeing estimates that it costs about $17,000 per hour to operate a 777, including everything: fuel, crew, depreciation, maintenance, etc. Shedding 2 hours of it by taking this polar route is more than enough arguments to pay for the overflight rights.

Airlines avoiding Siberian levy could either force much longer flight to Europe or East Coast via Anchorage detour in Alaska, or the "Silk Route" through the Middle East or India.

The thing about Siberian levy is that while it is the most expensive fees around, it is not exclusive to Russia as other countries also charge overflight fees. Among them are Brazil, Russia, Indonesia, and China while Canada left the treaty in 1988 to join the group. State signatory to International Air Services Transit Agreement (IASTA) grants the 129 member-States First Freedom of the Air or flying over a country without landing on its soil free of charge other than navigational fees for transiting at designated air routes.

International Air Services Transit Agreement (IASTA) participating countries as of 2013. The treaty allows civilian airplanes owned by the member countries' companies to cross the airspace over other member countries without paying overflight fees other than standard navigational fees, subject to following designated air routes.

For most airlines, the least fuel-burn route is generally the cheapest, but in a geopolitical world is by far the most expensive due to overflight fees.

But airlines operating to Europe and North America and making a detour must be aware that Russian, Chinese and Canadian overflights cost more than making a deviation which also cost more in terms of fuel, but money is saved in the end.

PAL deviation for long-haul and ultra-long-haul flights is one clear example of flying more distance for less cost.