Ukrainian insurance companies received notification that airlines were not covered for war risks

Although Russia and Ukraine hinted at new diplomatic efforts aimed at avoiding a conflict, two Ukrainian airlines have disclosed problems in securing insurance for some of their flights with foreign carriers beginning to avoid Ukrainian airspace.

Ukraine’s biggest airline said, its insurers had already terminated cover for at least some of its aircraft on flights inside Ukrainian airspace.

In a statement Ukraine International Airlines (UIA) said, it had received notifications from its insurers saying more airlines were expected to avoid Ukrainian airspace following a warning from the United States that Moscow could invade Ukraine at any time.

“UIA is making efforts and is constantly negotiating with insurance companies, the ministry of infrastructure of Ukraine, the state aviation administration and hopes for mutual understanding,” said UIA in a statement.

Last week on Saturday, low-cost carrier SkyU diverted a flight from Portugal following the plane’s owner barring it from entering Ukrainian airspace; since then it had resumed selling tickets after an agreement with the Ukrainian government.

“Negotiations with insurers have been difficult and our foreign partners continue to regularly assess their own risks and monitor the situation,” said the airline in a statement.

Neil Roberts, head of marine and aviation with the Lloyd’s Market Association, representing underwriters at the world’s leading insurance market Lloyd’s of London, said insurers told clients they could give just 48 hours notice to exclude Ukraine but that did not mean cover had been terminated.

“It means that there is an invitation to negotiate coverage. War risk insurance cover is being agreed in some cases on a rolling 24 hour or 48 hour basis, which is prudent,” he said.

According to trade sources, this means higher premiums.

On Sunday, Ukraine Prime Minister Denys Shmygal said, the government had allocated $592 million (16.6 billion hryvnia) to ensure flight safety for insurance and leasing companies to guarantee continuation of flights through its airspace.

Dutch airline KLM had earlier said it would halt flights to Ukraine while Lufthansa said it was considering a suspension.

On Monday, British Airways (BA)  flights between London and Asia appeared to be avoiding Ukrainian airspace, according to flight tracking service FlightRadar24.

In a tweet, a BA pilot said there was a longer flight time for a freighter service from London to Bangkok because of “current geopolitics”.

BA did not immediately respond to a request for comment.

“My guess would be that Ukraine will become unavailable pretty soon if what we’ve seen over the weekend crystallises into a couple of more carriers actually pulling the pin,” said Mark Zee, founder of flight operations association OPSGROUP.

“I don’t think it will be government advice that’s doing it so much as it will be insurance-based unavailability or carriers looking at other carriers. So if you have KLM, Lufthansa and British Airways, for example, deciding not to overfly Ukraine at all, we’re almost back into an MH17 scenario.”

Zee said avoiding Ukraine’s airspace would have the biggest routing impact on airlines from neighbouring countries but was not expected to add much to the cost of long-haul flights.

In a report, news agency Interfax Ukraine said, Ukrainian insurance companies had received a notification from reinsurers that airlines were not covered for war risks.

($1 = 28.0414 hryvnias)

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