While the invasion of Ukraine has not created a big impact on the region so far, the corporate travel community here is having to grapple with challenges and its fallout.
A Singapore corporate travel manager told TTGmice that “corporate retaliation” by way of sanctions was causing operational issues, for example, Sabre purging Aeroflot content and causing “workarounds if teams still need to fly with the Russian carrier”.
He noted that petrol prices which have increased between 20 and 30 per cent since the invasion of Ukraine were also impacting the operation of the company’s fleet of vehicles.
While CWT has also not seen a big impact on corporate travel demand, Hwang Cheng Meng, vice president, global market management, Asia Pacific, said the event is a reminder to companies about the importance of having robust risk-management measures in place.
Benson Tang, executive director, corporate travel, Informa Markets, observed that the main impact, aside from energy supply destabilisation, would be inflation as energy prices rise, and on trade and investments as financial sanctions are imposed by the US and western allies. For example, the removal of Russia from the SWIFT international financial system and partly disabling businesses from operating globally.
Tang continued: “Russia is the world’s 11th largest economy in terms of GDP size, is a major exporter of oil, gas, and coal, and has the world’s ninth biggest population. Hence, Russia’s involvement in the war will have a significant impact on the global economy.
“The most significant effect will be the increase in airfares. Fuel accounts for around 30 to 35 per cent of the total operating cost for an airline, and it is a cost which impacts the ticket price.”
Uncertainty over fuel prices is most worrisome for the aviation industry, Tang opined, and airlines would need to reconsider their network structure, reduce their cost where possible and engage in serious revenue management activities.
Tang commented there would be disruption of the global supply chain and endanger the recovery of the global economy if the situation in Ukraine drags on.
