Sanction Hit Russian Budget Carrier to Suspend Services

A budget airline operated by national carrier Aeroflot announced on Sunday it was suspending all flights after its plane lease deal was terminated when European Union imposed sanctions on Russia following the country’s role in Moscow.

The EU revealed economic sanctions on the airline, Dobrolyot in late July as it added more individuals and companies to its list of sanctions on Russia. The targeted parties were subject to travel restrictions and asset freezes.

Dobrolyot commenced operations in June, when it made its first ever flight to Simferopol, Crimea’s capital, the region that Russia annexed from Ukraine in March. The airline plies seven other Russian cities, according to Reuters.

“Following cancellation of a lease agreement for Boeing 737-800 planes because of sanctions introduced by the EU against Dobrolyot, we are forced to temporarily halt flights on all routes as of Aug. 4,” the firm announced on its website.

It announced another carrier would fly passengers who already had tickets to travel between Moscow and Simferopol and later this month between Moscow and Volgograd.

“Flights on other routes are temporarily cancelled. Passengers will get a full refund of the ticket price,” the carrier said.

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The suspension of flights comes despite a defiant attitude Moscow showed after the Western powers introduced additional harsher punitive measures over what it terms as Russia’s role in stocking the separatist insurgency in eastern Ukraine. Moscow dismisses all the allegation.

European firms refused to provide services to Dobrolet, a state-run firm, according to Bloomberg. As a result, the firm can’t access leasing, servicing and insurance and navigational data after the measures, Aeroflot wrote in an email.

The firm intended to fly as many as 10 million passengers every year over the next five years.

Two additional entities, lender Russian National Commercial Bank and Almaz-Antey, weapon manufacturer entered the EU’s blacklist.

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To contact the reporter of this story; Yashu Gola at yashu@forexminute.com