The FINANCIAL — The ban on Russia-Georgia fligts imposed by Russian president will harm both countries, Veritas Global , Geneva based company said. Russian airlines, which offer 76% of the capacity, will be worst impacted and stand to lose $225 million in revenue per year. Georgian airlines will face revenue losses of $61.3 million. “The proposed ban will have negative consequences for both countries, but Russian airlines stand to be impacted the worst” said George Anjaparidze, Veritas Global CEO.
Visitors from Russia, which make up about 82% of direct travelers, will experience a loss in consumer welfare of $63 million per year compared to $13.6 million in losses for travelers from Georgia. These losses are explained by a combination of longer travel time for diverted passengers and having to settle for less suitable substitutes for discouraged travelers. “We expect 63% of the Russia-Georgia direct air travel market to be diverted to other regional hubs such as Minsk, Riga, Almaty and Istanbul. That is a significant inconvenience to those passengers that prefer to fly direct.” said Anjaparidze.
Tourism spending will also be impacted. Georgia can expect lower tourism spending of $111.5 million per year due to a reduction in passengers from Russia. Spending in Russia by Georgian tourists will also decline, resulting in a reduction of $28.9 million.
On 21 June 2019 the Russian President issued an executive order prohibiting Russian airlines to carry passengers from Russia to Georgia starting 8 July 2019. This was followed by a statement from the Russian Ministry of Transport indicating that Georgian airlines will not be allowed to land in Russia. If implemented, these measures mean there would no longer be direct commercial flights between Russia and Georgia.
In 2006, as the Georgian government of Mikheil Saakashvili sought to strengthen ties with NATO and the European Union, Russia imposed a ban on wine and Borjomi imports from Georgia that lasted until 2013. As the biggest destination for Georgian wine, Russia faced accusations that it was applying politically motivated sanctions against a country looking to move away from its orbit.