Aeroflot (SU, Moscow Sheremetyevo) shares have taken a severe tumble over reports in the Russian press that Moscow is considering banning all European Union-based airlines from operating Trans-Siberian flights.

Quoting anonymous sources in the Kremlin, Russian business daily Vedomosti said the foreign and transport ministries have been discussing possible counter-measures to new European and American sanctions imposed in the wake of last month's Malaysia Airlines (MH, Kuala Lumpur International) MH17 tragedy which claimed the lives of all 298 on-board. The EU, along with the United States, hold Russian-backed separatists responsible for the tragedy.

Among the measures being considered are banning EU-based airlines from transiting Siberian airspace en-route to Asia. The move, while achieving its aim of disadvantaging European carriers at the expense of their Asian competitors, would, however, negatively impact Aeroflot which is said to earn EUR225million (USD303.1million) in transit fees each year.

The report claims a ban on Trans-siberian flights could cost carriers such as Lufthansa (LH, Frankfurt International), British Airways (BA, London Heathrow) and Air France (AF, Paris CDG) USD0.43billion each month in terms of lost business and higher fuel consumption costs.

The new sanctions toll on the Russian economy is beginning to make itself made on the country's burgeoning travel and aviation industry. In the past month, four Russian tour operators have collapsed stranding 50'000 tourists outside the country. The largest, Labirint, announced its suspension of operations on Saturday last week blaming declining demand on a weakening Rouble coupled with a "negative political and economic situation." Aeroflot's subsidiary Orenair (Orenburg) canceled a wide range of charter flights operated on behalf of Labirint effective immediately.

On Sunday this week, Aeroflot's recently launched LCC subsidiary, Dobrolet (Moscow Sheremetyevo), announced its suspension of operations after its aircraft leasing, MRO and aircraft insurance agreements were annulled.