Georgian Airways (A9, Tbilisi) has estimated that losses resulting from the suspension of direct services between Russia and Georgia have reached USD25 million.

“Suspension of the direct air service between Georgia and Russia dealt a material blow to Georgian Airways and put it into a challenging financial position,” the company said in a statement on July 29, adding that it had been forced to return around 80% of tickets already sold, while demand had “declined dramatically”.

Russia's President Vladimir Putin issued a decree in late June banning all direct traffic with effect from July 8, over debts it said were owed to its air navigation service provider by Georgian carriers. However, Georgia's only two active scheduled carriers, Georgian Airways and MyWay Airlines (MJ, Tbilisi), deny the charges.

The Kremlin has described the ban as "temporary," but the decree does not specify an end date. Analysts have told RFE/RL's Russian Service that if the ban remains in place, Georgia's economy could lose up to USD300 million a year, in particular, because Georgia has been a popular tourist destination for Russians.

The Georgian government has said the ban was a reaction to widespread anti-Russia protests. On July 24, it passed a decree allocating subsidies worth EUR600,000 euro (USD669,000) for flights from Russia to Tbilisi and Batumi via Yerevan.

In its statement, Georgian Airways welcomed the subsidies, saying it had requested this financial aid from the government due to the challenging situation.

“The government of Georgia took the airline’s request into consideration and made the decision to partly compensate the damages to Georgian Airways, thereby supporting the Georgian company,” it said.