Airlines routinely have to negotiate overflights and market access through a maze of bilateral agreements that govern aviation. The use of Siberian airspace by European airlines has been a source of trade friction in the past.

Russia is scheduled to phase out charges for overflights, but has threatened to restrict the use of its air corridors that connect Europe with North Asia as part of protests over EU plans to include all flights in and out of Europe in its Emissions Trading Scheme ETS.L.

The EU decision to include aviation in the ETS has stirred international outrage and threats of a trade war, with Russia among the staunchest opponents.

"The Commission and Russian side are in the process of talks over the ETS," a Russian diplomatic source said.

A Commission spokesman said the denial of overflights was not directly related to the ETS row.

Finnair (FIA1S.HE) said in a statement this week it had adjusted its longhaul capacity plans, citing several reasons including a shortage of overflight rights, as well as maintenance on large aircraft.

But it also said that even with the adjustments, it would fly a record number of flights to Asia.

A Lufthansa (LHAG.DE) spokesman also said some requests for incremental traffic had been turned down.

Since the EU at the start of this year began implementing its law to make all flights in and out of Europe buy carbon allowances under the ETS, there has been a series of threats.

The European Commission said only 10 airlines - all from China and India - had so far had failed to submit emissions data. Some 1,200 have complied.

In addition, India briefly held up some traffic requests from charter airlines as a symbolic protest, industry sources said.

The Commission has said it will only modify its law if the U.N.'s International Civil Aviation Organization ICAO.L can come up with a global scheme to tackle the rise in emissions from the airline sector. ICAO meets this month to assess progress.

U.S. airlines have so far reluctantly complied with the EU scheme, but lawmakers in the United States have proposed blocking legislation, which could be used to prohibit airlines from complying with the EU law.

The U.S. Congress heard testimony on the blocking legislation this week.

(Reporting by Barbara Lewis, Victoria Bryan, Tim Hepher and Ritsuko Ando; Editing by David Holmes)

• A Permanent Economic Emergency