In their case, it was AeroSvit Airlines which carelessly left hundreds of mostly Ukrainian passengers stranded around the world as it entered into bankruptcy proceedings with some $500 million owed to creditors. Faced with massive flight cancellations and delays, many travelers had nowhere to turn since AeroSvit had closed many of its airport offices, leaving them without hotel vouchers.
AeroSvit customers have long complained about the airline’s inferior product, poor customer service and price gouging, all classic pitfalls of a monopoly. Indeed, billionaire Ihor Kolomoisky’s AeroSvit and three other local carriers he controls have a 60 percent share of Ukraine’s air transport market.
But AeroSvit’s latest disregard toward travelers during the peak holiday season has crossed the line.
It was a crippling reminder of what happens when the marketplace isn’t driven by competition, a feature of this national economy. Surprisingly, Ukraine’s anti-trust “watchdogs” – more like lapdogs – don’t consider Kolomoisky’s carriers to be a monopoly.
As a result, Ukrainian travelers have fewer destination and route options, and often must pay more than their European and U.S. counterparts.
Poor regulation and oligopolies prevail to the detriment of Ukrainian consumers – and the nation as a whole – in big and small ways. A handful of billionaire oligarchs control much of the nation’s wealth and resist competition. In everyday consumer life, the lack of competition hurts access to quality car fuel, housing and utility services such as street cleaning, waste management, electricity and gas. Mobile communications, quality wireless Internet, affordable cars and clothing, etc., are all adversely affected.
Ukraine should offer air travelers more flight choices at cheaper prices by adopting multilateral open sky agreements, which Borys Kolesnikov, the former infrastructure minister, failed to do in his three years in office. By reducing government regulation on commercial aviation, flight routes would be liberalized, allowing airlines to fly direct to more cities in the country. Airlines would have the right to fly routes to and from the airports of their choice without restriction on capacity, frequencies and types of aircraft. This in turn would increase tourism revenue for local businesses.
But Kolesnikov said that, until Ukrainians get visa-free travel to Europe, open sky agreements with European countries is off the table. What does he care anyway? Kolesnikov and other rich Ukrainians fly in their own private jets.
Meanwhile, the public will have to continue relying on airline monopolies for which they pay a hefty price.
