Many options are available for the government to energize the aviation market. They include paying airlines a certain amount for each occupied seat or marketing subsidies for advertising, as well as reducing or eliminating airport taxes or landing fees at airports controlled by the state, said Thomas Jaeger, managing director of ch-aviation.com, a Swiss airline intelligence agency.
Wizz Air hadn’t asked for state benefits, and the government didn’t offer any, Infrastructure Minister Andriy Pyvovarsky said by phone.
Yet negotiations are ongoing this week with officials of the parent company. The way the government allocates routes is under criticism, according to experts and industry players, including Turkey’s Atlasjet.
Wizz Air had first threatened to leave the market in November when the State Aviation Service controversially prevented airlines whose foreign ownership quota exceeds 49 percent from being assigned international traffic rights and from operating international charter services.
The localization rules would’ve affected Wizz’s and UTair’s Ukrainian units, as well new market arrival Atlasjet. The Justice Ministry later agreed to suspend the rules’ implementation.
Atlasjet accused Ukraine International Airlines of keeping competitors out and controlling the aviation regulator. The airline hasn’t received rights for flights since April 2014, even after investing $15 million in the Ukrainian market, according to Atlastjet Ukraine CEO Serhiy Pidhorodetsky.
“The market and state authorities are divided into two camps,” Pidhorodetsky said in an emailed message.
Ukraine International Airlines and the State Aviation Service are one side, and on the other, the Infrastructure Ministry and the vast majority of airlines, he said.
The aviation regulator is headed by Denys Antoniuk, who was director of route and alliances at Ukraine International Airlines before being appointed to the post on March 12, 2014. Neither the State Aviation Service nor UIA spokesperson Evgeniya Satska responded to emailed requests for comment.
Air travel, both domestic and international, dropped sharply in Ukraine in 2014 and is not likely to rebound this year amid Russia’s continuing war and economic recession. Source: State Aviation Service of Ukraine
Currently, Ukraine International Airlines is in a legal dispute with the Infrastructure Ministry for how routes get distributed. An April 23, 2013 ministry order took that exclusive duty from the regulator and transferred it to a committee consisting of members from both government agencies involved.
A panel of three judges at the Kyiv appellate court is scheduled to hear the complaint on April 23.
An analysis of seats offered at departing Ukrainian airports on April 6-12 conducted by Jaeger’s ch-aviation found that UIA holds 42.3 percent of international market share. This dwarfs Russia-based Aeroflot’s 9.5 percent, Wizz Air Ukraine’s 7.9 percent and Turkish Airlines’ 6.75 percent shares. Domestically, Ukraine International Airline has almost 79 percent, according to data for the same period.
“Ukraine International Airlines holds a dominant position and definitely we could have had better prices if there was more competition on different routes,” said Oleh Marchenko, a lawyer who specializes in aviation at law firm Marchenko Danevych.
Aviation rules will become clearer, Pyvovarsky said. His ministry is going to review Antoniuk’s work performance and is awaiting a review of the nation’s aviation rules by EU authorities.
“Just wait. Soon you’ll see changes for the better,” said Pyvovarsky, who was appointed on Dec. 3.
