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Expert: Ukrainian airlines trapped between pressure of competition and monopoly

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March 18, 2013, 6:20 p.m. | Business — by Interfax-Ukraine

Ukrainian airlines at present are facing tough competition on one side and a monopoly of the providers of services to air carriers from another, the head of the supervisory council of AeroSvit (Kyiv), Gregory Gurtovoy, said at a press conference in Kyiv on Friday.
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Ukrainian airlines at present are facing tough competition on one side and a monopoly of the providers of services to air carriers from another, the head of the supervisory council of AeroSvit (Kyiv), Gregory Gurtovoy, said at a press conference in Kyiv on Friday. 

"Ukrainian airlines are trapped between the pressure of competition and monopoly, because all our suppliers are monopolists. Today the provision of services by airports, air navigation, aircraft suppliers is a monopoly, because, no matter what is said, consolidation leads to the fact that all aircraft suppliers are monopolies in their services as well," he said.

According to Gurtovoy, the last profitable year for AeroSvit was 2007, and starting from 2008 until 2012 AeroSvit had lost money in various amounts. At the same time, the number of flights and passengers carried increased by 1.5 times, keeping the average loading at 73%. The company's revenues increased by 2.9 times, and expenses by 3.4 times.

"We decided to find out what happened. The company set a task to develop a network model of air transportation, considering that a network carrier is needed, transit, development is necessary, but nobody created conditions for the company. The shareholders invested money, not receiving appropriate support. Our transportation was growing, and our costs were growing as well. This is the thing that contradicts all economic laws," said Gurtovoy.

He also noted that there has been a significant increase in costs for air navigation and airport services. 

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