Officials have launched a war for power and authority in Ukraine’s air transport industry

Officials twirl Air Code as they want

Photo: Ivan Chernichkin

The government plans to toughen the rules for entering the aviation market for the new carriers. To get assignments for routes companies will have to serve charter and unprofitable domestic routes for two years. Four agencies dispute the right to influence the situation in the industry.

The State Service for Regulatory Policy and Entrepreneurship Development (SSRPED) has demanded that the Ministry of Infrastructure cancel the existing procedure for issuing of rights to operate air routes, according to the decision of the SSRPED sent to the Ministry of Infrastructure on August 13. A copy of the decision is at Capital’s disposal.

The situation has changed

The existing procedure was adopted by order of the Ministry of Infrastructure last April and a month later was registered with the Ministry of Justice. At that time, the document was agreed by the chairmen of the State Aviation Service, the SSRPED and the Anti-monopoly Committee.

Now the situation has changed. First Deputy Chairman of the SSRPED Oleksandr Potimkov confirms that at the time of approval of the existing order there were no objections. But the service was addressed by Ukrainian International Airlines (UIA), which claims that the document contradicts the norms of the law. “We have checked and confirmed that the order does not comply with the law. As part of our authorities we issued a decision that obligates the Ministry of Infrastructure to cancel the document,” says Potimkov.

The decision of the SSRPED states that in accordance with the Air Code the right to operate airlines should be issued by the State Aviation Service. The service also sets aviation rules that govern the issuance of permits for opening new routes. Currently, this is one of the responsibilities of a committee, which includes representatives of the Ministry of Infrastructure and the State Aviation Service.

The UIA has de facto appealed to the SSRPED with a request “to verify the legality of the order currently in effect,” said the airline’s Corporate Spokesperson Yevhenia Satska “The UIA believes that in aviation, the main task of which is to ensure safety, there should be no violations or conflict in legal documents or duplication of functions of bodies of executive power,” she said.

The Ministry of Infrastructure considers the decision of the SSRPED to be unjustified, according to the press service of the ministry. “The ministry will send an appeal to the Ministry of Economic Development to overturn the decision of the SSRPED,” says the press service of the Ministry of Infrastructure. It also states that the law attributes legal regulation solely to the functions of the ministries and not some other central bodies of executive power. “According to the regulation on the State Aviation Service, it does not have the authority to issue legal acts,” says the message from the press service.

Lawyers say there is a conflict in the aviation legislation that allows each party to interpret the existing order at its discretion. Article 11 of the Air Code dedicated to aviation regulations does not specify the rules that govern the procedure for the issuance of permits for opening of new destinations and routes, says the senior lawyer at the Marchenko Danevych Law Firm Andriy Huk. “Having agreed to the order the State Aviation Service agreed that the Ministry of Infrastructure is the authorized state body,” says Huk.

Different consequences

Further development depends on the position of the Ministry of Economic Development. TheCapital did not manage to get any comments from the ministry’s head Pavlo Sheremeta yesterday. If the ministry listens to the arguments of the SSRPED and cancels the procedure, the three previous regulatory acts will take effect. According to these acts, the State Aviation Service will issue permits for new air routes. The Ministry of Infrastructure, according to Huk, can form its own commission for the development of a new procedure.

The State Aviation Service has already proposed a document of its own and submitted it for public debate at the end of July. “This project [drafted by the State Aviation Service - Capital] is mainly advantageous for the UIA and is very disadvantageous for new airlines,” says Huk. He explains that in order to receive the right to perform international flights the “newcomers” will have to wait for two years: for the first year they will have to service charter flights and for the second year – domestic flights. Chairman of the State Aviation Service Denys Antonyuk said in a conversation with Capital: “We will review the clause about two years”.

The gradual entry of new airlines on the market should minimize the possible negative consequences of the activities of “short-lived airlines” due to their bankruptcy or withdrawal from the market after one or two seasons of operation, says Satska. “Supported by Ukrainian aviation authorities the UIA spent a lot of time and resources to return Ukraine to the first category of FAA IASA, which made it possible to resume direct flights to the U.S. and confirmed that Ukrainian aviation standards and rules meet the highest international standards of safety and quality. It is important to maintain such a level,” she says.

The state regulator should promote the main air carrier, namely UIA. In fact, a former UIA employee is currently running the State Aviation Service, says Director of the Friendly Avia Support Consulting Company Oleksandr Lanetskiy. But, according to the expert, such control may strongly affect new Ukrainian or foreign airlines that will have a hard time entering the market.