rules of the game

The National Aviation Service will begin to distribute routes in December

The National Aviation Service will begin to distribute routes in December
Photo: Konstantin Melnitskiy

By the New Year the distribution of air routes will be unblocked. At the end of December the first meeting of the commission that will issue rights for routes according to new procedures is scheduled to be held, said Chairman of the National Aviation Service (NAS) Denys Antonyuk. It cannot be ruled out that the commission fall short of the applications of market players. A number of Ukrainian airline companies believe the new order is discriminatory and plan to appeal to the president.

Let’s get ready to fly in the sky

At the moment, the regulations on the distribution of flights that were approved by the decree of the Ministry of Infrastructure in 2013 are in effect. The new procedure adopted by the NAS cancels the regulations of the Ministry of Infrastructure, Antonyuk specified.

The new procedure of issuing destinations was approved by the NAS back in October and the Ministry of Justice approved it in November. As Capital wrote, the new procedure for the granting of rights will come as a surprise for some airline companies. Indeed, only the companies in which the state or citizens of Ukraine fully control or own over 50% of the shares in the authorized capital can be granted the right to fly to international destinations. Carriers that are owned by foreign individuals and entities working in Ukraine through subsidiaries will not be granted such rights. “The norm of the regulations ensures the impossibility of the situation, when on the international destination with frequency limitations the “Ukrainian” quota will be conveyed to a foreign air carrier. Under the old rules, such carrier could receive the rights as an intermediary of Ukrainian subsidiaries. From this vantage point, this norm should be assessed as positive,” commented Corporate Relations Press Secretary of Ukraine International Airlines Yevheniya Satska.

Besides that, air carriers may be granted international destinations on condition that they perform regular domestic flights in Ukraine over a period of no less than 12 months. However, this norm will only come into effect in a year after the new regulations take force. If several airlines contend for the same frequency of flights regulated by inter-government agreements, then the formula that takes into account several parameters will be applied – namely, the number of allocated routes used, the number of aircraft in the fleet, the number of employees, etc., said Antonyuk.

Complaining to Poroshenko

Wizz Air Ukraine, Atlasjet Ukraine and UTAir Ukraine are among the top five leaders on this market, but all its beneficiaries are non-residents. They can be issued new destinations in December on condition that they prove that their owners are Ukrainian citizens, says Antonyuk. He added that at the same time airlines can freely be granted destinations, for example, to Italy or Spain, which do not regulate with Ukraine the number of flights performed by airlines between the countries.

Senior lawyer of the Marcheko Danevych law firm Andriy Huk, who represents the interests of several Ukrainian airlines backed by Ukrainian capital, including Atlasjet Ukraine, says the carrier has no plans of changing its structure of ownership in connection with the new order. He said a number of airlines are preparing appeals to President Petro Poroshenko on the situation that may arise on the aviation market after the new regulations on the issuance of air routes take force.

“The provisions of the new order are formulated in such a way that not a single airline will even theoretically be able to contend for the rights to use airways if their applications will compete against Ukraine International Airlines. After all, only the number of aircraft, payments to the state budget and other quantitative, not qualitative, parameters will be factored in,” it reads in the letter that Capital has a copy of.

As a result, it is summed up in the letter, one airline that is the largest in terms of all quantitative indicators will have an instrument to block the access of any other airline to the market of air carriage.

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