Ukrainian aviation cannot seem to pull out of the crisis

Airport employees can remain without work

Photo: Konstantin Melnitskiy

Contrary to the traditional seasonal increase in air transportation, the start of the summer showed a record high decline. In June 2014, a total of 992,000 travelers passed through Ukrainian airports, which is 36.3% lower than the number in the same month of the previous year, real-time data of the State Aviation Service of Ukraine showed. Based on the results of the first half of the year, the volume of air transportation fell by 15.3% to 5.34 mn passengers compared to January-June 2013.

Good old reasons

Ukraine’s aviation industry began to feel the impact of the crisis from the second half of February after the political and economic crisis in Ukraine hit its peak. As Capital wrote earlier, the sharp devaluation of the hrynvia dealt a serious blow to the purchasing power of Ukrainians. For this reason, they used the services of airlines less frequently.

The closure of several major airports had a negative impact on the volume of passenger flows, a member of the Oversight Committee of the Ukrainian Logistics Association Artur Vynyukov-Proshchenko added. In March, Ukraine banned the flights of airlines to Simferopol. After that, the airports in Donetsk, Luhansk and Mariupol were shut down in the zones of anti-terrorist operations.

The military conflicts in the eastern parts of the country scared off tourists, which resulted in a decrease in the passenger flow. “I believe other airlines capitalized on the situation, for example, Turkish Airlines with its hub in Istanbul. They managed to attract transit passengers from Ukraine to fly to Turkey,” Assistant Commercial Director of UTAir-Ukraina Volodymyr Katerniy presumes.

No reason to rejoice

In the summer and during the winter holidays air travel traditionally peaks. During these periods airlines earn money that helps them survive through the low seasons in the fall and the months of January-February, says Director of the Friendly Avia Support consulting company Oleksandr Lanetskiy. “At the moment, all Ukrainian airlines are experiencing financial hardships. The crisis is so profound that I would not be surprised if any one of the currently operating airlines will exit the market,” he forecasts.

As Capital wrote earlier, the Boryspil International Airport is trying to force Ukrainian International Airlines to repay its debt of UAH 93.2 mn through the courts and the State Aviation Service has filed a lawsuit against UTAir-Ukraina to the tune of UAH 1.78 mn.

“Taking into account the active phase of anti-terrorist operation in Ukraine, I do not foresee an increase in the number of air passengers,” says Katerniy. For example, the airport in Donetsk is shut down until the end of October, he says. Though this is a conditional date after the anti-terrorist operation are suspended as the airport will need several months to restore its operations.

In the opinion of experts, there are two factors that can increase passenger flows: introduction of a visa-free regime between Ukraine and the European Union and stabilization of the situation in Ukraine. “The aviation industry is very sensitive to positive trends in the economy – as soon as the first signs of its revival are seen the flow of passengers will increase,” says Vynyukov-Proshchenko. If the economy shows signs of revival this year, the flow of air travel will increase no sooner than in the spring-autumn of 2015.