Ryanair’s announcement to enter Ukraine with flights to Lviv and Kyiv was a true celebration for many Ukrainians who expect visa-free status from the European Union and would use cheap offers from the Europe’s biggest low-cost airline.
But not all are happy with such a strong and aggressive new market player. President of Ukrainian International Airlines Yuri Myroshnikov said in his interview that if Ryanair will receive any special treatment his company will show “desperate resistance.”
As for now, two airports – Boryspil and Zhulyany – declared that they have no agreements with Ryanair. But all the experts, lawyers and other people who somehow sympathize with UIA started a huge campaign to declare that the Infrastructure Ministry’s policy to bring in low-cost airlines is not in line with state interests, while discounts that are asked by the market’s newcomer are impossible and even violate Ukrainian laws and European regulations.
When the new head of Boryspil airport was selected just before those events, the Infrastructure Ministry set up KPIs for him to bring in low-cost airlines.
But after signing the contract and reviewing Ryanair’s proposals, we suddenly hear the new CEO of the main Ukrainian airport saying that bringing in low-cost airlines is impossible because of the airport’s hub strategy. For Boryspil it is more acceptable to service low-cost airlines at Gostomel airport than at its own terminals, he said.
That is a bit strange since Boryspil airport has a few frozen terminals and could use them to create conditions for budget airlines.
Also, there are different schemes of tariffs and conditions that may be proposed to an airline like Ryanair. They fly to Frankfurt International, Rome Fiumicino and Warsaw Chopin. Those airports managed to find the place and appropriate conditions for Ryanair. But we don’t hear any proposals from Boryspil or Zhulyany airports. We just know that there is no possibility to accept Ryanair’s conditions. And from Zhulyany we even heard that visa-free regime with EU will have no big effect on Ukrainian passenger flow.
Meanwhile, right after EU’s visa-free regime announcement, Ryanair announced that its flights to Lviv from London will start even earlier than planned. And Lviv has no problems negotiating with Ryanair.
So, what’s going on? Nothing new – just business and a little bit of politics.
It would be strange for any national carrier of the country that Ryanair decided to fly not to show some opposition. Alitalia already felt negative impact after Ryanair’s activities. Now Ryanair threatens Lufthansa as it carries more passengers than the German airline. It is a normal reaction to make everything possible from UIA’s side to compete with Ryanair even before they start their flights.
And here Ukrainians have been inventive. For example, one of the possibilities to receive a discount from Boryspil according to its new incentive program is to fly a new route. Ryanair declared a few new routes. But what did UIA just do? They asked the State Aviation Service of Ukraine for permission to fly some of those routes so they would not be new anymore.
All the statements that we heard from airports that refuse to accept Ryanair are strangely similar to the ones by UIA’s lawyers and some experts. Zhulyany chose a very interesting time to refuse Ryanair after some negotiations – just the evening before the Infrastructure Ministry’s joint press conference with Ryanair.
Hearing UIA condemning special treatment to other carriers is interesting since UIA themselves have it and want it to be even more special. UIA has not been paying the state fare for each carried passenger for a few years and has questioned this fare in courts. But other airlines are paying it.
UIA has probably the biggest discounts from Boryspil airport that are subject to ongoing investigation by the Antimonopoly Committee of Ukraine. And those discounts are attached to the number of the carried passengers.
It’s easy to assume that Ryanair asks for almost the same – a special tariff if they carry more than, i.e. 150 passengers per flight. Discounts for the carried amount of passengers, for new routes, or the ones depending on terminal services or temporary conditions are quite possible to negotiate with the new carrier. An order by Infrastructure Ministry allows a CEO of a Ukrainian airport to provide discounts up to 80 percent from the tariffs. Besides, this order may be changed if Boryspil will make such a proposal.
But for now, we see that for some airports it is easier to say “No”. Because when we hear about a so-called “hub strategy” from Boryspil Airport, what is meant is its cooperation with UIA. And of course, the presence of Ryanair is a threat to such cooperation. When we hear that Ryanair should use Gostomel or Zhytomyr airport – it is “No” but in other words.
It is not right to compare Ukrainian reality with European countries in the terms of aviation market. Kyiv doesn’t have six airports to choose from, like London does. And Ukraine doesn’t have a huge national (in all meanings) carrier to defend by closing the access to new cheap carriers.
For our country, aviation connections mean a lot –they mean tourism development, business activities and new working places that Ukraine needs as a developing country. The entrance of new foreign airlines will lead to the local carriers getting better in terms of service since they must compete or die. Unstoppable changes are coming. Alitalia is back in Ukraine, Qatar Airways just included Kyiv to their 2018 season plans, other foreign carriers including low-cost Wizz Air are increasing their presence in Ukraine. All the energy spent on resistance should better be used for development and optimization.
Anyway, it is just business and we will see soon the real interest of Ryanair in Ukraine. If Ryanair really wants to fly – they will. The infrastructure minister did everything within his powers – the policy to bring in low-cost airlines is declared and implemented. Local problems of the airports and legal issues are already on the table. But the passengers’ expectations are very high. So will the low-cost airlines take the Ukrainian challenge despite such a “desperate resistance” or will they just wait for a better time?
Andriy Guck is a partner at the Ante law firm in Kyiv and specializes in the aviation industry.
