The Ministry of Infrastructure suggested allocating Hr 500 million, or $18 million, to Ukraine’s aviation industry to help airlines weather the coronavirus crisis.
The ministry will soon submit a bill to the Ukrainian parliament to effect the allocation, Infrastructure Minister Vladislav Krikliy told news agency Interfax-Ukraine on Feb. 17.
Taken from the state budget, the money would partly recoup the financial losses of air carriers that carried out a total of 170 evacuation flights in 2020, bringing Ukrainians home amid the pandemic.
These include the lowcoster SkyUp, the country’s flagship air carrier Ukraine International Airlines, as well as charter companies Azur Air Ukraine and Windrose. The evacuation flights cost them about $4 million.
It’s estimated that $18 million will cover about 25% of these airlines’ airport fees and 25% of their navigation fees in 2020, according to Krikliy.
“The current situation (in aviation) threatens the stable operation of Ukraine’s air transport and requires state intervention,” Krikliy said. The bill will help “save jobs, retain the current salaries for airlines’ staff and cut State Social Insurance unemployment spending.”
Ukrainian airlines have struggled since the beginning of the pandemic and have asked the government for support. Due to financial losses, Ukraine International Airlines alone has laid off nearly half of its staff — 1,000 employees out of 2,560. Since the beginning of the pandemic, from March to July, the company generated losses of $60 million.
Read more: Ukraine International Airlines lays off 1,000 workers to cut losses
To get financial support, the companies must have no bankruptcy cases and no more than six months of delay in paying taxes, air navigation fees and other obligatory payments.
Airline industry expert Victor Logvinenko finds the government’s move ineffective and populist. He thinks that the offered sum is too little to make the difference.
“The sum of Hr 500 million means nothing to the airline industry. This amount might work if it was 500 million dollars, not hryvnias,” Logvinenko told the Kyiv Post, pointing out that Dutch airline KLM received 2 billion euros from its state.
What might help the industry is to reduce taxes and restructure the debts created by the pandemic, Logvinenko said.
Earlier, on Feb. 16, Prime Minister Denys Shmyhal ordered the infrastructure ministry to develop a plan to support domestic airlines by Feb. 22.
“It is necessary to form a state strategy to support domestic air carriers after they were hit by the COVID-19 pandemic,” Shmyhal said. “It is important to complete this process as soon as possible so that Ukrainians can receive safe and quality services.”
During 2020, Ukrainian airlines completed 50,000 flights, 55% fewer than in 2019. Foreign companies working in Ukraine, including Ireland’s Ryanair, Hungary’s WizzAir and Turkish Airlines, completed 92,300 flights in 2020, 59% fewer than in 2019.
The total number of flights completed in 2020 was 142,000, nearly 60% fewer than during the previous year.
