Aviation Industry in Ukraine – Challenges and Opportunities

Although the beginning of 2020 was marked by the worldwide spread of the COVID-19, which also had a strong impact on the aviation industry in Ukraine, its consequences for civil aviation will need to be assessed over time.

The popularity of domestic and international flight in Ukraine has significantly increased in the past year. According to a report by the Head of the State Aviation Administration of Ukraine, air transport increased by 18,4% in 2019 compared to 2018. More than 335 thousand flights were serviced through Ukrainian airspace.

In the meantime, the administration has outlined the priorities for the development of the aviation market in 2020:

• Improve aviation safety and security
• Increase the quality of air transportation organisation processes
• Liberalisation of air traffic
• Minimisation of the negative effects of civil aviation on the environment
• Harmonisation of Ukrainian legislation with European Union legislation and ICAO standards
• Creating an integrated information system for the State Aviation Administration

It is obvious that one of the conditions for the sustainable development of the Ukrainian aviation industry is proper government regulation. It is fair to say that the efforts of the Ukrainian state authorities during this past year have had some positive impact on the development of the industry. A number of legislative acts have come into force in this sector and several drafts were presented for public discussion.

The main focal points in Ukrainian aviation in the past year include:

• The order from the Ministry of Infrastructure “on establishment of the charges for the provision of air navigation services for aircraft in the airspace of Ukraine”, which came into force on 12 July 2019. This act has significantly changed the calculation of the air navigation service charge.
• A draft law on amendments to the Air Code concerning the improvement of the mechanism of collecting state charges for each passenger departing a Ukrainian airport and for each tonne of cargo sent from or arriving through a Ukrainian airport was preliminarily adopted by parliament. The state aviation charge has been the subject of various legal disputes between aviation companies and the government for many years. The fact that a law has been drafted on this issue instead of a by-law already represents progress, but in order to make collection of the charge legal, the Ukrainian Tax Code must also be amended accordingly.
• A draft order for the approval of amendments to the Ukrainian “Rules of Air Carriage and Passenger and Baggage Services”. The draft order replaces the previous version of the rules that came into force on 5 March 2019. In general, the changes concern the simplification of procedures, as well as changes to the limits of the carrier's liability.
• A draft order for the approval of the Ukrainian aviation rules on “Access to the Ground Handling Market at Airports” developed by The State Aviation Administration. The main objective of the draft order is to establish free, transparent and competitive procedures for access to the ground handling market.

However, all these results can only be achieved if state authorities properly monitor this procedure, explain the Ecovis experts. They know the environment and can advise clients who work in the aviation industry or are planning to do so. The areas of advice include corporate, financing and tax matters, competition and antitrust investigations, multi-layer dispute resolution cases and PPP projects.

To succeed in regulating of the aviation industry, the State Aviation Administration and other state authorities must effectively respond to all the challenges they face, say the Ecovis advisors.

For further information please contact:

Mariia Stepanenko, Associate, ECOVIS Bondar & Bondar, Kyiv, Ukraine

Email: mariia.stepanenko@ecovis.ua