‘Open Skies’ with Europe: What Benefits Passengers and Carriers Will Get?

Ukraine signed the Common Aviation Area Agreement with the European Union. It took 15 years. Now, passengers and carriers have new opportunities. When will the agreement on expanding airspace with the EU come into force and how can ticket prices for Ukrainians and the number of flights change?

Long way and Brexit’s help

Negotiations on the conclusion of this agreement between Ukraine and the EU began in 2006. However, only seven years later, in 2013, the parties finally agreed on the agreement terms and finalised the wording.

For another eight years, Spain blocked the signing of the agreement with Ukraine and several other countries as the wording mentioned the British airport in Gibraltar. The point is that Spain has been considering Gibraltar an illegally occupied territory since the 18th century.

The UK insisted that EU law must be extended to the Gibraltar airport. The solution to the problem became possible only after the withdrawal of the United Kingdom from the EU, which finally took place on 31 January 2020.

After that, the European Commission was finally able to restart the technical preparations for the signing of the agreement with Ukraine.

Changes for passengers: affordable prices

It is no secret that flights to European cities are not such a luxury item as flights in Ukraine, but rather a common method of travel. Sometimes low-cost carriers between European capitals offer prices like a taxi in Kyiv.

The agreement opens the domestic Ukrainian market for European carriers. This gives hope that competition will reduce the ticket prices.

Lowering tariffs will lead to greater passenger seat occupancy, which, in turn, will increase the revenues of airports and their aggregate businesses and scale up the earnings of the Ukrainian State Air Traffic Services Enterprise (UkSATSE).

It is the reduction in prices and the increase in passenger numbers that will make regional airports in small towns attractive from an economic perspective.

In addition to the prices of domestic flight tickets, Ukrainians will get more opportunities to travel as more destinations abroad will open.

It is clear that ticket price depends on many factors and competition is not the only one. Fuel prices and quarantine restrictions are very important.

Nevertheless, we hope that, thanks to the arrival of European carriers, domestic air transportation will also become more affordable for both Ukrainians and guests of the country for the sake of tourism development.

Changes for airlines: competition

Bilateral air service agreements are currently in force with each EU country. They set limits on the number of carriers and weekly flights. And this makes it difficult for new carriers to launch popular flights and destinations.

Prior to the signing of the Common Aviation Area Agreement, in order to operate flights from Ukraine to the EU and vice versa, it was necessary to conclude bilateral intergovernmental agreements with all the restrictions they imposed (number of flights, routes, air carriers, etc.).

Once the agreement enters into force in full, the flight from Madrid Airport to Cherkasy Airport will be the subject of an agreement between a carrier and airports.

It is important that from now on the airlines will be able to open flights to Ukraine and Europe without intergovernmental agreements and negotiations. This will produce a positive impact on the profitability of carriers. It will now be possible to respond quickly to market factors such as changing consumer preferences: lifting quarantine restrictions, seasons, sport, and cultural events.

Thus, Europe’s largest low-cost carrier Ryanair has recently announced that it plans to aggressively expand its presence in the Ukrainian aviation market after Ukraine joins the European Open Skies.

However, it should be noted the arrival of new companies cannot be lightning fast. After all, new flights need preparation. This includes marketing research, concluding service, handling, fuel supply agreements), integrating into popular ticket services, getting the best slots at airports, conducting an advertising campaign.

The restraining factor is also the global rise in oil and fuel prices.

Changes for country: multiplier effect

Experience shows that liberalisation in any market drives the growth of related ones. Therefore, growth in the aviation market will incentivise the tourism industry of Ukraine. And in the future, the increase in traffic will improve the return on investment of aviation infrastructure.

In addition, Ukraine will be able to participate in current EU programmes and projects in the field of civil aviation, to expand cooperation with the European Union Aviation Safety Agency.

Ukraine will get more opportunities to participate in already existing projects and initiate scientific and technical cooperation projects in the field of design, production of aircraft, components, various aviation equipment, and systems. The EU will recognise Ukrainian certificates issued to Ukrainian-made aircraft, primarily manufactured at the Antonov plants.

When will all this become possible?

The signed agreement envisages gradual adaptation of the Ukrainian legislation to the EU requirements and standards, the introduction of uniform safety standards, modernisation of Ukrainian airports, and renewal of the fleet of Ukrainian carriers.

Ukraine undertakes to implement the provisions of 54 EU regulations and six EU directives into the domestic legislation.

The process will take place gradually, in two stages.

First, after signing, all 27 EU Member States, the European Parliament, and the Verkhovna Rada of Ukraine are to ratify the agreement. However, even before that, the agreement will take effect immediately on a temporary basis.

This means that the governments of Ukraine and the EU Member States will no longer provide permits for one route or another. Ukrainian and European airlines will already be able to agree on the possibility of launching flights and their number directly with airports in both directions.

During the first stage, Ukraine will gradually change the norms and standards of aviation legislation to European ones. After receiving a positive assessment from the European Commission, we will be able to move on to the second stage.

With the second stage, all Ukrainian flight certificates related to crew training will be automatically recognised in the EU. In turn, EU airlines will be able to offer passengers domestic flights between Ukrainian cities.

Therefore, the main achievement is that Ukraine took an important step towards economic integration into the EU. After all, the air transportation opportunities, rules, and standards in effect in the EU Member States will now function in Ukraine.

Source: Ekonomichna Pravda