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Annual Results in Aviation


Arseniy Herasymiv, attorney at law, Ilyashev & Partners
Source: The Yurliha

This year attention of the society was captivated by the aviation industry, in particular by regulatory activities of the Government in this sphere. The sphere may not be characterized by frequent changes as long as the regulatory acts approved here are directly or indirectly related to the safety of flights and passengers and, thus, require balanced and cautions approach. In my opinion there have been two significant events in the sphere of regulatory activities – novelty related to the procedure of provision and annulment of rights for exploitation of airlines (widely discussed in 2015) and the draft of new rules of air transport operations, handling of passengers and luggage prepared and brought up for public discussion by the State aviation service of Ukraine.

Military conflict at the east of Ukraine in which course the Malaysian Airlines plane of MH17 flight crashed, has undoubtedly had its influence onto regulatory activities in aviation sphere and contents of the proposed drafts of the regulatory acts. The State aviation service of Ukraine has proposed a number of draft laws, in particular: “On particularities of the state regulation of air carriers’ activities related to of carriage of passengers and baggage by air transport”, “On the state program of aviation safety of civil aviation”, new rules of air transportation, servicing of passengers and baggage. The Cabinet of Ministers of Ukraine has prepared new licensing conditions of performance of economic activities on transportation of passengers, hazardous commodities and dangerous waste by aviation transport.

The most heated debate was triggered by the draft Law “On particularities of the state regulation of air carriers’ activities related to of carriage of passengers and baggage by air transport”. In particular the draft law stipulates that the right to exploit air lines shall be granted only to those air carriers who predominantly own (fully control or have a share exceeding 50% of their charter capital) or who are actually controlled (are the ultimate beneficial owners or owners of more that 50% of the charter capital) by the state Ukraine and/or citizens of Ukraine. It means that foreign aviation companies will find it difficult to enter Ukrainian air transportation market. In order to set its foot onto the market a foreign aviation company will have to establish a legal entity in Ukraine and ensure compliance of its charter capital with corresponding requirements of the said draft law.

The similar provisions about substantial shareholding are contained in the Council Regulation (EEC) No. 2407/92 as of July 23, 1992 on licensing of air carriers. However, the mentioned Regulation does not contain provisions related to the size of the share in the charter capital of the air carrier. However, such logic is understandable for the market of European Union where the question of the status of the air carrier as a company located in one of the EU member states is important, considering for the general market, and the matter of regulatory activities in the sphere of transport is related to the competence of both European Union and of its member-states.

This is why a provision regarding the volume of a share in the air carrier’s charter capital may contain attributes of discrimination. The draft law in question may contradict international obligations undertaken by Ukraine, in particular, in the valid Treaty with the EU on common airspace. It needs to noted that the mentioned treaty stipulates that any discrimination between the parties in the sphere of air transportation under the grounds of national identity is forbidden. The mentioned treaty cancels all unilateral administrative, technical or other measures which may constitute an indirect limitation or play discriminative influence onto air transportation activities. Ukraine and EU undertook an obligation to apply administrative, technical or legislative measures which may lead to discrimination in relation to people, companies or enterprises of the other party in the process of provision of services under this treaty.

Proposed also was a draft law “On particularities of the state regulation of air carriers’ activities related to of carriage of passengers and baggage by air transport” which offered to introduce the system of financial monitoring aimed at prevention of bankruptcy of aviation companies. The mentioned control mechanisms are similar to those established by EU Regulation No. 2407/92 as of July 23, 1992. Tragic events in the East have evidently influenced regulatory activities in aviation sphere. The draft law assumes that no air carrier can be controlled by the residents of the countries involved into the military aggression against Ukraine, which actually restricts access of Russian air carriers to the Ukrainian market of air transportation.

Another regulatory act which will, to a greater extent, influence the consumer rather than aviation industry is the new Rules of passengers, baggage and cargo air service proposed by the State Aviation Service. Despite the fact that the rules of passengers, baggage and cargo air service were passed not long ago (in 2012) the State Aviation Service has drafted new rules which contain a number of novelties. In general the said draft can be characterized positively as soon as it was brought into compliance with the provisions of the Convention on unification of certain rules of international transportation.

It is proposed to replace the term “carrier” with the term “air carrier”. A separate section of the rules is devoted to the matter of booking tickets via Internet. The air carriers and sales agents were vested with obligation to timely inform passengers about changes in the booking process not later than eight hours prior to the flight.

The said draft, in my opinion, is more flexible in relation to the standards of handling of passengers with consideration for low-cost airlines entering the market. In particular it is proposed to get rid of a number of services which every air carrier is obliged to provide at the board of an airplane. Free of charge provision of soft drinks is replaced with provision of drink water. It is offered to fully exclude such options as: provision of passengers with soft inventory and service items during the flight; provision to passengers of periodicals (newspapers, magazines, advertizing booklets); translation of music programs (through corresponding equipment).

As opposed to the current valid rules the new draft does not contain requirements related to standards of handling the passengers travelling by business class. It is logical that air carriers must independently decide which volume of services must be provided in this segment. The regulator must establish only minimum and compulsory requirements towards quality of passenger services.

It was offered to impose the duties related to servicing of passengers at the airport and to providing them with necessary information at the airport terminal not on the air carrier, but on the airport operator.

The draft is also stipulates for more clear realization and protection of individuals with disabilities. In particular the draft rules impose an obligation onto the air carriers to distribute information on their internet sites on the procedure of servicing rights of individuals with disabilities. In addition to the aforesaid if a person with disabilities is denied boarding onto the board of the plane such person must be provided with a written confirmation of such denial with compulsory indication of the reasons of such denial. In addition it is also proposed to impose an obligation on securing rights of persons with disabilities not only on the air carrier, but also on the airport operator.

The draft laws propose to secure the right of the passenger to get registered onto the flight via Internet site or self-service kiosk. Thus, if the passenger failed to carry out registration as mentioned such registration is carried out immediately at the registration counter free 0f charge.

Proposed was also a number of novelties related to the procedure of registration. In particular, it is offered to establish registration ending time as 45 minutes prior to the departure as soon as nowadays the rules establish the period of 40 minutes.

The initiator of amendments specified the terms under which the passenger is allowed for boarding, as well as the list of identifying documents which will make it impossible to decline passenger’s boarding onto the plane under unsubstantiated grounds.

In the process of baggage transportation it is proposed to increase the norm of the maximum registered weight from 23 to 32 kilograms.

One may positively view the proposed section devoted to the responsibility of the air carrier and the amount of compensation for the inflicted damage. As distinguished from the valid rules the proposed draft law is laid down in accordance with the provisions of the Convention on Convention on unification of certain rules of international transportation as well as international practice related to the scope of responsibility of the air carrier. The proposed draft law clearly defines the scope of the air carrier’s responsibility regardless of the liability born for the damage inflicted as a result of death or body injury suffered by the passenger.

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