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“The team was recently visible advising on a number of pharmaceutical cases. Sources agree that the team is “moving in the right direction” and are particularly impressed by its work in the pharmaceutical sector”.

 

Failed Destination: Why Ukraine is Late with Open Skies

13.05.2013

Author: Arseniy Herasymiv, Attorney at Law, Ilyashev & Partners Law Firm
Source: Liga.net

Negotiations on Ukraine’s accession to the EU Common Aviation Area Agreement, also known as the Open Skies, were announced back in December 2006. The agreement would allow Ukrainian and EU airlines to fly over each other’s territory. To date, however, Moldova is the only CIS country to join the Open Skies, with negotiations in progress with virtually all of EU airspace neighbors including Tunisia, Turkey and Egypt.

The talks on the Common Aviation Area Agreement were originally expected to be completed by July 2, 2012. However, this did not happen as the game is still on our side of the filed. A key reason for foot-dragging is that Ukraine will have to introduce large-scale changes in the aviation industry while the EU has virtually nothing to change. Besides, there might be some lobbying on the part of important market players including manufacturers and major carriers.

As opposed to Moldova, for example, Ukraine has a well-developed aircraft industry represented not only by Antonov design bureau and aircraft factory, but also by a number of aircraft repair plants and a vast network of airfields and airports. All of these will have to be brought in conformance with EU regulations. The entire job or at least the greater part of it needs to be done before the documents are signed. Editor’s note: A number or arguments against the Open Skies have been articulated by the President of Ukraine International Airlines (MAU) Yuri Miroshnikov.

A good deal of the work has already been done. This includes renovation and reconstruction of airports in the anticipation of Euro 2012, adoption of a new Air Code and Rules for Carriage of Passengers by Air, and membership in the European Aeronautical Safety Agency. However, in terms of negotiations 6 years can hardly be called a reasonable term.

The reason for foot-dragging is that Ukraine has to introduce large-scale changes in the aviation industry while the EU has virtually nothing to change. Besides, there might be some lobbying on the part of important market players including manufacturers and major carriers. The open Skies agreement covers a far more wide range of issues than just free flight and landing. It suggests creating fair and equal opportunities for competition in the aviation market by lifting barriers for business. To that end, a common authority needs to be established. Besides, all market players in a country signing the agreement will be able to open representative offices in other member states. Other important aspects include liberalization of customs fees and taxes, environmental protection and social guarantees. In a nutshell, any restrictions must be lifted and a common basis for dispute settlement needs to be put in place.

Open Skies will bring new low-cost airlines to Ukraine. This will result in lower fares, and national airlines will face challenges in competing with low-costers in this segment. Should there be any improvement of service quality remains a question, and even if it happens, few segments will be affected. I, for one, don’t’ believe there will be any breakthrough in low-cost flights because lower fares usually mean fewer comforts such as meals or seat allocation. Apparently, flight safety standards will be raised. This, however, requires extra costs for the carriers and can affect the fares.

For all that, the signing of the Common Aviation Area Agreement with the EU is vital to cater for the growing passenger traffic between Ukraine and Europe. Since the beginning of negotiations there was a 300% increase in passenger flows. Alone in 2012, air traffic increased by 12%, with EU share amounting to 35%, the State Aviation Authority reports.

 
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