Content:
  1. How Russia’s full-scale invasion affected leading Ukrainian airlines
  2. How air carriers, the government, and the EU are trying to restore business
  3. How Ukrainian pilots and flight staff makes do without airlines
  4. When Ukraine’s air traffic market will recover, and what the prices will be

How will F-16 aircraft from Western partners help the Ukrainian civil aviation market? When will the Ukrainian skies be open for flights? Which airlines will take the place of bankrupt ones? And how much will their tickets cost? LIGA.net found out the answers to these questions.

Stay updated with the latest news by following us on X (Twitter)

In April 2023, the European Organisation for the Safety of Air Navigation (Eurocontrol) issued a ‘killer’ forecast for Ukrainian civil aviation, saying it wouldn’t return to operation at least until 2029.

This, in turn, would be a verdict for those Ukrainian carriers that have been struggling to keep afloat since the start of Russia’s full-scale invasion.

Six months ago, such a forecast wouldn’t have been surprising. Today, however, there are reasons to doubt it: Firstly, because of the large-scale rotation of aircraft used by Ukrainian carriers; and secondly, because the Ukrainian authorities are mulling partially opening the skies to civil aviation.

How Russia’s full-scale invasion affected leading Ukrainian airlines

Since the start of the full-scale war, the Ukrainian airline market can be described in one word: collapse. The complete absence of flights in Ukraine; debts; unemployed airline staff; attempts to somehow survive – this is an incomplete list of of what awaited the market after 24 February 2022.

Even before the Russian invasion started, international insurance companies had been the first to sound the alarm. After all, the majority of aircraft operated by air carriers around the world are leased.

The insurers had required that the lessors who work with Ukraine’s airlines either take their aircraft out of Ukraine or have their insurance removed in case the aircraft would be damaged in hostilities.

Accordingly, the lessors began to demand that carriers move their property out of Ukraine.

The worst situation was faced by the youngest player in the airline market, Serhii Smyrnyi’s Bees Airline, which launched in Ukraine in early 2021 and started regular domestic flights just a month before the full-scale war.

Permission to take-off: Ukraine is looking into resuming air travel
Photo: Bees Airline-Ukrainian low cost

The lessors recalled all the four aircraft used by Bees Airline to Europe, and in early February 2022, its management agreed on a wet lease with another market player, Ukraine International Airlines (UIA), a member of the Privat group of oligarchs Ihor Kolomoisky and Gennadiy Bogolyubov.

However, this was to no avail since Ukraine’s state aviation administration revoked Bees Airline's licence in August 2022, effectively not allowing the airline to fly.

UIA’s situation was no better: On the night of 24 February 2022, when the Ukrainian skies were closed to civilian flights, it had 21 out of its 24 aircraft in Ukraine.

Permission to take-off: Ukraine is looking into resuming air travel
Photo: Fly UIA

Another airline, Windrose, which is part of the interests of one of UIA’s shareholders, Ihor Kolomoisky, had its entire fleet of 11 aircraft in Ukraine at that time. Also stuck in Ukraine was a part of the fleet of Elvis Abduraimov's Azur Air Ukraine, which had been operating mainly charter flights for tour operators.

The situation with another leader in the Ukrainian civil aviation market, Yuriy Alba's SkyUp, was relatively fine. Its CEO, Dmytro Seroukhov, says the airline started preparing for a large-scale invasion a month before and began moving their aircraft out of Ukraine.

SkyUp had managed to get 10 out of 11 planes out of the country. The last one, without passengers, needed only another twenty minutes to leave Ukrainian airspace on the night of 24 February, but the pilots were ordered to return to their airport of origin.

A similar situation had occurred two weeks before that, when SkyUp was forced to land the plane right during the flight because the lessor banned its operation in Ukraine.

However, the carrier sounded the alarm and, through negotiations with the lessors and Ukraine’s infrastructure ministry, reached a compromise, with the Ukrainian government taking on part of the risks by reserving UAH 16 billion.

Subsequently, the aircraft has remained in Ukraine ever since.

Permission to take-off: Ukraine is looking into resuming air travel
Photo: SkyUp Airlines

As of today, there are 45 airlines with a valid licence in the state register, while before 2014, there had been more than 70, aviation expert Bohdan Dolintse told LIGA.net.

He estimates that four carriers – UIA, SkyUp, Azur Air Ukraine, and Windrose – accounted for 93 percent of Ukrainian civilian air traffic.

How air carriers, the government, and the EU are trying to restore business

Changes in the Ukrainian air traffic market began in April of this year, when Eurocontrol – a pan-European air navigation safety organisation, issued its latest seven-year forecast, estimating flights in Ukraine would be restricted until 2029.

This did not come as a shock to many.

"Eurocontrol gives a forecast twice a year for the next seven years. But based on the analysis of the state of affairs today, it is impossible to predict when Ukraine's airspace will be opened in the next seven years," Andrii Huk, an aviation law expert and partner at Ante Law Firm, explains.

"That is, if there are more positive developments in six months, the disappointing forecast will be revised."

And there are some indications such a revision is likely.

In September 2022, Ukraine’s infrastructure minister, Oleksandr Kubrakov, said his ministry was considering the Lviv airport to be the first to resume operations even under martial law, subject to security guarantees.

And Dmytro Kuleba, Ukraine’s foreign minister, said last month sufficient air defence capabilities, including F-16 aircraft, would allow Ukraine to open the airport.

"There are similar examples in the world. For example, this is the case in Libya, Iraq, and Iran, but it is an exception rather than a rule. In those countries, local air carriers carry out cargo and passenger traffic. Ukraine can at least learn from their experience," Bohdan Dolince says.

Another possible example is Israel – however, its airspace is much smaller than Ukraine’s, and this practice is already well established there.

The carriers themselves have also begun to take action. First, the former monopolist, UIA, was found to have provided its aircraft outside Ukraine to Windrose, giving the latter the opportunity to operate.

Currently, Windrose is using three aircraft from the UIA fleet, having carried out its first flight, commissioned by Egyptian charter airline FlyEgypt, in May 2023.

As for UIA itself, since the airspace over Ukraine was closed, it was trying to make ends meet by operating its four aircraft outside of Ukraine.

Back in the summer of 2022, UIA announced it was ready to operate charter flights from Poland, and later, struck an agreement with the Polish tour operator Itaka. The airline also operated several flights for the Ukrainian national football team.

By autumn 2022, however, UIA got embroiled in a corporate conflict between its shareholders, Aron Mayberg and Ihor Kolomoisky, effectively ending its operation for now.

Since then, UIA has already had its third CEO, and the conflict seems far from being settled. In fact, it was one of the reasons UIA had given part of the fleet to Windrose, which is also in Mr Kolomoisky's sphere of interest.

"In general, UIA does not look viable now," Andrii Huk tells LIGA.net.

Skyline Express – which previously operated in Ukraine under the name Azur Air Ukraine – also made its first flight at the end of May 2023.

Permission to take-off: Ukraine is looking into resuming air travel
Photo: Azur Air Ukraine

The company currently has two aircraft that will fly from European cities to seaside resorts in Egypt and Türkiye. Both aircraft are owned by the Turkish company Mavi Gok Havacilik A.S., which received them from Ukraine.

The ‘upgraded’ Skyline Express carrier is part of the interests of the Turkish tour operator ANEX Tour, which allows the airline to expand its charter flight network.

Ukrainian airline SkyUp has been the most active over the past and this year. As the company moved its aircraft out of Ukraine before the full-scale invasion, it managed to develop a new business model – leasing the aircraft under wet-lease contracts.

On 22 March, SkyUp wrote an open letter asking to save its business, which eventually allowed them to sign wet-lease agreements with their current partners in this area, including Moldovan airlines FlyOne and Air Moldova and Tunisian airline TunisAir.

A wet lease provides for the use of aircraft with crew, equipment maintenance, and other services.

"We are currently looking for new partners and are open to proposals and negotiations. The geography of interaction and cooperation under our contracts is quite extensive and includes several continents," SkyUp CEO Dmytro Seroukhov tells LIGA.net.

He added it was difficult to agree on cooperation on wet-lease terms. At first, future partners refused because of the war and, therefore, had to be convinced.

The bet worked out in the end, and SkyUp is now including the wet lease in its business model, planning to expand the scheme to other continents.

At the same time, the carrier began setting up a European subsidiary throughout last year, which was necessary for the efficient execution of wet-lease contracts, as well as the launch of regular flights from Europe in the future, Mr Seroukhov explains.

The Ukrainian and EU air traffic markets are too different now – at least because the latter has not suffered from the war and is very protective of its players from possible competitors. Therefore, becoming part of this market is the best idea, SkyUp believes, although it’s still wary of disclosing its respective investments.

SkyUp’s Seroukhov says at first, the company tried to settle everything at its own expense, but then was forced to apply for loans.

However, banks were in no hurry to provide them, as business in Ukraine is now considered high-risk. Eventually, in May 2023, the carrier announced the launch of a company in Malta that will operate charter flights for travel companies in the EU, and from 2024, it will operate domestic flights in Europe.

SkyUp is currently working on launching an online ticketing system.

"I believe SkyUp’s example is extremely successful. Their experience can only be admired, despite the fact that the airline was forced to take risks by sending aircraft and staff to Africa, where one of its planes is currently blocked," Andrii Huk says.

"But, in the end, SkyUp can become a leader in the recovery of the aviation industry in Ukraine."

How Ukrainian pilots and flight staff makes do without airlines

Retaining aviation personnel in Ukraine is an extremely difficult task due to both the lack of work and the ability to travel abroad for training or work.

"Those issues can only be partially resolved. People are often left alone with their problems. A significant number of specialists are now working abroad. And these are not always the best conditions. We can't say that there were any worse working conditions in Ukraine," Andrii Huk explains.

SkyUp, again, is an example of how not to leave your employees to fend for themselves.

In the first months after the Ukrainian sky was closed, working under wet-lease contracts allowed the carrier to at least receive funding to maintain its flight staff, if not earn money.

"This allowed us to pay for pilot training so that they did not lose their flight licences. It will be very difficult to find new ones in the post-COVID market. In addition, they need to be trained for at least several years," explains Mr Seroukhov.

In December 2022, EU countries established a voluntary solidarity fund, which, in particular, provides funding and training for personnel, thus maintaining their qualifications and certificates.

According to Bohdan Dolince, the vast majority of Ukrainian airlines' staff is in a mode of forced downtime, with some employees laid off and others called up to the Armed Forces.

"Some specialists, such as flight attendants and pilots, were able to find jobs with other airlines abroad, mainly European ones, on temporary contracts," he explains.

This, however, applies mainly to flight staff, who can easily adapt to working in other countries and are legally entitled to travel abroad for training or contract work.

Many employees of airports, handling companies, and logistics carriers are not considered aviation personnel and therefore remain in Ukraine – in particular, due to a lack of language skills or a ban on men travelling abroad.

Those staff are forced to look for new opportunities to work in other areas, Mr Dolince explains.

When Ukraine’s air traffic market will recover, and what the prices will be

Despite Eurocontrol’s extremely disappointing forecast, the market itself is quite optimistic about its prospects in the near future – at least for the next two to three years.

Bohdan Dolintse notes that once the Ukrainian skies are reopened – albeit partially – flights could resume in a matter of weeks to months.

"It is impossible to predict more precisely at the moment, the timeframe may vary from next year to the end of the war," he said.

Andrii Huck believes the current war will be a good opportunity for many Ukrainian airlines – in particular UIA – to literally restart their business. He is also confident that Bees Airline will not leave the market, and the Ukrainian government is likely to return to the idea of a national airline, which was put on hold by the war.

In addition, new leaders may emerge in the market: SkyUp is preparing to be the first to return to Ukraine when its airspace is at least partially reopened.

"And the previous market leaders may go bankrupt by the time the war ends due to debt obligations. But at the same time, this is a great opportunity for small and new airlines to make a name for themselves, as the demand for air travel in the global market after the pandemic is huge," Mr Dolince believes.

However, there is a risk that international players will also want to ‘seize’ the Ukrainian market: European airlines, seeing the prospects here, might easily return by offering dumping prices.

Therefore, once the airspace is opened, the Ukrainian market could quickly become competitive.