Maxim Arslanov | 16 October 2014

Airports in the Red:
How Ukrainian Airports Lost More than a Quarter of their Passengers

The volume of passenger traffic fell by almost half on Ukraine’s domestic routes and by 27% on international routes during the first nine months of this year. The biggest increases in passenger traffic were at Ivano-Frankovsk and Dnepropetrovsk airports. The largest airport in the country, the Boryspil airport, lost 10 percent of its passenger traffic.

Ukrainian airports continue to lose passengers. According to the State Aviation Service, passenger flows through Ukrainian airports reduced by almost 27 percent to 8.488 million in the first nine months of this year, compared with the same period of last year. The number of passengers on international routes fell by 24 percent to 7.43 million while the number on domestic routes fell by 42.2 percent to 1.058 million.

Leaders Passenger traffic through the Boryspil airport, which is the largest airport in Ukraine, reduced by about 11% to 5.322 million in the period of January-September this year, compared with the corresponding period of last year. The airport handled 4.893 million passengers on international routes during the first nine months of 2013 or 10.9 percent fewer than the number it handled in the first nine months of 2013. At the same time, domestic passenger traffic fell by 21.6 percent to 428,600, reflecting the general trend of the market. The airport notes that passenger traffic volumes are directly dependent on key macroeconomic indicators. In particular, a 3-4 percent GDP growth causes a 10-12 percent increase in passenger traffic at major airports.

The Boryspil airport lost about 11% of its passenger traffic in the period of January-September

"As stated on the eve, the GDP is forecast to fall by 8.3 percent this this year. Accordingly, the forecast for the airline industry cannot indicate a positive trend. The aviation market is very sensitive to both business and tourist activity. Unfortunately, we are currently not seeing growth on the market," the Boryspil airport’s spokeswoman Oksana Ozhyhova told the Center for Transport Strategies.

Moreover, the country’s main airport is becoming very vulnerable in the current situation because of the difficulties facing its base carrier, Ukraine International Airlines (UIA). Its employees remember the result of the collapse of the previous flagship airline (AeroSvit) in 2013 very well. There was no demand for one of the airport’s terminals (the Terminal F), and it has had to be shut down until better times. The capacity utilization of the Terminal B, in the reconstruction and painstaking expansion of which the Boryspil airport invested money, also leaves much to be desired.

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Passenger traffic through Kiev’s second airport - the Zhulyany airport - reduced by 45.9 percent to 764,700 in the period of January-September. The number of people arriving in/departing from the airport on international flights was 673,800 in the first nine months of 2014, which is 36 percent lower than the number in the first nine months of 2013. The situation involving passengers on domestic flights is by far more pessimistic: the number of such passengers that passed through the airport reduced by 74.8 percent to 90,800 during this period. The reasons for this are the departure of the main domestic carrier (UTair Ukraine) and the loss of several important destinations for domestic flights (Simferopol, Donetsk, and Lugansk). Competitors have not yet been able to fill this niche. Of course, the economic situation in the country and the purchasing power of passengers are also exerting a strong influence.

The airport declined to comment, but Oleksii Yakovets, the general director of the Master Avia company, which operates the airport, predicted in a recent interview with the CFTS that passenger traffic would fall by about 30 percent to 1.2-1.3 million in 2014. He said that the airport planned to implement anti-crisis measures involving reduction of the cost of heating its premises by switching from gas to solid-fuel installations, where it also planned to use slop oil.

Built for the Euro 2012, the Lvov airport is also in the negative

The Odessa airport served 20.8 percent fewer passengers in the first nine months of this year, compared with the corresponding period of last year (660,100). International passenger traffic through the airport reduced by 23.2 percent and domestic passenger traffic reduced by 9.2 percent to 130,400 during this period. "The reduction is being observed because of the socio-political and economic situation in the country. The biggest reduction in passenger traffic was observed on flights to CIS countries: the number of passengers reduced by 45 percent. At the same time, the passenger traffic on flights to non-CIS countries reduced by only 10 percent. The 9,177 flights that were performed were 18.1 percent fewer than the number performed in the same period of last year," the press service of the airport told the Center for Transport Strategies.

According to forecasts by the airport’s management, the passenger traffic in 2014 will be at the level of 2012, i.e. between 850,000 and 900,000 passengers. "The airport is taking comprehensive anti-crisis measures, namely attraction of new carriers, marketing support for carriers, and optimization of our own operating expenses. In addition, the airport is not considering cutting its staff, as a matter of principle," the press service of the airport said. Regarding new carriers and flights, the Aeroflot airline (Russia) plans to resume flights to South Palmyra this month. The only question is the number of passengers.

The carrier appears to be optimistic by launching two flights per day. However, such a decision may have been dictated by a desire to squeeze competitors out of the Moscow-Odessa route with the aim of taking an advantageous position on the route when the armed conflicts end. In addition, the flydubai airline, which operates flights from Odessa to Dubai, will increase the number of its flights to two per week on October 26. The flights will be operated on Tuesdays and Saturdays.

Passenger traffic through the Kharkov airport reduced by 21.5 percent to 361,300. The number of passengers on international flights passing through the airport reduced by 24.7 percent to 301,500 while the number of passengers on domestic flights passing through it remained unchanged at 59,800. The airport’s Commercial Director Vladyslav Illin told the Center for Transport Strategies that the number of passengers was projected to reduce by 25-30 percent to 400,000 this year. As an anti-crisis measure, the airport is working to reduce costs and holding negotiations with the airlines that previously suspended flights to the capital of Slobozhanschyna, including the Wizz Air, flydubai, and Aeroflot airlines. The Wizz Air Ukraine airline confirmed such negotiations. "We are constantly engaged in dialogue with airports, but a decision to launch flights depends on the economic and military-political situation in the country," Wizz Air Ukraine’s Commercial Director Vadym Tretiak told the Center for Transport Strategies.

In addition, the Kharkov airline is considering the possibility of launching flights to countries such as Georgia, Armenia, and Azerbaijan, and it is holding the relevant negotiations with local carriers. New flights between Kharkov and Ivano-Frankovsk, which will connect Kharkov to the Bukovel ski resort, will be launched during the winter. The Dniproavia airline will use an Embraer-145 aircraft for the flights. In addition, regular flights from Kharkov to Sharjah will resume at the beginning of the winter tourist season on December 26.

The Ivano-Frankovsk airport has unexpectedly become the leader in terms of growth rate

Optimists That notwithstanding, two airports in Ukraine managed to achieve slight growths in the first nine months of this year. The first is the Dnepropetrovsk airport, where passenger traffic increased by 6.3 percent to 358,800. The airport is also observing moderate but positive trends on both domestic and international routes. This is attributable to, among other things, the fact that the airport partially compensates residents of eastern Ukraine for the loss of the Donetsk airport.

The second airport with positive results is the Ivano-Frankovsk airport. Passenger traffic through this airport increased by 9.4 percent to 21,000. According to experts, this positive dynamics is due to a successful winter season, during which flights were operated from Kiev and Moscow to the ski resort. This year’s winter flight timetable includes flights to Kharkov, as mentioned already. Moreover, the Dniproavia airline plans to launch flights from Ivano-Frankovsk to Odesa on December 26 (such flights were operated during the 2013/2014 winter season). The flight timetable also provides for operation of flights from Ivano-Frankovsk to Moscow (Domodedovo), which will also begin on December 26.

Thus, the results of the first nine months of the year provide no reason to revise the previous forecasts made by the State Aviation Service and independent experts. The situation in the country will lead to a 30-40% fall in the volume of the passenger transport market in 2014.

The Lugansk airport, like the Donetsk airport, is in ruins