Boryspil Airport’s General Director On Why Low-Cost Airline Companies Do Not Fly to Ukraine

The general director of the state-owned Boryspil international airport, Anton Volov, discusses passenger traffic, the obstacles to attracting budget airlines, development of the airport’s Terminal D, and construction of parking lots in an exclusive blitz interview with CFTS.
Maxim Arslanov 04 July 2013 14:51

The departure of the largest carrier bases at the airport had a negative impact on its passenger traffic. To what extent did the airport manage to level things in the first half of 2013?

Passenger traffic at the airport reduced by 14%, compared with the first half of 2012. There are several reasons for this. In the first half of last year, we received guests of the 2012 European football championship, which significantly affected the growth dynamics of passenger traffic. In the first half of this year, the airport’s base carrier - the AeroSvit airline - stopped operations, which could not but affect the financial performance of our company.

Ukraine International Airlines (UIA) is showing rapid growth at present, and we are attracting new airline companies. Recovery of the indicators is not a quick process, but I think that we will be able to make up the projected gap of 6% from 2012 by the end of this year.

Will you attract low-cost carriers to operate in the underutilized Terminal F?

We working on this, and we can boast of certain competitive advantages over other airports, such as the Zhulyany airport, where the length of the runway does not allow aircraft to take off with full loads and full fuel tanks. That is why aircraft of the type Boeing 737-800 belonging to the UTair Ukraine airline company (based at the Zhulyany airport - CFTS), which performs charter flights, are served by us.

Right now, we are technically fully ready to receive low-cost airline companies. We have reformatted the terminal F for this, but the issue is the cost of services. No low-cost airline company will agree to pay the full price for limited services. However, the tariffs for a low-cost airline company and a classic airline company that receives the full range of services are the same and these tariffs are strictly regulated by the executive authorities. We are currently waiting for the Ministry of Infrastructure to approve differentiated tariffs for the terminal F or grant the airport the right to set its own tariffs. All tariffs are currently regulated by orders of the Ministry of Infrastructure.

However, the Ministry of Infrastructure’s order No. 745 of December 19, 2012, authorized the heads of airports to offer discounts themselves...

Unfortunately, our rights are not clearly spelled out in this ministerial order. According to this document, the head of an airport may reduce charges by a coefficient of 0.2, but it is unclear what discount - 20% or 80% - can be granted. It will be difficult to clarify this not only for us, but also for the State Financial Inspectorate and the State Tax Inspectorate, which will lose revenue. Therefore, we have sent official inquiries to the Ministry of Infrastructure, asking it to provide clarification.

Although, our terminal F is underutilized and we could bring here new airlines that do not presently fly to Ukraine - for example, EasyJet - we are not yet ready to start negotiations with them. We cannot go to a low-cost airline company, which, as a rule, dictates its own terms, and offer it the existing tariffs. Usually, airports operate incentive programs for new flights, offering significant discounts - up to 90% for the first few years - as a marketing support package. We cannot offer such a package. Therefore, you can imagine how difficult it is for us to attract new carriers.

Since the presidential program of priority actions for 2013 provides for cooperation with low-cost airline companies and sets the task of bringing five such companies, I think we should be helped a little in terms of the regulatory policy in the industry to enable us to fulfill the task set by the head of state.

Airline companies’ flights are currently scattered between several terminals. How are you solving the problem of transfers?

We are trying to make transfers as comfortable for passengers as possible. At present, a passenger transferring from a domestic flight to an international flight does not need to leave Terminal B, find a way to get to Terminal D, register, and carry his own luggage. We transport such passengers on a special bus from one terminal to another. The first floor of Terminal D now has a special area for transfers, where four additional desk and passport control desks are installed.

 

We are waiting for the Ministry of Infrastructure to approve differentiated tariffs for the terminal F or grant the airport the right to set its own tariffs

 

Passengers go through passport control without their luggage. We carry their bags ourselves. Customs and border officials help us by inviting passengers only if there are some questions.

How will the second floor of the terminal D operate?

The second floor is reserved for our expansion, i.e. domestic flights. Today, the terminal is almost full, and the registration area is very small. We have two options. The first option is to expand the registration area, increase the number of desks, and create a fully-fledged zone for domestic flights, commercial areas, and a through-passage duty free, the lack of which was a cause for criticism by international experts. They asked us how we intended to return the investment in the terminal.

However, at present, when a passenger is passing through passport control and flight security, he immediately enters a gallery with departure gates. If a chain of stores is then added on this way, it will interfere with people queuing to board airplanes. Therefore, ideally, we need to modify the terminal, complete the construction of the missing areas, and add a zone for domestic flights with full services and a walk-through duty free.

There is a second option, which is to bring the second floor into operation without completing it and create gates for boarding buses from the northern end. However, this will solve the problem for only one year and block further development of the terminal, since in this case we will be deprived of a technical floor through which construction materials can be delivered and where work can be performed. However, we will have to finish building it sooner or later because passenger traffic is increasing. We are currently seeing a temporary drop, but there would have been an increase of about 20% in the aviation industry if the largest Ukrainian carrier had not gone bankrupt.

When will a parking lot will be built near the terminal D?

The construction of a parking complex is being constrained by authorization procedures, which require us to first obtain approval for its design before beginning work. We have now secured approval of the document. We submitted it at the end of 2011 and expected a decision in January-February 2012, but we received approval only at the end of 2012. Accordingly, we could not begin construction in the winter. We created a temporary service zone in the summer due to the lack of an approved financial plan for 2013.

We can now start construction work on the approved project, but it is only an interim solution. If you remember, a meeting was held with Prime Minister of Ukraine Mykola Azarov in the unfinished wing of the terminal D back in September 2011, and we said even then that there was insufficient area for domestic flights at the terminal and a fully-fledged parking lot nearby. We solved only part of the problem by building a covered parking area for buses between the terminals B and F. We also expected an Air Express with passage from the station to the terminal D to be launched ahead of the 2012 European football championship. However, even at that time, different systems for access and control were expected in the parking lot and at our terminal.

We reported this to Azarov. The prime minister ordered standardization of the automation system, facilitation of passage from the terminal to the parking lot and from there to the station, allocation of a place for parking of buses, and multi-functionality. Then, we began the process of redesign. Literally a few months after that, we prepared an interim project that did not require structural changes – for example, the first floor for buses – but provided for unification of the access control systems and the CCTV. Initially, we expected to secure approval of this document and then prepare its final version. However, approval of the interim document took us one year. We cannot lose one more year to redesign. Now we are counting on construction of the Air Express. We have held talks with the State Agency for Investments and National Projects and asked it to add an area for buses to the train station, which will allow them to recoup their investments and repay loans. It will also allow us to supplement services rather than duplicate them, thus saving one more year that we could have spent on securing approval of another project.

How painful to the airport was the discontinuation of long-haul flights after the departure AeroSvit?

AeroSvit was the only company that performed long-haul flights on a regular basis. Today, such carriers as Windrose, Kharkov Airlines, and UTair Ukraine are discussing the possibility of launching charter flights. Yes, this is much easier because tour operators pay for flights and carry a lot less risk. However, speaking from the position of an airport, it should be noted that only scheduled flights allow development of connecting traffic, and this is necessary in order to be a hub. It is very difficult to ensure connecting traffic based on short-haul flights because of the strong competition from low-cost airline companies on intra-European routes. Therefore, connecting traffic will be provided only by connecting to the long-haul flights of a classic carrier, and we are hoping that the carriers based out our airport will launch regular flights to help us to increase our passenger traffic.