EAU Newsletter “EU integration transport problems”

During the last two years after the Orange Revolution Ukraine has been persevering to integrate into the European community. The European orientation of Ukraine has ceased to be only political declaration and was amplified by actual attempts to integrate into the European and global economic, energy and transport networks. Ukraine is trying to become a reliable partner of Europe and a participant of the world market on full scale. 

Obviously, extending economic and business contacts between Europe and Ukraine should occur in healthy competitive conditions on a mutually advantageous basis. However the real processes face numerous problems which not only complicate European integration course of Ukraine, but also turn into loud international scandals.

Since 2000, the Ukrainian companies keep facing prejudiced conditions of a successful development of economic cooperation with Europe. The highly developed western companies frequently use the State machinery for "active" (aggressive) protectionism, defending their own markets. It results in restriction of the Ukrainian business opportunities in the markets of the European countries and thus forces out the Ukrainian business proper from the Ukrainian market.

A number of problems connected with the European integration of Ukraine has arisen in the sphere of transport communication which is crucial for developing and extending contacts between Ukraine and EU.

Thus on March, 29, 2006 London airport Gatwick refused to give to Ukrainian airline «International airlines of Ukraine» (IAU) slots to make additional flights to London, preceded in this refusal by the main London airport – Heathrow. In both cases lack of capacity and technical capabilities for granting additional time were brought forward as the reasons for the decision.

Such a conduct on the part of Great Britain violated the Ukrainian - British agreement “About the Reciprocal Air Communication” and the international covenant «About the open sky», that was an offence against competitive conditions and was recognized by State air service.

2004 saw the beginning of the notorious conflict between Ukraine and German leading air carrier “Lufthansa”, which insisted on unilateral increase of the frequency of its flights to Ukraine.

German authorities issued an ultimatum with the demand of increasing the flight frequency for “Lufthansa” carriers on the route Kyiv – Munich – Kyiv from 7 to 14 per week, regardless of the fact that it already carried out 30% more of all the transportation on the route than all the Ukrainian airlines taken together. Moreover, Munich airport did not give the consent for the analogous increase of flight frequency of Ukrainian airlines envisaged in the covenant “About the open sky”.

When the Ukrainian party refused to start one-way concessions, on October 31st, 2004 all flights of Ukrainian airlines “Ukrainian Mediterranean Airlines” and “Donbassaero” to Germany were banned, followed on November 14th by the same prohibition concerning “International Airlines of Ukraine” and “Dniproavia”. There shares were cut down from 16 to 7 flights per week.

Experts estimate the financial damage of Ukrainian carriers to exceed 1 million euro. As compared with the analogous period of 2003, in the year of 2004 the traffic flow of “International Airlines of Ukraine” alone headed for Germany plummeted 60%. Furthermore, The Germen party posed the threat of denouncing all bilateral agreements in the field of air transport. In retaliation the Ukrainian party deprived “Lufthansa” of its rights to leave its airplanes in “Boryspil”, which hampered completing the Munich route.

The actions of the German party were viewed by the State Air Service of Ukraine as directed at asserting the corporate interests of “Lufthansa” not following the principles of the Intergovernmental treaty about air communication between Ukraine and Germany (1993). The German party even intimidated denouncing all bilateral agreements with Ukraine about airline transportation.

The aftermaths came soon. Already in autumn 2004 the corporate conflict between “Lufthansa” and “Dniproavia” arose. “Lufthansa” ventured flights into regional centers; one of the first routes was Frankfurt – Dnipropetrovs’k – Frankfurt, where Ukrainian state airline company “Dniproavia” had already been working.

“Lufthansa” commence making flights Frankfurt – Dnipropetrovs’k – Frankfurt an hour earlier than the analogous flights performed by “Dniproavia”. Moreover the German carrier rejected the propositions as to both - the regulation of tariff policy according to the international treaties and coming to agreement as to the air passages.

The efforts of “Dniproavia” to solve the conflict by way of negotiation lead to the recurrent ultimatums and consequent banning the flights of the Ukrainian airlines to Frankfurt and Berlin. In case of taking analogous further actions “Lufthansa” threatened to deprive the Dnipropetrovsk airport of its international status.

On examining the conflict, the State Airline Service along with the Ministry of Foreign Affairs of Ukraine initiated a line of negotiations with the German party aiming at unlocking the flights of the Ukrainian airlines to Germany. However the German party represented by “Lufthansa” managers refused point-blank to enter into the constructive dialogue. The air communication of a major Ukranian region of Dnipropetrovsk with German cities came to a halt.

Actually the European air tycoon “Lufthansa” set it as an aim to completely force out the Ukrainian regional airlines from profitable, promising and long-range international flights.

This rough behaviour called forth a wave of protests on the part of non-governmental organizations against the unfriendly policy of Germany.

The active citizens held demonstration at the central office of “Lufthansa” in Kyiv and in Ukrainian airports.

The negative publicity triggered by the non-amicable policy of Germany undermined the rating of “Lufthansa” in Ukraine, as well as hampered the European tendencies in Ukraine.

On November 22, 2006 people’s deputies referred to the European Parliament with the demand to conduct comprehensive investigation of the German policy with regard to Ukraine and called the German party to halt the discrimination of the Ukrainian carriers. The appeal under consideration of the European parliament reads about the violation on the German part, represented by “Lufthansa” of the regulations stated in the Intergovernmental treaty about air communication and those determined by ІКАО, ІАТА.

On 30 January, 2007 the Ukrainian public organizations referred to the Parliamentary Assembly of the European Council with the analogous demand.

Ukraine on her part tried to regulate the international conflict between Germany and the Ukrainian carriers. On behalf of the Government of Ukraine the consultations between the airlines authorities of Ukraine and Germany were initiated on February 8, 2007 with the target of solving the problems existing.

Negotiations occurred with the participation of the Ministry for Foreign Affairs of Ukraine, Embassy of Germany in Kiev and airlines "Lufthansa", “The International airlines of Ukraine”, "Dniproavia" and "Aerosvit".

Unfortunately, the German side have shown an unconstructive approach during the negotiations, and it was not possible to coordinate the status of the German and Ukrainian sides. Germany continues the practice of artificial restrictions for Ukrainian airline "IAU" and blocking of flights of airline "Dniproavia" that is an infringement of arrangements in the field of the aviation message, allowed unilaterally by the German side.

The community of Ukraine is extremely concerned with the tendency of deterioration of relations between Ukraine and Germany in transport sphere that results in breaking lines of the European integration of Ukraine.

In the circumstances assistance of the European structures in the sanction of disputed situations and in support of equal competitive conditions that will provide expansion and a deepening not only transport, but also economic relations of the European Union and Ukraine is extremely necessary.