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New routes, services and prices: How popular Ukrainian airlines are surviving the pandemic?

Author : Iryna Shostak

Source : 112 Ukraine

The year of the pandemic has become a real test for world aviation, throwing the development of its economy back several years. Driven to a dead end, airlines are switching to unprofitable self-maintenance, because the costs of maintaining the life of the fleet and staff salaries do not correspond to income. Some are opening new routes, some are reconfiguring the fleet, and some are announcing tempting promotions. 112ua.tv will tell you about how popular companies of the Ukrainian aviation market live today, and what role natural selection plays in this.
09:47, 12 May 2021

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Closed borders, almost completely stopped flights, reduced demand, the bankruptcy of companies - this is not a complete list of challenges that carriers faced during the pandemic.

Last year, the low-cost airline Wizz Air carried about 9 million passengers, although back in 2019, the figure was more than 40 million. Domestic low-cost airline SkyUp performed one third fewer flights (and this is with the twice as large a fleet as in 2019), and the volume transportation of "Ukraine International Airlines" (UIA) in comparison with last year decreased by four times.

The airlines have made efforts to adapt to the situation and maximize all available opportunities to maintain business.

"After the implementation of the global lockdown in the spring of 2020, we did not abandon any of the 11 aircraft in our fleet, but reconfigured almost the entire fleet for cargo transportation," representatives of the Ukrainian SkyUp say in a commentary to 112ua.tv.

A similar decision was then made by another domestic airline UIA - flights were operated on Boeing 767 and Boeing 737 aircraft (they can carry up to 20 thousand kg of weight and up to 29 thousand kg of weight, respectively).

With the gradual opening of borders, airlines began to return to passenger transportation. However, the ratio of their capabilities to real indicators left much to be desired.

"In April 2020, we worked only at 6%, in August this figure recovered to 80%, in November we worked at 21% compared to the level of 2019. Today we are working at about 25% of our capabilities, and the situation is not the same critical, as in 2020 ", representatives of the Hungarian low-cost airline Wizz Air note in a comment to 112ua.tv.

SkyUp also speaks of a slight improvement in the situation - all 11 aircraft are in operation today and the airline operates at the level of 50-60% of its operational capabilities, which is comparable to the scale of the beginning of 2020. However, in order for the segment to move further, the restrictions must be removed. According to representatives of the airline, they remain the key factor holding back the recovery of the passenger transportation industry.

However, while a large number of airlines were thinking about reducing their fleets to maintain profitability during the pandemic, the budget Wizz Air, on the contrary, expanded its fleet with 20 new aircraft. It now consists of 137 Airbus A320 and A321 aircraft.

"Today the airline has about 1.6 billion euros of free funds. Therefore, in the event of a serious crisis, other airlines will suffer much more. Even if we had to stop all flights overnight, we could finance ourselves for a long time", emphasize in the airline.

Carrier representatives say that although Wizz Air currently operates a limited number of flights, the current situation provides opportunities to meet the demand of travelers for safe travel. Now, during the flight, passengers must wear protective masks, and the crew must wear gloves. Airplane cabins are regularly disinfected, and travelers are encouraged to use the option of contactless payment for purchases on board during the flight.

How governments around the world are supporting the industry

In connection with the pandemic, a number of countries are financially supporting airlines. For example, the French government allocated 7 billion euros to the national Air France, and Air Canada received almost $ 5 billion from the Canadian government. Parliamentarians from neighboring Romania allocated 62 million euros to help the state Blue Air. And there are more such examples every month.

However, not all governments are in a hurry to give a helping hand to the aviation sector. Not so long ago, Czech Airlines, the national airline of the Czech Republic, declared itself bankrupt. At the same time, the Czech government decided to stay on the sidelines.

A similar fate may befall Ukrainian airlines, because their representatives also repeatedly and so far unsuccessfully turn to the government for support, appealing that the prosperity of big business is in the interests of the state itself. Since the beginning of April 2020, similar requests have been sent by the SkyUp airline.

"We pay taxes, create jobs, develop the air transportation market in Ukraine. In 2019 alone, our first full calendar year of operation, we paid taxes and fees. Therefore, like every taxpayer, we count on government assistance in difficult times" - they say in the company.

UIA also joined the appeals. In particular, back in March last year, the airline asked the state for a stabilization loan of $ 60 million to cover losses from the termination of flights. And now, almost a year later, in February, the Minister of Infrastructure Vladнslav Krykliy confirmed: the ministry is developing a bill that provides for the creation of a new budget program providing for the allocation of funds to carriers. We are talking about Windrose, Azur Air, Ukraine International Airlines and SkyUp, which in March-April 2020 performed a total of 170 flights in order to return Ukrainian citizens to their homeland.

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Whether it is a lot or a little, there is no need to say, because the likelihood of this support being allocated remains open to question. In the meantime, Ukrainian airlines continue to independently pay salaries to their employees, ensure proper fleet maintenance, pay taxes and refund passengers whose flights have been canceled due to restrictions.

So, only for the period from January 1 to March 31 of this year, Ukraine International Airlines processed about 30 thousand passenger requests and issued a refund in the amount of $ 6.7 million. In total, for 12 months of its activity during the pandemic from April 2020 to March 2021 inclusive, UIA returned more than $ 33 million to passengers

“We understand that the resources of the state are limited. Therefore, on our part, we have repeatedly voiced the ways that would help Ukrainian aviation go through this crisis more easily. You can find available tools - these are loans under state guarantees or under obligations, and the abolition of VAT on domestic flights and excise taxes on fuel, and the provision of tax holidays, and the like, "add the SkyUp.

It is noteworthy that not all airlines agree that the state must necessarily provide such support - they say, it is not the strongest who survives, but the one who responds best to the ongoing changes.

How airlines reward passengers

Each of the airlines is trying to shift the attention of passengers through new routes, bonuses, a convenient ticket refund system and other services.

So, SkyUp offers its passengers new travel formats: weekends and city breaks. The cost of the weekend includes flights, accommodation, meals and even entertainment.

And the cost of the city break includes airfare and hotel accommodation at a special package price.

"We have transformed the flight program: in the winter we flew to Tanzania, Turkey, Armenia, now we are starting to open destinations that are less known among tourists for various reasons, which at the same time have no less worthy attention, tourist potential, - Kazakhstan, Serbia, Albania", noted the  SkyUp.

In addition to opening new ones, the airline is expanding the possibilities of popular destinations - SkyUp has begun to operate flights to several cities of the same country from Kyiv and regions at once. So, a passenger can fly, for example, to a city in the north, travel across the country and return home from a city in the south.

"According to this model, we are already opening flights to the Czech Republic: from Kyiv it will be possible to fly to Prague, Pardubice, Brno or Ostrava, and sell air tickets to Germany: Berlin, Hanover, Nuremberg, Hamburg, Dusseldorf, Munich, Stuttgart, etc." states the airline.

Another low-cost carrier Wizz Air has also reorganized its network of routes in several countries. The airline has announced 380 new routes since the Covid-19 outbreak, and has opened 17 bases, including a base in Lviv.

UIA, in turn, is trying to diversify its services with interesting projects. In particular, now passengers can see the world "through the eyes of the pilot". So, for the 35th anniversary of the accident at the Chernobyl nuclear power plant, the airlines offered passengers a unique opportunity - "Flight over Kyiv and Chornobyl"..

Since one of the biggest challenges for aviation today is the lack of stability, special services that simplify the planning, booking, purchase and refund of tickets are a big bonus in giving an advantage to one or another airline.

For example, the volatile nature of coronavirus restrictions makes it difficult for travelers to track routes and plan their trips to meet the needs of a particular country. To assist passengers, Wizz Air has created a travel planning map that helps you check entry and exit requirements in countries in the airline's route network.

“We advise passengers to add the WIZZ Flex service to their booking, which allows them to cancel their flight up to three hours before departure without paying any fees and immediately receive a 100% refund of the starting fare to their WIZZ account in the form of a credit, as well as change dates and even routes an unlimited number of times, "the airline says.

In addition, Wizz Air has automated the refund process. Consequently, in case of flight cancellation, passengers receive compensation within a week or they can choose another flight.

UIA has also improved the procedure for reimbursement for travel that did not work out due to the pandemic. The airline offers several options to choose from: free ticket reissuance or issuance of a personalized promotional code for 125% of the paid amount, valid for 2 years from the date of issue (the option allows you to use the funds already spent on issuing a new ticket).

What will happen to ticket prices and the companies themselves?

Will the tickets become more expensive? SkyUp and Wizz Air assure that no. Indeed, according to various studies and surveys of passengers, the cost of tickets even before the pandemic was one of the key factors in choosing a destination and an air carrier. Therefore, in the near future, this trend will not disappear, and possibly, will become decisive.

“Airlines - both classic and low-cost airlines - will try to form the most affordable prices that they can afford, taking into account the transformations that the industry is experiencing in the next few years," say representatives of the Ukrainian low-cost airline.

The Hungarian colleagues believe that the purchase of 20 new aircraft and plans to purchase another 27 within a year will allow Wizz Air to operate in the same way, without raising, but even slightly lowering prices.

“We will not have to raise fares, on the contrary, we can afford to lower fares and be competitive in the market. In my opinion, in the long term, ticket prices will remain at their current levels,” says Joseph Varadi, CEO of the low-cost airline.

Expansion of geography, fleet, services. Due to the variable nature of the restrictions, it is not necessary for the airlines to talk about 100% implementation of their plans. So, at the end of last year, UIA announced plans to restore the route network from the end of March-2021 (on 43rd international routes). And already at the beginning of this year, the airlines had to correct something - the updated summer schedule consists of only 20 destinations.

SkyUp is also in the short-term planning mode. In the near future, the low-cost airline plans to start flights on sea routes: to Montenegro, Albania, Croatia, Cyprus, Greece and Turkish Izmir and Antalya. And also awaits the opening of European destinations - Italy, France, Spain, Czech Republic, Poland, Germany, the Netherlands and other countries.

If we talk about global plans, the representatives of the airline are optimistic - over the next five years they plan to increase the share of SkyUp in the Ukrainian air transportation market to 50%, get at least 5-7 more aircraft, open new bases and expand the list of services.

Wizz Air has no less ambitious plans, it even wants to exceed the volume of pre-quarantine flights.

If we talk in general about passenger traffic in the world, then even with large-scale government support, the recovery to the indicators of 2019 will last until 2024. The recovery of the Ukrainian segment will take much longer.

“Unfortunately, Ukraine is out of the global trend in this process. The Ukrainian aviation industry is left alone with its own problems. This means that the restoration will come to Ukraine with a delay and not everyone will have time to wait for it ”, says the president of the company Yevhen Dykhne.

The complete lack of support from the state puts the Ukrainian aviation under a significantly greater blow in terms of survival and further development. And this will not stop even after the restrictions are lifted, because the competition in the world market will be much tougher than before.

"How to compete on equal terms with those who have a much better margin of safety thanks to state support?" they ask a question in SkyUp.

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