State policy in the aviation industry and creation of favorable conditions for the investors

The two drivers of development of the Ukrainian aviation industry are the economic climate in the country and a vector of thoughts of the authorities.

I think that to form a proper government policy in the aviation industry, it is necessary to deregulate it as much as possible and allow the market exert the greatest influence on the formation of tariffs. Of course, this should be done factored into the investment component and the need to develop the infrastructure.

Let me explain. We are talking about two basic things that constitute the aviation industry – the airline companies and airports.

Airline companies are the fleet. And when airline companies say they're investing in the economy, I want to make it clear that in fact they are investing in the economy of Boeing or Airbus.

At the same time, when airports say that they are investing in Ukraine's economy, they are actually investing in Ukraine's economy. Because what was invested in the airports will remain in Ukraine and will not fly anywhere. And will continue to serve the Ukrainian nation and improve the infrastructure.

Investments in the airline companies are very mobile. Today you have invested in new aircraft and tomorrow the investment climate in the country has changed or there is an external aggression, and the aircraft flew away. Foreign airline companies do not invest in Ukrainian staff. While airports invests in both Ukrainian staff and Ukrainian infrastructure.

Therefore, I believe that investments in the airport infrastructure should be one of the top priorities of the state policy in aviation industry.

At the same time, investments in the airports can be done in different ways: from public, municipal and, of course, private funds.

The size of private funds can significantly exceed the size of the public funds. But to achieve this, the state should create favorable conditions.

What does it mean to create favorable conditions for the investors?

Undoubtedly, we are talking here about transparent conditions for engaging investment and providing long-term guarantees.

Aviation fees, in fact, are the mechanism that guarantees the investor that he will get his money back. The fees must be clear and fair and cover not only current expenditures – on staff, electricity, petroleum – but also investors' contributions, if any. Airport infrastructure is very expensive; it requires large investments, so the refund period for these investments must be stretched in time. Usually, it makes up 20-30 years.

For example, let’s consider the concession agreements that are concluded as a result of concession competitions. The Law “On Concessions” was adopted in 2019, but no airport has been transferred to concession yet. We have the law, it has drawbacks, and it is natural. But, as far as I know, no active work is being done to improve the law. That's the problem…

Therefore, I believe that today everything is happening in a perpendicular direction in Ukraine: we are not moving backwards, but we are not moving forward. As soon as Ukraine creates transparent rules of the game for the investors, forms a competitive environment, and enshrines at the statutory level the guarantees of return of the invested funds, we will have the grounds to say that conditions to attract investment have been created. And then, I am sure, a lot of money will be invested in Ukraine. A private investor will be ready to invest, because he will understand that his money will be returned and will bring him a profit. Then we’ll have the possibility to engage investments in the airport infrastructure.

LIGA.net