Guidance on Request
"Low-cost companies want lawyers to be both universal soldiers and narrow specialists within the confines of the allocated budget" VIKTOR MOROZ, MANAGING PARTNER OF SUPREMA LEX LAW FIRM, CLARIFIES
— Is the development of aviation a priority for the state? What are the features of legislation in this sphere?
— Because of Ukraine’s advantageous geographical position, the development of aviation transport is considered a priority for our state. The legislation governing the activity of aviation industry has its own peculiar feature: only general provisions are defined in laws, and all nuances are regulated by the by-laws of the Ministry of Infrastructure of Ukraine and the State Aviation Administration of Ukraine, which often contradict each other. Lawyers working in the aviation field have to solve various issues: from antimonopoly and corporate law to intellectual property law, international trade and banking law. Today, due to introduction of the visa-free regime with the European Union, providing the possibility of cheap flight from Ukraine to Europe is very promising. This task is solved all over the world thanks to low-cost aviation (from the English low cost — "cheap"). However, as the example of Ryanair shows, Ukraine is not ready for the entry of low-cost airlines. There are shortcomings in the legal framework in the aspect of possible granting of an aviation fee and payment benefits, taking into account compliance with the requirements of antimonopoly legislation.
— What affects the set of airfares in our country? Is it worth expecting they will be reduced due to the arrival of foreign companies?
— A significant number of factors influence the formation of airfares. They include, in particular, the cost of the airport service, price of fuel, tax burden on airlines, taking into account flight charges and payments, number of passengers carried by the airline, flight range, and depreciation of aircraft. There is an urgent need to improve the quality of services provided to passengers by both airlines and airports, and to simultaneously reduce the cost of flights. Such goals can be implemented precisely by attracting low-cost companies and providing passengers with the possibility to choose between a cheap flight (air minibus) or high-class service (air limousine).
However, the entry of foreign airline on the Ukrainian aviation market is accompanied by a number of problems related to certification of its aircraft, coordination of flight routes, conditions of cooperation with hub airports and ground services. These issues require considerable time and effort for coordination at all levels.
— What changes should we expect overall for the Ukrainian air transport market to become more accessible for foreign operators?
— I believe that the work of foreign airlines on the Ukrainian air market will promote the development of competition between air carriers, and the consumer of services, and the passenger will benefit first of all. At the same time, it is important that the state properly control both compliance with competition law and flight safety.
— Among the myths used against low-cost operators there is the appeal to security concerns. How has the work of low-cost companies been organized in order to reduce risks in this area? How much are Ukrainian security requirements adequate to modern-day challenges?
— Aviation companies operating in Ukraine need to consider the issues of cost and quality of services and flight safety. Since most aviation companies use fairly old aircraft, and flight safety problems really do exist. And they are inherent not only in low-cost aviation, but also in airlines which position themselves as companies having average flight prices. It should be said that the requirements of Ukrainian legislation for flight safety in general conform to European and world standards. However, they are not met by all air carriers. I am sure there is a need to tighten flight safety controls.
— For budget airlines, savings are paramount. Are they inclined to save on legal services? What requirements do budget airlines impose on lawyers?
— Indeed, low-cost companies save on many things in order to provide cheap flights. However, the management of budget airlines understands that in a highly competitive environment the key to success is reliable legal protection, which causes the existence of quite sensible budgets for legal support. At the same time, low-cost companies want lawyers to simultaneously be universal soldiers, able to solve any problems, and narrow specialists, being good with the subtlest nuances of each specific issue, and all of this within the allocated budget. It is not so easy to meet such requirements.
— Which disputes arise in the course of activities of low-cost segment companies? Do judges demonstrate understanding of the specifics of this industry?
— Many different disputes arise in the course of activities of low-cost carriers: with passengers, other airlines, states, airports, banks, etc. This is due to the fact that budget airlines do not always have the possibility to settle their obligations in a timely manner, which entails their improper execution and leads to certain disputes. In my opinion, consumer complaints are, in most cases, justified. However, low-cost companies cherish their reputation and try to settle such disputes out of court. But if disputes regarding aviation law reach the courts, it should be acknowledged that judges are not always competent in the specifics of this industry, although the quality of their training is still increasing.
— How effective is antimonopoly policy in aviation industry? Are there any positive examples of price policy control?
— In the aviation industry in general and in budget carriage in particular, the issues of competition law and antimonopoly regulation are more than relevant. Provision of certain privileges and preferences to budget airlines borders, as a rule, violation of competition legislation. Nevertheless, the state, as represented by the Antimonopoly Committee of Ukraine, tries to regulate competition in the aviation industry and to monitor pricing policy. However, the key domestic carrier retains its monopoly position and sets prices at its own discretion.
— How do you assess the prospects of amending legislation in the field of aviation? Are practicing lawyers interested in the process of reforming this sphere?
— As long as there is no clear strategy for development of then aviation industry, accordingly, there are no regulations aimed at implementing it. But it must be recognized that the Ministry of Infrastructure has recently been talking actively about reform of regulatory controls over the aviation industry, it began to address the shortcomings of existing regulations defining the rules of air transportation, flight safety, airport operations, etc., as well as the development of new regulations in this area. The involvement of lawyers specializing in aviation law in the process of preparing draft regulations can be considered a positive trend, as this will certainly contribute to the filling of legislation with quality standards, taking into account the interests of aviation business.