Ecovis Global > Government Support for the Aviation Industry in Ukraine Due to COVID-19
Government Support for the Aviation Industry in Ukraine Due to COVID-19
12. October 2020
COVID-19 has significantly affected the Ukrainian aviation market and all the industries directly supported by aviation globally. Without financial support from the government, Ukrainian aviation will find it hard to survive. Ecovis’ experts can advise aviation-dependent companies on various matters related to overcoming the consequences of COVID-19 restrictions.
During the quarantine almost all flights, including domestic flights, were cancelled or postponed as a result of state restrictions and border closures. The only exceptions were humanitarian cargo flights and special passenger flights. At the same time, all the risks relating to refunding fares for cancelled flights are borne by the carriers. These liabilities, together with the suspension of air traffic, have led to enormous reductions in revenue. As a result, there have been staff and salary cuts and budget cuts for support services in Ukrainian aviation companies.
Almost all Ukrainian carriers’ aircraft remain idle. Most of the airlines are not able to meet their financial obligations to partners such as airports, ground handling companies and other aviation operators. At the moment, this trend is continuing because Ukrainian citizens, as well as the citizens of many other countries, are still generally prohibited from crossing the borders of the European Union.
Furthermore, on 29 August 2020, amendments to the Government’s Order “On the Establishment of Quarantine and Implementation of Enhanced Anti-Epidemic Measures in Areas with Significant Spread of Acute Respiratory Disease COVID-19 Caused by SARS-CoV-2 Virus” came into force. As a result, foreigners, except for certain categories such as students, diplomats and those officially employed in Ukraine, were forbidden to enter the country until 28 September 2020. It should also be noted that this regulation could be extended in the future.
We can advise companies in the aviation industry affected by COVID-19 restrictions. Mariia Stepanenko, Associate, ECOVIS Bondar & Bondar, Kyiv, Ukraine
The International Air Transport Association (IATA) has analysed the current state of the industry. The analysis showed that by the end of 2020, the potential loss of income by air carriers in Europe will have reached USD 89 billion, while passenger demand is expected to decrease to 55% of the 2019 level. According to the IATA forecast, the Ukrainian aviation market will not return to its previous levels before 2024.
The Ukrainian state authorities have taken some steps to support the aviation industry, but these measures are obviously not enough to overcome the crisis. The Ukrainian State Aviation Administration has released a number of manuals and recommendations, such as the “Manual for Air Carriers Concerning the Prevention of the Spread of Coronavirus Disease (COVID-19)”. The Manual describes general precautionary measures for crew, as well as for the medical screening of passengers.
It can now be assumed that the ongoing crisis is one of the worst ever encountered in the history of the aviation industry. The longer the crisis lasts, the more likely that the future of the Ukrainian aviation cannot be guaranteed without extensive support from the government in the form of financial assistance, loans or privileges. State aid to the industry can help to successfully overcome the existing crisis, explain the Ecovis experts. These experts know the environment and can advise clients who work in the aviation industry or are planning to do so. The areas of advice include corporate, financing and tax matters, competition and antitrust investigations, multi-layer dispute resolution cases and PPP projects.