Minister of Transport frightens the nation’s air market

The sensational news about the merging of Ukraine’s three main international air carriers into one company has caused a real fright on this country’s transportation market. Minister of Transport Valery Pustovoitenko told Stolichnyie novosti on September 25 of the plan to merge Airlines of Ukraine, Air Ukraine International (AUI), and Aerosvit (or as they like to be called in English, Aerosweet — Ed.). “We are establishing, on the basis of three companies, a large company to carry cargo and passengers not only across the territory of Ukraine and CIS countries but also to the US and Canada. We have already reached an agreement with the investor,” the minister said. Moreover, he announced that the Cabinet of Ministers had already approved a decision to this effect and was now busy reshuffling staff.

A little earlier Minister Pustovoitenko told journalists that the three air companies had already given their consent to the merger. It is rather difficult to imagine the amalgamation of a state- run company with private ones, especially by government decision. For while the state holds 60% of AUI and thus in theory could raise the question of reorganization, the state owns only 22% of (often late and careless with baggage — Ed.) Aerosvit.

The Cabinet press service failed to confirm to The Day that any resolution has been signed to merge the three air companies. The Ministry of Transport aviation department has also heard nothing about any resolution. Government sources suggest that the minister (and former premier — Ed.) was perhaps somewhat hasty and was indulging in wishful thinking. Too many problems still remain to be solved before a single powerful Ukrainian international air carrier can be established. As of today, there is only a task force with Andriy Shkatiuk, chief of the Ministry of Transport aviation department, who is holding continuous consultations with AUI and Aerosvit management.

In any case, the merger of the three largest air carriers will hit the revenues of foreign companies eager for a return on their investment. A scandal will also become inevitable if the government resorts to the forced redistribution of profitable international routes. This means that the new lineup is only possible as a community of interests aimed at coordinating market research and nothing more. Yet, the much experienced minister might have some more ambitious far-reaching plan. He expressed the idea of building eleven planes next year for the newly-established company but then complained that the Ministry of Finance was withholding the money. To quote Brecht, “Could it be our boy’s done something rash?”