SkyUp Under Attack
Doing business in Ukraine, a case study
Who We Are
We are Join UP!, a tour operator, and SkyUp, an airline. We make travel affordable for a majority of Ukrainians. When someone wants to fly to Barcelona for 50 euros or to Lviv for 500 Ukrainian hryvnias, we are the ones to turn to.
Join UP! has been in business since 2010. SkyUp began operations in 2018, thus becoming the first Ukrainian low-cost airline. The two companies are part of a family business owned by Oleksandr Alba and his father, Yurii Alba.
We are a fast-growing business. SkyUp launched with 10 charter routes; today we already have 47 routes, 31 of which are regular. A year ago, SkyUp employed 17 people and had a fleet of 2 aircraft. Today we employ 488 people and have a fleet of 8 aircraft that is the youngest fleet in Ukraine. We have just recently completed its modernization, making our flights more environment-friendly and affordable. In the past year, we have carried 1,031,665 passengers.
The past six months, our companies have been under attack. The main tools of pressure are of administrative nature: numerous inspections, lawsuits and inquiries sent in by Members of Parliament. Concurrently, there is also a smear campaign underway in the Ukrainian media. All of this became especially pronounced in the past two months. We see this as an attempt at a hostile takeover of our business, which we have already lived through back in 2013.
Despite unprecedented pressure, we are operating as normal and doing everything to make sure our passengers can reach one of the 47 destinations we offer, in comfort and without breaking the bank.
What This Website Is About
In the sea of misinformation, we want you to know the facts of the case. How we got here and what’s at stake. We will present to you the main persons involved, the pertinent documents, and the timeline of events. Today is the day we are taking our last stand in order to defend ourselves and defend the right of Ukrainians to affordable traveling. We are guided by the principles of openness, rule of law, and fair competition.
If you are an entrepreneur and your company is being attacked, do not stay silent. Get your story out there. This is the only way to defend your business and to improve the investment climate in Ukraine.
Here is what we have found ourselves up against and what we are trying to fight off, sometimes successfully and sometimes not. At the end of each section, we will describe the tactics used against our business, since anyone could be the next target of such an attack.
The Baryshivka Court attempted
to annul our license
It all started with a fake lawsuit ostensibly brought by Oksana Pasenko. The lawsuit states that she had bought tickets for a flight to Sharm El-Sheikh. The flight was supposed to leave from the Kyiv International Airport (Zhuliany) on May 17, but it was postponed until May 20. After that, Oksana Pasenko supposedly decided to sue; she gathered negative reviews of SkyUp she found online and attached it to her complaint. In reality, though, there was no three-day delay, and even the most basic facts were wrong, the flight was originating from the Kyiv Boryspil Airport. The details of these events were reconstructed by journalists of the “Schemes” investigative show.
confirmed to journalists that she had never been SkyUp’s client and had not filed any complaints. However, it was on the basis of her complaint that on May 24, 2019, a judge of the Baryshivka court, Olena Lytvynenko, issued a court order that supposedly suspended SkyUp’s license. Never mind
the dubious grounds to order the closure of an airline, like that a district court cannot suspend airlines’ operating licenses—this is only within the authority of the State Aviation Service or an administrative court. Of note, on June 13, 2019, the Baryshivka court also
attempted to interfere
with the work of the National Bank of Ukraine.
On June 10, 2019, Oksana Pasenko filed another complaint, this time with the State Bureau of Investigations, the prosecutor’s office, and the police. In it, she demanded that SkyUp be prosecuted for failing to comply with the order of the Baryshivka court. Besides, Oksana Pasenko wrote to a Member of Parliament named Oleksandr Dubinin who, according to “Schemes”, had long worked as an executive at the so-called Privat Group. The “plaintiff” was expressing her displeasure with the fact that the Baryshivka court had issued a court order, but SkyUp was still keeping up operations. The same day she allegedly “wrote” to the Member of Parliament (Dubinin), Oksana Pasenko filed a complaint with the police stating she had not brought any lawsuits against SkyUp. Despite this fact, Dubinin wrote to the Ministry of Infrastructure to decry “non-compliance with a court decision that has entered into force.”
On June 12, 2019, we have come out with a public statement saying that the court decision was absurd. We have filed an appeal with the Kyiv Appellate Court and a complaint with the High Council of Justice. Prime Minister Groysman called the decision of Baryshivka court “beyond the pale”, while the Minister of Infrastructure Volodymyr Omelian characterized it as “a political “decision” inspired by raiders.”
On June 25, at a hearing at the Kyiv Appellate Court, the “plaintiff’s” lawyer Yevhenii Rivnyi moved for recusal of the judge in order to delay the hearing. He refused to comment on the case for the media.
On July 3, 2019, it emerged that the State Bureau of Investigations opened a case against the judge of the Baryshivka court Olena Lytvynenko. She is possibly facing 3 to 5 years in prison. As soon as the fact became public, Olena Lytvynenko submitted her resignation request to the High Council of Justice. This was disclosed by the High Council on July 8. According to the procedure, letters of resignation are heard and ruled during the Council’s meetings. The next meeting was scheduled for July 18. When the date came, it turned out that Olena Lytvynenko had revoked her request couple of days prior to the meeting. Her revoking the request coincided with the Kyiv Appellate Court’s decision to stay the hearing in the case of rescinding the order she had handed down.
On July 19, 2019, the High Council of Justice opened a disciplinary case against judge Olena Lytvynenko. Her actions had become the subject of complaints by Dmytro Tolkachov, SkyUp’s counsel, and Member of Parliament Anton Herashchenko. Among other things, the complaints allege the judge’s undue interference in the company’s business operations. The Council’s preliminary conclusion as part of the disciplinary hearing was that the judge’s actions were possibly in violation of Art. 106 of the Law of Ukraine “On the Judicial System and the Status of Judges.”
At the same time, there were active efforts to stall the proceedings in the case appealing the original order of the Baryshivka court. On July 17, two more complaints were filed on behalf of Pasenko, the “plaintiff.” This time, they were filed with the Supreme Court and demanded the same thing—enforcement of the notorious order of the Baryshivka court that suspended SkyUp’s operator’s license. Aviation lawyer Andriy Guck noted that the filing of these complaints is aimed at keeping the order in force for as long as possible. On July 31, we once again heard from Yevhenii Rivnyi, the original lawyer of the “plaintiff” Pasenko. He once again moved for recusal of the judge. But this time, he was acting on behalf of a civic organization called “Committee on Defending the Rights of Crime Victims.”
Why fake court decisions are dangerous for business There can be no healthy business climate if any court can annul your license on a whim. But the worst thing is that such legal proceedings can drag out indefinitely, without any result one way or the other..
We were fined by the
In June 2018, the Anti-Monopoly Committee of Ukraine initiated an inquest into the operations of the Join UP! company. The reason for the inquest was that we have called ourselves “the market leader.” The Kyiv branch of AMCU deemed this to be an exaggeration. However, according to the Ministry of Economic Development and Trade of Ukraine, in 2018, we were ranked first for the number of tourists we have provided with trips abroad. For this “exaggeration”, in January 2019, AMCU fined us 68,000 hryvnias.
On June 21, 2019, AMCU fined the company again, this time in the amount of 1,5 mln. UAH. This time, we were accused, among other things, of “spreading misleading claims about providing flights operated by leading and reliable airlines.” Evidential base? One screenshot, e-mail, mythical phone calls. The decision contained no specifics regarding when and how the company has been spreading these “false” claims and what warranted calling them “false”. We filed a complaint with the European Business Association (EBA) and asked it to interfere. EBA wrote to AMCU, but the Committee ignored this letter.
On June 10, 2019, we have submitted a complaint to the Business Ombudsman Council (BOC). According to the rules of procedure, the ombudsman investigates complaints concerning alleged acts of corruption and/or other violations of legitimate interests of businesses by actions or omissions (including decisions) on the part of state and municipal authorities. On June 20, 2019, BOC wrote a letter to the head of the AMCU Kyiv regional branch Oleksii Khmelnytskyi asking for an impartial handling of the case. After that, BOC sent its inspector to an AMCU meeting. The inspector attempted to present BOC’s position, but the Head of the Committee, Yurii Terentyev, interrupted him and prevented him from speaking further. After the meeting, he published an online post where he boasted about fining a company for “spreading false information.” Oleksii Khmelnytskyi called the AMCU decision “a payback.” This is a rather strange way to put it. Andriy Guck, an aviation lawyer, has called this decision “very strange.” At the moment, AMCU initiated a third proceeding against the company.
How AMCU proceedings can be a threat to businesses Similarly to legal action, AMCU inquests can drag on for long periods of time. They hamper companies’ operations. In turn, if the logic of decisions is not transparent and positions of business institutions like EBA or the Business Ombudsman Council are ignored, businesses can be defenseless.
Regulatory bodies started a flurry of inspections at our companies
In November 2018, the State Service of Consumer Rights Protection decided to inspect us. There was seemingly nothing wrong with that. But three months later, on February 4, 2019, our companies found themselves subjects of inspections by, simultaneously, the State Emergency Service, the Department for Tourism and Resorts of the Ministry of Economic Development and Trade of Ukraine, and the State Service for Labor.
Seeing such a suspicious simultaneous attention, we have written to the State Regulatory Service of Ukraine. The response was: everything is happening according to plan and according to the law—inspections have to be done simultaneously. A bit later, in May, we have become subjects of a new inspection—by the State Tax Service.
Why a flurry of inspections is a threat to businesses The more inspections there are, the more time needs to be spent on communication with the regulatory bodies, searching for and preparing the necessary documents, replying to inquests. It hampers business operations and can even bring them to a halt. And that is even without mentioning the numerous corruption risks.
A Member of Parliament, Anna Romanova, launched a campaign against “con artists” and “scammers”.
This is what she calls Join UP! and SkyUp
Anna Romanova is a Member of Parliament (8th convocation) from the “Samopomich” party, Head of the Subcommittee for Tourism, Resorts, and Recreation Industry Development. Her first degree is in education and she has never worked in tourism.
Starting from the summer of 2018, this Member of Parliament started sending numerous letters concerning Join UP! to the Ministry of Economic Development and Trade of Ukraine, the State Service of Consumer Rights Protection, and the State Fiscal Service (as the State Tax Service was called at that time).
Specifically, in her letter to the Ministry of Economic Development and Trade of Ukraine she writes about “chaos,” “irresponsible conduct,” “unscrupulousness,” “scam-like actions of the tour operator” (meaning Join UP!). She also asks the Ministry whether it is doing anything to annul the company’s license. The Ministry responds that there are no grounds for annulment.
In a different letter she writes about “thousands of tourists who have been affected.” The same year, during the UITM (Ukraine International Travel Market) exhibition, Anna Romanova forced the organizers to remove Join UP!’s display from the stage, although the company was a sponsor of the exhibition. She cited “large-scale violations of tourists’ rights” as the reason for her behavior.
It is unclear how Ms. Romanova arrived at these numbers. Since 2018, courts satisfied 0 motions out of the few brought against Join UP! and SkyUp by tourists. This number does not stop Anna Romanova from calling Join UP! “con artists.”
This is not the only instance of Ms. Romanova demonstrating a certain bias. In the “Right to Power” talk show that ran on the 1+1 TV channel on July 6, 2018, Anna Romanova accused Join UP! of being responsible for the delay of a flight from Antalya. That flight was indeed delayed, but it was a flight operated by Ukraine International Airlines, not by Join UP! That much was confirmed right then and there, during the show, by Serhii Korshuk, acting First Deputy Head of the State Aviation Service of Ukraine.
From November 2018 to June 2019, Ms. Romanova
wrote 14 Facebook posts about Join UP! and SkyUp, all of them criticizing these companies. There were no positive mentions. Let’s imagine, a lot of people really do complain to Ms. Romanova about Join UP! and SkyUp. But how come there are no complains about other tour operators? By way of comparison, only 7 of her posts were dedicated to them; delays caused by other companies are simply ignored. Actually, Romanova’s own followers point this kind of selectivity to her in their comments on her posts.
Technically, Ms. Romanova is acting within the law. We are also responding within the bounds of law, e. g. we have passed inspections by the chief directorate of the State Service of Consumer Rights Protection and prepared responses to the inquest by the Department for Tourism and Resorts. Anna Romanova’s letter to the State Tax Service alleging “possible tax evasion” had led to an inspection that found no violations Romanova was talking about.
How inquiries by Members of Parliament can become a threat to businesses Inquiries by Members of Parliament cannot be ignored. Based on them, regulatory bodies begin inspections and request information from companies. Through numerous inquiries and media activity, unscrupulous Members of Parliament can create a platform for subsequent attacks on businesses.
“Repeated delays,” “bad service,” “junkyard-worthy aircraft” — is any of this true? Not at all, these are reputation attacks
SkyUp’s flights are sometimes delayed. This happens to all airlines. When comparing our punctuality to that of other low-cost airlines, our performance is average. We are doing everything we can to become better. But our main goal is to make flights as affordable as possible.
Mostly, attacks on our companies in the media cite delays and “bad service.” At first, these claims were used by Member of Parliament Anna Romanova. Later, our competitors created a fake “online community of SkyUp passengers”—a website created, for some reason, in Russian, with its domain name under the “.ru” top-level domain,—that publishes reviews from non-existent customers. But this was not yet the end of it. “Espreso” TV channel accused Join UP! of “running a scam.” In March 2019, we have sued this TV channel, demanding that the disparaging claims be retracted. Right now, the case is being heard in a lower-level court.
On June 12, 2019, when the story about the Baryshivka court decision broke, Oleksandr Dubinskyi, a journalist of the 1+1 TV channel who is also running for parliament, recorded a video blog on SkyUp. In it, besides lies, manipulations, and profanity-ridden language directed at Join UP! and SkyUp, there was not a single word of truth. And this is not an exaggeration, but a result of a meticulous analysis of Dubinskyi’s claims. He maintains that our passengers of our companies can regularly spend “20 hours at the airport.” According to the rule, if a delay exceeds the 6-hour mark, we take tourists to a hotel. Dubinskyi thinks that we mostly operate flights to Turkey and Egypt. SkyUp’s most popular destinations are in fact Tbilisi (Georgia), Barcelona (Spain), Larnaca (Cyprus), Poprad (Slovakia), Sophia (Bulgaria). According to Dubinskyi, SkyUp’s fleet is “junkyard-worthy.” According to the State Register of Civil Aircraft, SkyUp’s fleet it the youngest in Ukraine.
Dubinskyi’s attack happened right around the time there was a danger that the Baryshiv court would annul SkyUp’s license (on the basis of a fake complaint from a fake plaintiff). On June 19, 2019, Anna Romanova joined the choir of reputation attacks. She claimed SkyUp had “trouble being disciplined” and accused the Prime Minister and the whole government of “backing financial machinations masquerading as low-cost airlines.”
On July 9, Oleksandr Dubinskyi posted his second video blog in which he openly threatens SkyUp: “lawsuits related to the annulment of the license will keep coming.” On July 24, blogger and now Member-elect of Verkhovna Rada (Parliament) of Ukraine Oleksandr Dubinskyi dedicated another one of his videos to SkyUp, this time titling it “Flying Mother****ers.” Ignoring all facts, he continues calling Oksana Pasenko, who has never been SkyUp’s client, someone who “was affected by the company’s failure to fulfill its obligations to its passengers.” This is one of very few sentences in his video that is not laced with obscenities. It makes little sense to quote the rest of this verbal dirt that bears no relationship to reality.
In response to reputation attacks, SkyUp’s shareholder Oleksandr Alba made a public statement in which he spoke of the pressure that had been put on the company and launched a campaign “Defend Your #RightToFly.” We decided to be as open as possible in telling the whole story of how our companies came under attack.
What kind of a threat reputation attacks pose to businesses Imagine that someone is repeatedly calling you a dishonest person and a thief. At some point, your acquaintances and friends will begin wondering whether this could be true. Some of them might stop talking to you. The same thing can happen to companies. The technical terms describing this practice are “creating a toxic atmosphere around the company,” “disinformation,” “character assassination.”
The pressure on our group of companies has been growing for the past six months.
Especially in June-August 2019
Our story is the first test
for the new administration
We believe that business is the lifeblood of the country. We share the view that the best thing the government can do for business is not hampering its operations and instead helping it. We are convinced that law enforcement agencies should not attempt to influence businesses.
That is why the case of Join UP! and SkyUp is not just a story about an attack on two companies. It’s a story about what doing business in Ukraine looks like and the role played by government. Government agencies can become tools in destroying companies. But they can also become protectors of rights afforded to companies and citizens. And "such silence [as in the SkyUp case] damages the country and is also encouraging more misbehavior", as Diane Francis, the senior fellow at the Atlantic Council's Eurasia Center, puts it.