"It would be untrue to say that an airport in Ukraine is possible as soon as tomorrow," - Oleksandr Shafiev, a top manager at SkyUp Airlines. · c. 480 - SkyUp Airlines
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"It would be untrue to say that an airport in Ukraine is possible as soon as tomorrow," - Oleksandr Shafiev, a top manager at SkyUp Airlines.

"It would be untrue to say that an airport in Ukraine is possible as soon as tomorrow," - Oleksandr Shafiev, a top manager at SkyUp Airlines.

01 трав. 2024
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SkyUp's resilience, commitment to its homeland during challenging times. Oleksandr Shafiyev,  Director of Safety and Quality SkyUp Airlines, discussed the company's efforts to maintain operations, support its workforce, and engage in social initiatives amidst the ongoing conflict. In the article, featured on UNIAN's website, read about SkyUp Airlines' response to the crisis in Ukraine. With the permission of UNIAN, we publish the article.

"It would be untrue to say that an airport in Ukraine is possible as soon as tomorrow," - Oleksandr Shafiev, a top manager at SkyUp Airlines.


In the government, it has been stated that there are "different scenarios" regarding the reopening of Ukrainian airports during the war. Oleksandr Shafiev, the Director of Security and Quality at SkyUp Airlines, assessed the prospects for resuming air travel and told UNIAN about the current situation for Ukrainian airlines.

Both the Government and the President's Office periodically emphasize Ukraine's need for its own airport. They refer to the West, "nodding" to the successful experience of the "grain corridor," which russia could not disrupt despite all efforts. Achieving such an ambitious goal will require funds, resources, and guarantees (including insurance), which Western partners could assist with. However, they are not willing to do so yet.

UNIAN spoke with Oleksandr Shafiev, the Director of Security and Quality at SkyUp, one of the few Ukrainian airlines that not only survived the evacuation but also launched a new business model. The company's top manager shared his own opinion on the prospects for the resumption of civilian air transportation, explained how the Ukrainian aviation industry is currently surviving, where flights are most frequent, and how SkyUp evacuated its plane from Boryspil Airport during full-scale war. He also addressed whether there is unemployment among Ukrainian professionals, whether they are leaving Ukraine, and compared Ukrainian salaries with those in Europe.

Is an airport in Ukraine possible during the war?

In aviation, everyone adheres to the general principle of "safety above all." Until there are solid assurances regarding the safety of flights to and from Ukraine, the reopening of airports won't happen. I can't even imagine how it could be organized now. The entire country is vulnerable to russian missiles and drones. No one can guarantee 100% that no missile or "Shahed" will penetrate the air defense systems and hit an airport, even in western Ukraine. During alarms, even ground transportation stops to reduce risks. Here we are talking about airplanes. 

In general, to resume air travel, infrastructure at airports needs to be prepared and equipment restored after being idle. Air corridors must be secured for safe flight. Ukrainian air traffic controllers must continuously monitor flights and coordinate with European partners. Qualified licensed engineers and pilots must be present. Passengers and crews must be provided with appropriate conditions and protection

Airlines themselves must also implement a comprehensive set of measures and negotiate with foreign aircraft owners who may not allow their planes to be used in Ukrainian airspace under such conditions. Remember, almost all private airline planes are leased rather than owned. Additionally, permission must be obtained from insurance companies, which have their own lists of countries where flying is either prohibited or restricted.

My personal opinion is that in the near future, this cannot be implemented. Undoubtedly, we want Ukrainian airports to operate, and we are monitoring the situation. Furthermore, we want to be among the first to return to Ukrainian skies. But it would be untrue to say that this is possible as soon as tomorrow.

Could the experience of operating airports in "hotspots" like Israel or Syria be useful to us? After all, they have developed special security algorithms both in the air and on the ground, allowing flights despite restrictions...

Security algorithms for aviation in Ukraine have been worked on by experts, repeatedly. However, let's be realistic, threats, for example, from Hamas, are simply incomparable to the capabilities of the russian federation. Therefore, comparisons with Israel or Syria are not entirely accurate. Currently, Ukrainian airspace is completely closed, so no civilian airline can operate flights to or from our country.

Yes, it's not possible right now. But in the near future, we expect changes in this "equation." Israel, as mentioned, relies on military aircraft to protect its airports. We also hope to soon receive F-16s, which could take on the role of "flying air defense systems." Will this impact the airport issue?

Potentially, it will have a significant impact. However, F-16s still won't provide a hundred percent guarantee against russian threats. We cannot rely on assumptions in this matter. We need complete assurance of the safety of aircraft and passengers both in the air and on the ground. Even one missile or drone could cause significant damage.

Let's assume that an airport is opened in Lviv, and the planes there do not linger for long but quickly board or disembark passengers and immediately take off. If a hypothetical russian missile is flying towards Lviv and will arrive in 10-15 minutes, will the prepared plane be able to safely take off and "escape" through the corridor to the western border?

It's not that simple. We need to consider whether the plane is already on the runway or still on the tarmac, whether it has undergone servicing, or if passengers are already on board. These factors vary in different airports and planes. Additionally, much depends on the type of missile – whether it's anti-aircraft or designed for ground strikes, the power of its explosive material, and the presence of countermeasures.

And even if the plane successfully takes off. We are talking about a civilian airport after all. What about passengers who have just arrived or are about to board another flight and are currently at the airport or on a bus on the way to the terminal? They could also be at risk. So, theoretically, the plane could "escape," but the threats to people and the airport on the ground would remain.

Let's imagine then that we already have the best air defense systems deployed in three echelons, and F-16s constantly patrol nearby. Thus, security issues are addressed. But there are still economic questions remaining. Obviously, the profitability of such flights will not be significant. What should the government do to bring back Ukrainian companies? Reduce taxes, provide state guarantees for insurance cases (similar to the "Grain Corridor"), or something else?

If all military threats have been eliminated over a specific area, then the government should help facilitate operations in its jurisdiction, primarily through legislative means. Another crucial aspect of flight resumption is restoring the operation of airport equipment, which has been idle for a long time, and certifying experts who have not been certified for a long time.

Therefore, it is necessary to first establish all ground infrastructure. This is more critical in the context of airport reopening than economic factors because the state does not regulate insurance issues in aviation or the profits of private companies.

Now, let's return from the hypothetical to the harsh reality. Have you experienced any losses of aircraft due to war or flight bans?

We haven't experienced any losses of aircraft. But at the beginning of the invasion, one plane remained at Boryspil Airport. It even took off on February 24, 2022, but the order to land came because the sky was closed. It returned to the airport. It stood there for over a year. Only in April of last year were we able to retrieve it.

Our plane was not the only one allowed to take off from Ukraine after the full-scale invasion. Certainly, without passengers. I cannot discuss all aspects of this evacuation operation right now. But the procedure was extremely long and complicated, requiring a lot of coordination. It was a one-time operation, and making such flights regular now is impossible.

And what about your own air fleet now?

We have 10 planes. This includes both SkyUp Airlines and SkyUp MT, registered in Malta. The jurisdictions are slightly different, but the business model and management remain the same.

How is Ukrainian civil aviation surviving in "exile" in general?

It's very difficult. Before the russian invasion, we had the same model as other Ukrainian carriers – a combination of regular and charter flights. But after the evacuation from Ukraine, this scheme stopped working. According to international law, if planes are registered in Ukraine, they are only allowed to fly to Ukraine. Their registration numbers are Ukrainian. Therefore, they cannot fly between European cities.

This made it very difficult for us to find solutions to keep the company afloat. So, we found a solution and started providing passenger aviation services under the ACMI model – Aircraft crew maintenance insurance. That is, everything remains Ukrainian, but the plane with Ukrainian experts is used to provide services to a partner – for example, WizzAir, allowing us to work outside of Ukraine and earn some money.

The model was implemented quickly, allowing our company to survive, even despite losing our base at Boryspil Airport. We were able to establish ourselves in this sector. We preserved our air fleet and jobs. We continue to develop. For example, SkyUp Airlines recently received the IOSA certificate.

I'll add that we currently don't have any bases. Although some of the planes are registered in Malta, we are not operating flights to or from there. This is not required by our business model, where a plane can be in Europe today and fly to the other end of the planet in six months. We're not looking for a new base. However, compared to other European companies, this complicates our work significantly.

So, your planes belong to foreign companies, which lease them to you as a Ukrainian company, and then you lease them to other foreign airlines to get permission to fly in Europe or elsewhere. And only then can your partners sell tickets to end consumers? Is that correct?

Our airline provides passenger aviation services to other airlines and tour operators. Yes, local customer airlines can independently obtain flight permits from regulators because they can do it much faster and meet additional regulatory requirements. The aviation industry is very complex.

And how does all this affect the company's profits? After all, each participant in the process should get a share of ticket sales.

This allows us to survive because we have obligations. This includes obligations to aircraft owners who receive a fixed fee, even if the aircraft remains parked. And prices in aviation are very high. We had to find a way out.

As for the company's profits, I can only say that the financial statements for the past year have not yet been finalized, and 2022 was simply surplus. Now we need to obtain the full amount of financial information. Especially considering the seasonality of airline operations.

For example, during the spring-summer season, all companies earn well from passenger travel. But in winter, most companies, even under normal conditions, operate at a loss. Demand decreases, and there is an oversupply of aircraft in the market. Winter is always a "minus", and summer is a "plus". All airlines must consider seasonality to balance their operations.

For us, this is compounded by obligations regarding the aircraft to the owners, the financial situation in the previous period, and other factors. The winter period has recently ended, and now the balance calculations are underway. Although the situation was better in the first months of the current year than at the beginning of 2023. For comparison, in January-February of this year, we operated 463 flights and transported over 68,000 passengers, while for the same months in 2023, we operated only 202 flights, used by about 31,000 people.

 

And what is the IOSA certificate you mentioned?

This means that SkyUp Airlines has successfully obtained certification in the International Air Transport Association (IATA) Operational Safety Audit (IOSA) program. This means that all processes have undergone a safety check. This is a major project for us because it shows that we have the highest safety standards. Because this is an international benchmark for airline safety, which not all airlines have. It took us almost a year to obtain the certificate. It was difficult because these standards are higher than state requirements.

 

And how will this help you practically? Will it bring more contracts or access to new markets?

This will encourage more partners to cooperate with us. Because, let's be frank, the attitude towards a company that does not have its own base and cannot fly in its own airspace abroad is more cautious than towards European companies. Especially in safety matters.

We are already known in the world. We have managed to create a positive impression on the market. And this certificate confirms the high level of safety of the airline. Because some European competitors don't even have it. We are proving that a Ukrainian airline can be a serious player in Western markets.

 

What is the trend in your transportation? At least it's positive – the number of flights is increasing, and accordingly, the company's profits are growing?

Yes, of course. In 2022, we operated slightly more than 6,000 flights, and in 2023, it was 40 percent more. Over 10,000 flights. The passenger trend is smaller – plus 25 percent compared to 2022. But the number of passengers is not a key indicator for us now because these are mainly not our passengers but those of the companies for which our planes operate flights. So, the number of flights is more important for us now.

 

Do these partners using aircraft registered to you pay you fixed fees like the lessors?

No, these payments are not fixed. In the case of an ACMI contract, payment for passenger transportation services provided is tied to so-called "block hours." This is the time from when the aircraft starts taxiing until it lands and stops at the stand.

But I'll add that in winter, prices are cheaper, as I mentioned, and high utilization in this season does not necessarily mean high profits.

Another interesting point is that the aviation market in the European region, including Poland and other countries we often fly to, is actively growing. In some places, it has already returned to pre-COVID levels. However, the industry still cannot fully overcome this crisis.

 

You mentioned Poland. What are your most popular routes?

We most often fly to Eastern Europe – a lot to Lviv and Warsaw, as well as to Chisinau. Romania and the Baltic countries are popular destinations. We fly more actively to Turkey in summer and to Egypt in winter. Although there are some flights there year-round.

But the specific route mainly depends not on us but on who orders passenger transportation. For example, in January-February of this year, one aircraft operated flights to Papua New Guinea. Last year, we also obtained permits for flights to the USA and Canada, which are powerful aviation markets.

 

How do Ukrainian companies "in exile" compare to their European counterparts? Are they willing to cooperate with us?

Ukrainian personnel are highly qualified, and therefore European companies are willing to cooperate with us. I'm not just talking about our team, but in general. Although our staff, of course, is the first and foremost – because among active Ukrainian airlines, we are currently the most powerful, with the largest fleet. Among the "alive'' Ukrainian companies are also SkyLine and some others. We are not competitors and operate on different models, so I cannot assess their success in the market.

Ukrainians are definitely not "second-rate" compared to Europeans in the aviation industry. We look good, and that's why people really want to work with us. Those who have used our services once come back again. It's nice.

 

By the way, what's the situation with personnel – are people leaving you for other companies (possibly foreign ones), or, on the contrary, are you "picking" candidates due to the large number of unemployed professionals from Ukraine?

We try not to hire more people but to retain our own team. As I mentioned, restoring qualifications in aviation is extremely difficult and expensive. Although, indeed, there is an influx of people from Ukraine. They have the necessary permits to leave Ukraine, so there is no shortage.

However, this does not apply to all specialties. Demand is higher for some areas – we have vacancies posted on our website, indicating areas where there is a slight shortage. In reality, there are not many available Ukrainian professionals with valid licenses and permits. And retraining will be necessary in just six months.

There is also some outflow of people. But this is not related to the company but to the place where they are now. It happened that people are scattered all over the world, and some decide to find work closer to their new home. But the overall number of people in our company has hardly changed and is just over 1100.

Moreover, a significant portion of our employees are currently on the front lines. We will do everything in our power to ensure they restore their qualifications after the war as soon as possible.

 

Do you hire foreigners?

Only where necessary. For example, the Maltese company requires specialists with European certificates and licenses to work there. But foreigners are a small part of our team.

 

Are the salaries of your professionals still "Ukrainian" or already "Maltese"? Doesn't such a decentralized business model force you to compete for personnel with foreign companies and increase wages?

The company's policy is that employees receive market-average salaries. There is a separate market for pilots and for each category of specialists. Since this market is global, even before the war, Ukrainian aviation professionals received higher pay than the national average. Higher salaries are due to the fact that it is cheaper for companies to increase wages than to lose a scarce specialist and then spend much more on retraining and training their replacement. This applies to everyone – pilots, engineers, dispatchers, and others.

 

You say you remain in the Ukrainian market. How is this possible under current conditions?

Most of the work is currently happening in Ukraine. Since the beginning of the full-scale invasion, SkyUp Airlines has paid about 200 million hryvnias in taxes. For a company that cannot operate in Ukrainian airspace, this is a significant contribution to the budget. Because we are a Ukrainian company.

We maintain a large staff of employees in our homeland. Only those directly responsible for flight operations and aircraft technical conditions have gone abroad. Our crews and engineers constantly travel in and out of the country, having the necessary permits for this. We have a constant rotation.

Ukrainian professionals remain the backbone of the domestic aviation industry even during evacuation, and they are ready to rebuild the industry in Ukraine as soon as the gunfire subsides and the airports reopen. Until then, they are forced to work in the current mode.

Together with our strategic partner JoinUp!, we assist in organizing leisure activities for military personnel. Over the past year, we have sent over 600 soldiers on vacation, spending around 28 million hryvnias on this project. There is also a joint project aimed at children with autism spectrum disorders. Last year, we sent 20 families of displaced persons with children undergoing corrective therapy at the Levchik hub on vacation. Based on the trip results and conducted surveys, we created an illustrated book for parents on preparing a child with autism spectrum disorder for travel. It is distributed free of charge, including in the Yakabu app, our partner. We have received many positive reviews regarding the implementation of these projects. This is very valuable to us and motivates us to further develop them.

In addition, we collaborated with the United24 project to raise funds for medical kits. In 2022, one of our aircraft received The Power of Freedom livery to draw attention to the needs of Ukrainians.

There were other social projects as well. In other words, we were, are, and will remain a Ukrainian company. We do not plan to scale back our activities in Ukraine. We are doing everything in our power to help our homeland in difficult times.

 

To summarize our conversation... You have already adapted to the new conditions, found your niche, and business model. What are your expectations for the current and future years – will Ukrainian civil aviation survive "in exile"? Will domestic airlines create real competition for foreign ones?

We have a positive experience in overcoming all obstacles. Therefore, I have positive expectations regarding our work in external markets. But the main thing is – we are a Ukrainian company. And we believe that SkyUp will definitely be the first airline to return home. And the new experience and model will significantly strengthen our company in the global markets in the future. Because we have become more resilient and flexible.