Ukrainian regional airline, Dniproavia, is publicly requesting that the Department of Aviation of the Federal Republic of Germany reverse the revocation of its right to fly to Frankfurt and Berlin. The company believes this move breaks the parity principle regarding access to local routes envisaged by the 'Open Sky' agreement signed between the Ukrainian and German governments, and creates unfair advantages to a single carrier and the risk of monopolization on specific routes.

The Dnipropetrovsk - Frankfurt route, which generated USD 5-6 mln in revenues annually, had been serviced by Dniproavia twice a week. In September 2005, following the signing of the 'Open Sky' agreement, Lufthansa requested 6 flights per week on this route, and this was largely implemented by November, 2005. The Dnipropetrovsk airport granted 5 of the flight slots according to the request, and asked for a time shift for the sixth as it conflicted with the existing Dniproavia flight on Thursdays. On the following day, the German government's LBA prohibited Dniproavia from servicing its long-established Sunday flights. The ruling was based on the Dnipropetrovsk airport's 'breaking the parity agreement', though in reality Lufthansa had 6 flights per week compared to Dniproavia's 2.

Sergey Tkachenko, Deputy Director at Dniproavia, says that the company was shocked by the sudden and untimely restriction, especially when an accommodating shift, and not a refusal, was involved. "After this, we thought long and hard about a response. Reluctantly, we withdrew our own confirmation of Lufthansa's slots at Dnipropetrovsk, and offered them 6 day-time only assignments instead of their preferred 2AM arrival and 6AM departure times."

In a letter dated March 8, 2006, the German government's Department of Aviation completely forbade Dniproavia from servicing not only its Frankfurt route, but its established Berlin flights as well.

The department's ruling, which unravels Dniproavia's 7 years of route development, USD 6 mln in infrastructure improvement and the lease of a Boeing 737-400 jetliner, is seen by Dniproavia as a violation of the fair competition rules and Open Sky agreement mentioned above.

The move by an aviation giant against the successful niche created by a firm in a developing country affects more than the ability for people to travel. Dniproavia's financial commitments, including loans for the home airport facility improvements that Lufthansa now enjoys, must still be paid despite the loss in revenue. Clients have been paid back for tickets they had purchased, but reclaiming Dniproavia's customer base will take a lot of effort.

Given that the coordinated moves by Lufthansa and the German Department of Aviation are counter-competitive and put Dniproavia's continued financial security at risk, the directorship asks again, in the open letter, that the routes to Frankfurt and Berlin be restored to the company.

FMI: www.dniproavia.com