Reform Index Focus: The Open Skies Agreement

Reform Index Focus: The Open Skies Agreement

Photo: / DmitriyAnaniev
8 July 2022

The Common Aviation Area (CAA) agreement between Ukraine and the European Union was signed on October 12, 2021. The agreement includes passenger, cargo, and mail air transportation.

Work on the agreement began back in 2006. It was initialed in 2013, but the signing was postponed. The main reason was a spat between Spain and Great Britain over the wording of the CAA agreement in the part of Gibraltar.

The need to conclude an agreement on creating a common aviation area was due to the development of economic, trade, and cultural ties between Ukraine and the EU under the Association Agreement/Deep and Comprehensive Free Trade Area and the visa-free regime with the EU creating a demand for affordable, high-quality passenger air transportation. With candidate status, this need is likely to grow even bigger.

Ukraine undertook to bring regulations closer to common EU requirements and standards in the field of aviation safety, flight safety, environmental protection, protection of passenger rights, certification, competition, etc. The agreement also provides for the liberalization and mutual opening of markets for Ukrainian and European air carriers.

The mutual opening of air transport markets involves lifting restrictions on the number of flights, designated carriers, and routes used in bilateral agreements between Ukraine and individual EU countries and simplified procedures for access to air transport markets between countries.

Countries with similar CAA agreements with the EU (e.g., Georgia and Moldova) increased the number of flights and routes between them and the EU, overcame monopolies, and increased the number of airlines and competition on routes where restrictions previously applied. Accordingly, prices for passengers decreased, increasing airport passenger traffic. Such dynamics can also be expected in Ukraine’s case.

The mutual opening of the markets will occur gradually. At first, all restrictions on direct international flights between any destinations in the EU and Ukraine will be lifted. It means that Ukrainian airlines will be able to perform direct flights in all directions within the EU without restrictions. Currently, market access conditions are agreed upon separately by the authorities of each EU country through negotiations and bilateral agreements. These conditions used to be different for different EU countries and contained restrictions on the number of flights, designated carriers, and routes.

The second liberalization phase will be carried out after Ukraine fulfills its obligation to implement EU legislation. In particular, Ukrainian airlines will be able to perform complex flights in the EU without any restrictions, with Ukraine being one of the destinations (i.e., transportation from Ukraine to the EU and between EU countries, subject to a stopover in Ukraine).

However, the CAA agreement also contains restrictions for Ukrainian air carriers. They will not be able to operate regular direct flights between EU airports (if a flight is not part of transportation that begins or ends in Ukraine). At the same time, European companies will receive such a right in Ukraine (after the CAA agreement is fully implemented).

The CAA agreement is primarily beneficial to Ukrainian citizens since they will have a greater choice of routes and flights between Ukraine and EU countries, becoming more affordable. In addition, Ukrainian air carriers will offer higher quality services to meet EU safety standards. The regulatory approximation to EU norms will ensure a gradual integration of the Ukrainian air transport market into the internal EU market and preparation for obtaining full membership in the EU.

Notably, the EU states will recognize the certificates issued by Ukraine regarding aircraft crews, the organization of air traffic, and the provision of air navigation services. Aircraft certification systems in Ukraine and the EU are also expected to converge.

With the real prospect of EU membership and candidate status, Ukrainian air carriers have additional incentives to increase their competitiveness according to EU requirements and standards. With candidate status, Ukraine will also be able to raise issues regarding the integration and full liberalization of the single EU aviation services market for Ukraine, including obtaining the right to conduct direct internal transportation between destinations within the EU (e.g., like that received by countries of the Western Balkans under the European Common Aviation Area (ECAA) agreement), provided that Ukraine fulfills all the necessary requirements for adapting legislation (i.e., integrating relevant EU directives into Ukrainian legislation).

  • Svitlana Taran, International Trade Research Center Trade+ of the Kyiv School of Economics


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