Ukraine International Airlines

UIA BACKGROUND

Back in 1992, Ukraine International was co-founded as an international carrier of independent Ukraine by the Ukrainian State Association of Civil Aviation and GPA (thereafter AerCap B.V.), the world’s largest aircraft lessor.

Over the 15-year period, the airline has attracted top class strategic and financial investors. In 1995, the Ukrainian Government shareholding was transferred to the State Property Fund. In 1996, Austrian Airlines and Swissair became shareholders with the European Bank for Reconstruction and Development, EBRD, joining shortly – in 2000.

Organizational model of a public-private entity empowered UIA to take advantage of the strengths of all shareholders, to seize a vast selection of business opportunities, as well as to adopt best maintenance, operation, service, and management practices of its international partners.

Initially, UIA was meant to establish non-stop operations between Ukraine and Western Europe and successfully implement the strategy of a point-to-point carrier.

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By its 18th anniversary in 2009, UIA became one of Ukraine`s key aviation market players with 20% business segment. However, further development required the UIA business strategy revision. The latter coincided with the change of the company’s ownership in 2010 and was triggered by international investors’ withdrawal from the equity fueled by the shift in their market strategies in Ukraine and expiration of the EBRD investment conventional participation period.

Amid challenging operating environment and intense price-based competition, privatization guaranteed the UIA business flexibility and allowed commencing transformation from a point-to-point into a network carrier.

In 2013, following the business collapse of the main competitor, UIA turned out to be the sole carrier capable of averting market infrastructure collapse. The transition process turned out to be much more dynamic than it had been planned initially. Over twelve months, UIA had to boost operations by doubling fleet and enhancing the team. The latter empowered the airline to resume operations to most destinations “inherited” from the competitor carrier.

Involuntary expansion jump-started the UIA operations’ optimization and prioritized the development of Ukraine’s transit potential. UIA built up its operations so as to generate and direct transit passenger traffic from the North to the South and from West to the East via its hub, Kyiv Boryspil International Airport.

In 2014, UIA faced the challenge of stabilizing its business amid profound political and economic crisis, devaluation of the national currency, and dramatic decline in effective demand. For the first time ever, UIA had to take drastic contingency measures and optimize its staff, fleet, and route network.

Meantime, to sustain the business and guarantee passengers the service availability, the UIA Management Team decided to modify the operating model and commence systematically decreasing fares by excluding additional services from the ticket price. Eventually, the latter empowered UIA to offer clients competitive fares and become the world’s first network low-fare carrier.

Effective from 2014 to 2017, UIA continued to maintain and develop a route network to provide a hub model despite the overflight of the territory of the Russian Federation, which made it uncompetitive. The hub model of development was approved by a presidential decree and was developed by joint efforts with Boryspil Airport.

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At the end of 2019, UIA's top management initiated the optimization of the airline's route network in order to reduce excess costs and bring the company to break-even point in 2020 with further stable development. In particular, unprofitable flights to Almaty, Beijing and Bangkok were canceled based on unjustified flight costs due to the need to fly over the territories of the Russian Federation. Effective from 2014-2019, due to unequal business conditions (overflight of the territory of the Russian Federation on the eastern shoulder of the network, which was carried out exclusively by UIA among the competitors on the route), the airline lost about $ 216 million. Because of measures to revise the flight program, UIA in early 2020 attracted an unscheduled revenue of $ 11 million.

January 8, 2020, was the largest plane crash among Ukrainian aircraft in decades. An UIA plane with registration number UR-PSR, departing from Khomeini Airport, flight PS752 from Tehran to Kyiv, was shot down by a military missile in the skies over Iran. There were 176 people on board: 167 passengers and 9 crew members, all of whom died.

In the spring of 2020, a complete lockdown was introduced to stop coronavirus infection COVID-19. During this period, regular flights in Ukraine and abroad were stopped, so UIA management implemented an anti-crisis program to restructure costs, optimize staff and minimize airline costs. This has reduced UIA's mandatory monthly operating costs by almost three times, while freeing about 1,000 people.

Since the partial resumption of the airline's scheduled flights in June 2020, the company's work will focus on flexible and short-term flight network planning, taking into account frequent situational changes in the rules of entry of foreign countries during 2020.

MAIN ACHIEVEMENTS OF UIA

  • Since the establishment of UIA, an active process of developing air connections with the largest capitals of Western Europe has begun. This course of development became an important moment for the formation of business and cultural connections of the young and independent state of Ukraine.
  • On November 2, 1992, UIA leased its first, completely new aircraft, a 170-seat Boeing 737-400 with registration number UR-GAA, thus becoming the first airline in the CIS to operate this type of aircraft and start cooperating with the largest American Boeing Corporation.
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  • The first flight of the airline was performed on the route Kyiv-London-Kyiv on November 25, 1992. This date is considered the birthday of UIA. After London, UIA opened flights to Paris and Frankfurt. At the beginning of 1993, UIA's route network covered several European destinations - Berlin, Milan, Amsterdam, Vienna, Munich and Brussels.
  • In April 1999, UIA received a new Boeing 737-300, commissioned by the airline. The aircraft was given the registration number UR-GAH and its own name "Mowgli", which was chosen at the all-Ukrainian competition. In June 2001, “Mowgli” transported Pope John Paul II from Kyiv to Lviv during his official visit to Ukraine and then from Lviv to Italy.
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  • On July 9, 2008, UIA was the first in Ukraine to start operating a Western-made Boeing 737-300SF cargo aircraft with registration number UR-FAA, which made its first flight on the route Kyiv-Vienna-Kyiv.
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  • On July 24, 2009, the airline's fleet was replenished with the first Boeing 737-800 "Next Generation", which passed the official registration procedure in Ukraine and received the registration number UR-PSA.
  • Hub model of the company's development gave positive indicators. Providing a hub model has allowed the airline to increase passenger traffic every year. According to the results of 2014, UIA carried almost 4 million passengers, 52% was transit traffic. In 2015, approximately 5 million passengers were transported. And the figure for 2016 was more than 6 million passengers (with a transit rate of more than 52%). In 2018, UIA carried more than 8 million passengers, which is 15% more than in 2017. The share of transfer passengers on UIA scheduled flights was 53%.
  • At the beginning of 2018, the UIA got the first aircraft in Ukraine Boeing 777-200ER, which received the registration number UR-GOA. In total, in 2018, the UIA fleet was replenished with three aircraft of this type with a modern cabin in a 3-class. This has significantly improved the quality of long-haul flights, especially for business class passengers.
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  • On November 16, 2018, the airline carried a 50 million passenger. It was a young Michael Osipchuk, who went from Kyiv to Paris on flight PS127.
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  • During the corona crisis of 2020, UIA managed to withstand the lack of any support from the state solely through management decisions: redistribution of financial pressure on expenditures, staff reductions, transfer of a significant part of the team to remote work, etc. These are the strategic steps provided UIA with the opportunity to compete in the aviation market despite losses of about $ 60 million caused by the 2020 pandemic crisis.
  • UIA is the only one airline in the Ukrainian market that primarily develops regular passenger air transportation, thus being part of Ukraine's transport infrastructure.