• Українською
  • Support of aviation market: reduction of the VAT rate on domestic transportation services and establishment of Infrastructure Development Fund in the sector
    Ministry of Infrastructure of Ukraine, posted 26 November 2021 09:58

    As part of the large-scale Forum "Large Construction: Aviation and Tourism", the Ministry of Infrastructure presented a number of system solutions to support the aviation industry in the coming years.

    • Reduction of the VAT rate on domestic transportation to 7%

    Reducing the VAT rate on domestic air transportation from 20% to 7% will allow Ukrainian airlines to reduce the cost of the ticket and improve the attractiveness of domestic air travel. At the level of the Government, a dialogue between the state and business has already been opened and an agreement in principle has been reached.

    Relevant legislative initiatives have been prepared by the Ministry of Infrastructure.

    • Introduction of PSO in the aviation industry

    The possibility of introduction of the Public Service Obligation (PSO) mechanism is being actively developed. It is a question of compensation from the budget of a part of cost of the ticket on routes critical for the state.

    "Let me remind you that this year new regular flights have been opened from Kyiv to Chernivtsi, Uzhhorod, Mykolayiv and Kryvy Rih, and in total there are flights between more than 10 Ukrainian airports.

    We want to make domestic flights affordable and comfortable that air carriers compete for the passenger with the railway and road carriers. Our global goal by 2024 is to unite the whole country with quality passenger transport.

    It is the PSO mechanism that will allow us to maximize the flight map in Ukraine and in the first stages to support new regional airports and domestic tourism," said Oleksandr Kubrakov, Minister of Infrastructure of Ukraine.

    A similar mechanism has already been launched on the railway as part of a pilot project on the Odesa-Izmail route.

    • Aviation Development Fund

    Another systemic solution, which is currently being actively developed by the state, is the creation of a Special Fund for the development of aviation and railway infrastructure, the resource of which can be used, including for the construction and modernization of airport infrastructure.

    It will be recalled that Ukraine is currently actively implementing a program to modernize regional airports, in particular, construction work is underway at the airports of Dnipro, Odesa, Vinnytsia, Kherson, Rivne, Kryvy Rih, Kyiv and Uzhhorod. In addition, a new airport in Zakarpattia is being designed.

    Next year it is planned to begin construction work in Chernivtsi, Poltava, as well as the start of preparations for the construction of two new airports in eastern Ukraine is planned.

    • "Pandemic" compensation to airlines

    In addition, we will reimburse Ukrainian airlines for their passenger flights during the period of restrictive measures in connection with the COVID-19 pandemic in 2020.

    The funds are already provided in the state budget for this year and will soon be paid to carriers.