On the morning of June 25, a small group of people gathered outside a courtroom on the 10th floor of the Kyiv Court of Appeals. Soon a bailiff opened the door and they filed in, taking their places behind heavy wooden desks.
On the far side of the room sat the lawyer and representatives of Oksana Pasenko, an aggrieved client of Ukrainian low-cost airline SkyUp. On the other side were a lawyer for the airline and a representative of the State Aviation Administration of Ukraine.
SkyUp was in the process of appealing a lower court decision that suspended the company’s license to operate passenger flights.
It would have been an ordinary instance of a client suing an airline, were it not for several problems with the case.
First, a client suing an airline usually doesn’t result in a court suspending the airline’s license.
Second, there was no client. The alleged complainant says she never filed the complaint. In fact, she says she’s never been on a plane.
SkyUp believes someone is trying to shut their company down. In the aviation community, some suspect Ukraine’s national carrier is involved.
And if left in place, the ruling would set a very dangerous precedent, says Aleksandr Alba, SkyUp’s co-founder.
“You can be unsatisfied with the quality of a supermarket or movie theater, go to the local court, and they can just shut down the business,” he told the Kyiv Post.
Sky’s the limit
Founded in 2016 by the Alba family, SkyUp is an airline specializing in low-cost and charter flights. But it is also an extension of an older Alba family business: tour operator Join UP!
“In 2010, vacation travel was a luxury for Ukrainians. Only the richest Ukrainians could afford it,” Alba says. “Our goal, the mission of our company, is to make vacation accessible for a larger number of Ukrainians.”
To a large degree, Alba and his parents have done that. In 2018, more than 900,000 people — the vast majority of them Ukrainian citizens — utilized Join UP!’s tourism services, according to the Economic Development Ministry.
SkyUp, the tour company’s personal airline, has a fleet of eight Boeing 737s. It carries out international flights to some of the most popular vacation destinations for Ukrainians in Europe and the Middle East and a growing number of domestic flights to Ukraine’s biggest cities for low prices.
But the Alba family’s companies have also encountered hostility. In 2013, under the rule of ousted President Viktor Yanukovych, they faced corporate raiding.
It began with hacking attacks, followed by searches of the company’s office. Soon, the authorities had opened a criminal case against Alba’s father, Yuriy, for tax evasion — and the sum he supposedly owed was at least 20 percent higher than the company’s annual turnover.
“We were fighting for almost six months,” Alba says.
Then, in February 2014, protesters ousted Yanukovych in a series of events that would come to be known as the EuroMaidan Revolution.
That saved the family’s business. Pressure on Join UP! decreased, and the company managed to escape with just a minimal fine — likely an attempt by prosecutors to save face.
Village idiocy
Five years later, the Albas say their companies have again found themselves under attack. And this time, the threat appears to be emanating from Baryshivka, a town of just under 11,000 people located roughly 70 kilometers from Kyiv.
Baryshivka has all the trappings of provincial Ukraine: a mixture of village-style, single-family homes and Soviet-era apartment blocs, a commuter train station, and monuments to Soviet Afghan War veterans and the liquidators of Chornobyl.
But in the last month, this otherwise unremarkable town has become a center for inexplicable court decisions.
On May 24, the Baryshivka District Court suspended SkyUp’s license because the company allegedly provided customers with systematic poor service, failed to adhere to safety norms, and had many flight delays.
But the court also appears to have violated the law. Under Ukrainian legislation, any complaint against a transport company is supposed to be heard in the court where the company is registered, SkyUp said. And it is not registered in Baryshivka. Additionally, only an administrative court — not a civil court — can cancel an airline’s license.
Several lawyers and aviation industry experts questioned by the Kyiv Post confirmed that the company is correct about this.
More shockingly, on June 21, Radio Free Europe/Radio Liberty’s Schemes investigative program found the complainant in the case, Oksana Pasenko, in Baryshivka. She said she had never been a client of SkyUp and had not filed a complaint against the airline. She also said she had reported the use of her identity to the police.
On June 11, just two weeks after it ruled on SkyUp, the Baryshivka court also issued another strange ruling: it banned Kateryna Rozhkova, the deputy chair of the National Bank of Ukraine, from doing her job.
The National Bank says the ruling violated several legal and procedural norms. It is currently appealing.
Under attack
For SkyUp, the Baryshivka court decision comes at the peak of the tourism season and at a time when the company is opening new routes.
Moreover, in the last year, Alba says their firms have come under political attack. Some lawmakers in the Verkhovna Rada have been attempting to draw attention to any and every problem in the company.
After complaints from a lawmaker to different state agencies, SkyUp had to undergo six separate inspections.
“Can a company function normally when all the top management is working with the state agencies?” Alba asks.
Despite that, SkyUp successfully passed through the checks. The inspectors discovered some minor violations — for example, not having a smoke detector in a certain room of the company headquarters — and the company had to pay some minuscule fines, but nothing substantial was uncovered, Alba says.
Moreover, on June 21, the Anti-Monopoly Committee of Ukraine fined Join UP! Hr 1.5 million ($57,000) dollars for dishonest competition and spreading false information. The committee said that JoinUP! had told customers that they would travel to their destinations on several airlines before ever having a contract with those companies.
Alba views all of these incidents as part of a broader campaign of pressure on the company. But the thing attracting the most attention is the Baryshivka decision.
“It looks like a classic case of a raider attack,” says Oleksandr Aleksyeyenko, a partner at the Marchenko Danevych law firm.
He says that many suspect the involvement of the largest Ukrainian carrier, Ukraine International Airlines (UIA), a company owned by oligarch Ihor Kolomoisky.
UIA denied involvement in the case. Freezing an airline’s license is “a very agressive way of defending the rights of a passenger,” the company said in a statement. “Such a precedent carries serious risks…for regular air carriers. We will attentively follow how this case develops.”
However, UIA also blamed the ruling on “regular violations of charter flight passengers’ rights,” including delayed and cancelled flights. Additionally, it said that the Anti-Monopoly Committee’s fine of Join UP! was “not a very adequate punishment” given the size of the company’s revenues.
Reached by phone, Kolomoisky denied involvement.
“In Ukraine, we now have a (domestic) low-coster? I didn’t even know. You’re telling me new things,” he told the Kyiv Post.
“It would have been better for UIA to stop (airline) Ryanair,” he added.
Previously, UIA enjoyed a near monopoly on the Ukrainian market. However, in recent years, it has faced increased competition from low-cost carriers, whose tickets are much more affordable to average Ukrainians.
In June 2017, Irish low-coster Ryanair canceled an earlier plan to launch flights to Ukraine, alleging that Kyiv Boryspil International Airport had chosen to protect high-cost airlines. UIA was widely believed to oppose the low-coster’s entry into the Ukrainian market.
Ryanair would finally enter Ukraine in March 2018 with support from the Ukrainian government.
Kolomoisky says he did not oppose Ryanair entering the Ukrainian market; rather, he wanted equal conditions for all airlines, while Ryanair demanded discounts from Boryspil airport.
In the case of SkyUp, there are other signs that could point to UIA. The Baryshivka court decision against the National Bank’s Rozhkova could potentially be seen as benefiting Kolomoisky, the former co-owner of PrivatBank, Ukraine’s largest financial institution.
In 2016, PrivatBank was nationalized after the National Bank and Finance Ministry declared it insolvent. In recent months, several courts have ruled in favor of the bank’s former owners, leading to speculation that Kolomoisky may regain control over the bank.
Additionally, in the wake of the Baryshivka decision, popular commentator Oleksandr Dubinsky recorded an obscenity-laden video in which he termed low-cost airlines “cattle cars” and expressed support for the ruling against SkyUp.
Dubinsky is a journalist at the Kolomoisky-owned 1+1 television channel and is running for parliament with President Volodymyr Zelensky’s Servant of the People party. Zelensky, a comedic actor and businessman, previously worked with 1+1, which broadcast his television shows and comedy specials.
But not everyone is so sure that UIA is behind SkyUp’s troubles.
Andriy Guk, a partner at Kyiv’s Ante law firm and an aviation expert, agrees that SkyUp’s struggles appear to suggest a concerted campaign of pressure. The fact that Pasenko denies involvement indicates someone else is behind this.
But it’s difficult to determine exactly who, he says.
“The company has entered a new stage of its development, and now poses a risk to competitors,” Guk told the Kyiv Post. He suggests that a number of competitors could also be working together against SkyUp.
Yevhen Treskunov, the founder of the AviaPlan aviation consulting firm, says that the court case against SkyUp is amateur hour. This leads him to believe that UIA is not involved.
“UIA has very competent lawyers,” he said. “They could do better.”
Treskunov notes that SkyUp’s plans to fly to Ukrainian cities could earn them the ire of ground transportation operators. He suggests that even bus companies could be imposing pressure on the airline.
Victory ahead?
The lawyers and aviation experts agree on one thing: SkyUp is likely to win this case. The Baryshivka ruling appears crudely fabricated and violates too many procedures for it to remain in force.
Transportation Minister Volodymyr Omelyan has also stood up for the company, saying it will continue to fly. SkyUp has not canceled any flights and has tried to reassure customers that their tickets are safe.
Alba says that SkyUp feels “colossal support from our clients.”
But he has concerns. Omelyan is an outgoing minister. What will happen if the new minister is loyal to the people who want to stop SkyUp?
More broadly, Alba says the attack on SkyUp is bad for the aviation business in Ukraine. He believes Ukraine needs new airlines and more competitors to lower prices and improve customer service.
And he’s worried what such a dodgy court ruling says about corporate raiding in the country.
“Even in 2013, they did everything by the letter of the law…” Alba says. “But this is the violation of a company without following any letter of the law.”
