As the visa barrier to 34 European nations disappears for Ukrainians on June 11, travel costs are expected to go down also — eventually.
Taken together, Ukraine is about to undergo a positive transformation not only in travel, but also in its status as a developing democracy trying to integrate more closely with the rest of Europe.
Ukrainian President Petro Poroshenko knows the magnitude of the change that is about to take place. He describes visa-free travel as a “final farewell to the Soviet and Russian empire.”
The long-awaited event comes hot on the heels of the entry of Irish low-cost carrier Ryanair into the Ukrainian air travel market, with the first flights to take off this September from Kyiv and Lviv.
This is not expected to be the last of the low-cost carriers to seek entry into the market, all to the benefit of Ukrainians who want to go abroad for visits of up to 90 days. It is hoped that Ukraine International Airlines, the near-monopoly carrier owned by billionaire oligarch Ihor Kolomoisky, will have to start competing on price and service or lose its 40-plus percent share of the market.
In response to Ryanair’s entry, Ukraine International Airlines in May launched a new “low-cost” fares category for those who buy tickets 10 months in advance.
Fares checked by the Kyiv Post in June for travel to Stockholm, Sweden show that a one-week round trip from March 12–19, 2018 would cost $59 on Ukraine International Airlines and $78 on Ryanair. Both airlines depart from Kyiv’s Boryspil International Airport but land at different airports serving the Swedish capital.
Ukraine International Airlines also planned a sale of tickets to European capitals on June 11, the day when the visa-free travel comes in force.
For those planning to see the continent by train, Ukrainian state railway company Ukrzaliznytsya says it will be providing more international travel options. It has promised that from June 12, trains will run daily from Kovel in western Ukraine to Chelm in southeastern Poland. More services to other cities in Poland and Romania are in the works.
But Ukrzaliznytsya has stressed that the visa-free regime will not influence the speed of border crossings by train because document checks will, as before, be carried out throughout the course of a journey.
Market dynamics
Meanwhile, Ukraine International Airlines has applied to Ukraine’s State Aviation Service for permission to fly on the same routes as those offered by Ryanair, suggesting that competition in the air travel market is only set to intensify.
But any talk of a price war would be premature, says Vladimir Shulmeister, a former deputy infrastructure minister and now an analyst at the Ukrainian Institute for the Future.
He says that such a development would more likely be seen in oligopolistic markets, where there are from three to six players with roughly equal market share. Ukraine International Airlines’ grip on the market as a near-monopolist significantly changes the dynamic.
“Ukraine International Airlines has a solid market position,” Shulmeister said. “When you take into account the fact that it essentially has a monopoly, you see that it is strong enough to withstand attempts at predatory price undercutting, which are usually used by new market players and low-cost airlines.”
But even if prices were to go to minimum levels, weak demand means Ryanair’s market share would be unlikely to grow.
The low-cost carrier has said that it expects in its first year of operation in Ukraine to transport around 500,000 passengers, a market share of 6 percent.
Shulmeister believes that figure will remain steady for the foreseeable future.
“Today in Ukraine we don’t have the economic preconditions needed for Ryanair to gain a significant share of the market for at least the next three years,” he said.
Ukrainian airlines carried 8.27 million passengers in 2016, or 31 percent more than in 2015. But Shulmeister says that the rise simply meant returning to the normal levels after the economic slump of 2014–2015, and is unlikely to be repeated this year.
“In spite of the visa-free regime, there won’t be significant growth in demand for air travel,” he told the Kyiv Post.
Visa-free, rules-based
When the EU decided to waive visas for Ukraine, it also made sure at the same time to strengthen its ability to easily reintroduce them if Ukrainians violate the rules of the regime. The chief stipulations are that Ukrainians are not allowed to work in EU without a visa and they should not stay longer than 90 days in a 180-day period.
But based on the experience of other nations that have received visa-free travel, the risks of such a scenario are low according to Max Fras, a European Institute visiting fellow at the London School of Economics.
“It has been over six years since visa liberalization for a number of Western Balkan countries, and despite repeated warnings, none of the countries lost visa-free travel rights, so it does not seem to be a tangible threat,” he told the Kyiv Post.
For Fras, ensuring Ukrainians conform to all the requirements of visa-free travel is a challenge that needs to be met by the Ukrainian government, whose task is to ensure “Ukrainian citizens leaving the country are duly informed about their rights and responsibilities, and that Ukrainian citizens expelled from the EU are returned promptly.”
The Georgian experience
The arrival of visa-free travel to Ukraine will come nearly three months after Georgia received the same benefits, although the two countries were at one time considered to be moving on the same time-frame in terms of implementation of the visa-free program.
Data is still scarce on the Georgian experience, but as reported in the Georgian media, after one month of visa liberalization, 11,700 Georgians had traveled visa-free to the Schengen area.
Alexander Kipiani, a senior adviser to the Georgian ambassador in Kyiv said that during the first month of the new regime there were 17 cases of Georgians being refused entry at EU borders, but that the number of Georgians travelling abroad had increased significantly.
Anita Gvasalia, a student at the Agricultural University of Georgia, told the Kyiv Post that none of her friends had experienced any problems while travelling to the EU visa-free. She said the regime is positive not only in practical terms, but symbolically too.
“The implementation of the visa-free regime was probably the most popular topic of every conversation for several months, and we were all very excited,” she said, “For me personally it was not just about traveling more easily, but also about being acknowledged as part of Europe.”
For Salome Goduadze, a frequent traveler from Tbilisi, the best thing about visa-free is the elimination of the “stressful” bureaucracy associated with visa applications.
“I remember my emotions when I was waiting for a visa, and I’m glad I will not have these feelings ever again,” she said.
To enter the Schengen Zone visa-free, apart from having a biometric passport, Ukrainians are required to show their return tickets, proof of accommodation, medical insurance, and sufficient funds to cover their trip.
According to Fras, how things work for Ukrainians in practice will depend to a great extent on the training and instruction given to border guards, both at home and abroad.
“Anecdotal evidence has it that Georgian border guards have been scared by their bosses, and are more strict than EU border guards in requiring their fellow citizens to present insurance, bookings and cash details — even where it was not necessary or in a way more detailed than any EU border guard (would do),” Fras told the Kyiv Post.
“In short — a lot will depend on the first few months of the implementation of the agreement,” Fras added. “If the migration services pass the initial test, it may go smoothly.”
