Ukraine's Infrastructure Ministry, State Aviation Service and representatives of the aviation market have decided to draw up calculations of the State Fiscal Service and Finance Ministry. It aims at developing the domestic flights market in the country.

An Interfax-Ukraine correspondent has reported that it was arranged at a roundtable devoted to the development of the domestic aviation market held in Kyiv on Monday.

Head of the aviation transport department of Infrastructure Ministry Halyna Durmush said that the peak of domestic transportation was in 2012 – over 1 million people were transported. Then a decline was seen, and only in 2016 802,000 passengers were carried on domestic routes.

Vice President of Ukrainian International Airlines (UIA) for Commerce Serhiy Fomenko said that in 2016 the airline serviced 3,248 domestic flights carrying 664,000 passengers.

"Finally we have not seen return of spending from these flights, with $2.5 million of loss," he said.

Fomenko said that if in 2008 average tariff for domestic flights in the U.S. dollar equivalent was $82, in 2016 it was $42. This decline is balanced by the devaluation of the national currency.

He said that in 2017 UIA would offer 1 million seats on domestic routes.

"If everything were good, the airline will carry 880,000 passengers," he said.

"In this segment there is a field for development for UIA if runways of Chernivtsi, Dnipro, Ivano-Frankivsk, Yuzhgorod and Kherson accept Boeing 737-800 planes without any restrictions. The minimum production cost of a flight is ensured thanks to this type of planes. These runways cannot accept these planes. In addition, the runway in Odesa is deteriorating," Fomenko said.

He presented three proposals to develop the market: to annul the formation of the tariffs in the U.S. dollars at the national level, stop applying VAT to the price of tickets on domestic routes and invest in the infrastructure of the above-mentioned airports.

Durmush said that the public airport development program envisages the funds for its implementation, but in 2016 the Finance Ministry did not provide the funds. In addition, there are no funds planned for 2017.

Representatives of the State Fiscal Service and the National Bank of Ukraine (NBU) said that the detailed calculations and explanations of viability to remove VAT from domestic passenger transportation should be presented. Aviation market players mentioned the painful issue of selling foreign currency income during the discussion.

"Next week we are gathering data from all Ukrainian airlines and sending the relevant letters to the NBU and the State Fiscal Service and working with the Finance Ministry. These letters will concern the VAT issue and sale of foreign currency income by airlines. The issue of socially important routes should be discussed and European experience should be studied," Durmush said.