17:00 31.05.2018

Denys Kostrzhevsky: Kyiv Airport doesn't give up plans to extend the runway

6 min read
Denys Kostrzhevsky: Kyiv Airport doesn't give up plans to extend the runway

Chairman of the Board of Directors of Kyiv International Airport Denys Kostrzhevsky's exclusive interview with the Interfax-Ukraine News Agency (Part 2)

- What is the ratio of aviation and non-aviation incomes of Kyiv Airport?

- Ours is approximately 65% by 35%.

- How do you plan to expand the share of non-aviation revenue?

- Aviation revenues are fees approved by the state, plus service fees. Non-aviation revenue is an income from rent and parking. The rental income is directly related to the willingness of people to spend their money, so there should be a good assortment and prices at restaurants, cafes and shops. The third component of non-aviation revenue is earnings from the business terminal. Kyiv Airport services 85% of business aviation, due to this our share of non-aviation revenue is higher than that of other airports. The airport is unlikely to ensure the growth of non-aviation revenue, as the Master-Avia company has done its best. Now everything depends on passengers' purchasing power.

- Is such a facility as a hotel possible in the perimeter of the airport?

- Yes, it is possible. I've seen options when a hotel was located inside a terminal or next to a terminal, but this is a separate business. Master-Avia has checked the feasibility of the construction of a hotel several times, but so far it is not feasible from the economic point of view, as the airport is close to the city center and there are enough hotels there. Still, there are more promising areas for investment.

- What are your plans for the old terminal?

- The old terminal exhausted its potential way back in the 70s of last century. It cannot be used to serve passengers either because of fire safety or sanitary standards. Functionally, it cannot be used for anything other than the airport's services. This is how it is now.

- The idea of extending the runway was repeatedly voiced earlier. Is this possible in a dense construction area around the airport?

- The Master-Avia company has carried out a detailed analysis and developed a project for the reconstruction of Kyiv Airport's runway. The project provides for the reinforcement of the airstrip to be able to handle aircraft with a larger takeoff weight such as Airbus A321 and Boeing 737-900. In addition, it foresees the extension of the runway by 600 meters. To do this, it is necessary to solve legal and engineering issues: the final allocation of the land plot for the airport and the extension of the runway in the conditions of the rough terrain. It is a complicated task, but it is part of the project and, most likely, it will be done. The estimated cost of such a reconstruction project is EUR 84 million. Kyiv Airport has already applied to Kyiv City State Administration (KCSA), asking for either the allocation of the necessary amount or efforts to look for an investor.

- In case of a positive decision by KCSA on an investor, is Master Avia ready to be it?

- Everything will depend on conditions. It is logical that the reconstruction of the runway should be made at the expense of budget funds. The state or the municipality is interested in the airport working and developing. But if a decision is made to go for public-private partnership, then whether Master-Avia will participate or not will depend on what the authorities can offer.

- And what is the profitability of the airport today?

- Municipally owned enterprise "Kyiv International Airport" ranks second among Kyiv's most profitable municipal enterprises and pays tens of millions of hryvnias to the state and local budgets.

As for Master Air, the situation here is different, as all profit of the company is channeled into servicing loan obligations. In order to build terminal complexes, the company borrowed large loans in 2011. As of today, about UAH 500 million in loans remain unpaid. Interest rates there are absolutely market ones: 12.3% per annum in foreign currency.

- Is there any plan to build any new infrastructure facilities?

- Last year the Master-Avia company built a new apron whose area is 25,000 square meters. This year about UAH 500 million in capital investment will be spent on the expansion of Terminal A. The terminal is expected to be commissioned before May 2019.

- What kind of passenger traffic do you expect by the end of this year?

- In 2017, Kyiv Airport served 1.8 million passengers. At the end of 2018, we plan to serve about 2.8 million people for arrival and departure – this includes our new capacities.

- Can you name airlines you're in talks with on cooperation?

- We have completed all negotiations for the spring-summer navigation. As a rule, there are few newcomers during winter, although there are some companies that have expressed their desire to fly in winter. As there are no contracts yet, it's too early to talk about it.

I would like to mention a new Ukrainian airline, SkyUp, which has signed a long-term cooperation agreement with Kyiv Airport. The company will begin to perform the first flights after the arrival of two aircraft in May. SkyUp plans to have Kyiv Airport as the base for its several aircraft . It is an important milestone Ukraine has not seen for several years. This is really a big Ukrainian airline with ambitious plans. If these plans come true, there will be a good growth in passenger traffic.

- Qatar Airways has recently entered the market, which, according to speculation, has "bitten off" a significant chunk of transit passenger traffic, in particular, from flydubai. Can you comment on this?

- I can only say that flydubai does not show a decrease in the number of passengers. The load percentage, according to our data, has not changed, it is big enough.

- What is your forecast for the development of the aviation industry in Ukraine for the medium-term outlook?

- My forecast is optimistic enough. I think in the next decade, there will be an increase in the number of air transportation by 7-10% per year. This is even higher than the International Air Transport Association (IATA) forecasts. The Master-Avia company ordered a market research study through 2052, this report confirms that in the next couple of years there will be a rapid growth of 20-30%, and further, according to forecasts, there will be a 5-7% increase through 2052.