UATK handles Ukraine's defence equipment exports with fleet of ex-military Il-76s, while the MoD benefits from the transfer revenues, but for how much longer is questionable (574 words)

Published: 11/19/2001

For the last couple of years, one of the biggest complaints from the Russian and CIS airline sector, particularly among cargo carriers, has been the activities of military operators in the commercial sector. In the case of the Russian Air Force, this was legalized by a decree issued in July 1999 authorizing commercial operations, although the activity had been widespread prior to that date. But the industry has remained reluctant to accept this state of affairs, with East Line in March 2000 accusing the air force of price dumping and further complaints being raised over the air force's poor safety record, operating as it does outside the regulations governing civilian carriers. In Ukraine, the situation has been somewhat different. In 1997, the Ukrainian Ministry of Defence created a commercial airline with surplus military aircraft, the state enterprise Ukrainian Aviation Transportation Company (UATK). This is currently the largest airline in Ukraine with 29 aircraft and it holds the exclusive rights, along with Antonov Airlines, to transport Ukraine's considerable exports of defence equipment. UATK's current fleet of 20 Il-76s is mostly used to deliver arms to what are described as "hot destinations". The airline also undertakes hot deliveries for other customers, losing an a Il-78 on charter to Air Sofia in Eritrea, in circumstances that led to the insurers not paying up owing to the airline's non-disclosure of the cargo and failure to carry war risk insurance. The airline does, however, have more straightforward charters throughout the world, including the United Nations in Sudan, Yugoslavia and Congo. UATK, in contrast to other privatized airlines in Ukraine, was also given the military airbases at Zaporozhye and Striye from which to operate, and where it is reported to receive subsidized supplies of fuel. Its aircraft are reported to be kept and maintained in Melitopol and Krivoi Rog, with certified maintenance at Zaporozhye and in Kinshasa. Despite the current fleet numbering only 29 aircraft, over 170 surplus aircraft have been transferred to the airline since its inception in 1997, including 94 Il-76s, 22 An-12s, 15 An-26s, two Tu-154s, and 36 helicopters. However, the substantial loss of aircraft from the air force's fleet has seen the 180 Il-76/78s inherited from the Soviet Air Force shrink to only 64 aircraft, of which 20 are reported to be airworthy, the balance having been or being cannibalized for parts. The reason for the massive transfer of aircraft to the airline is attributed by some to the fact that if the aircraft had been sold to third parties, the proceeds would have gone to the state export agency, Ukrspetsexport and the state budget, so denying the Ukrainian MoD of badly needed income. This way, it offered a viable alternative as it brought the revenue directly to the MoD. Even so, the future of UATK is not particularly encouraging. It is faced with the need to upgrade the Il-76s in order to gain greater economy to meet new international standards and the likelihood of the state providing the required funding is slim. Despite the orders for 65 An-70s, the cost of $2.5 billion is seen to be beyond the resources of the Ukrainian defence budget and the MoD may be spending scarce cash on keeping its dwindling fleet of Il-76s airworthy.

Article ID: 2914