Running an airline during a war: a Q&A with SkyUp’s CCO, Lyudmila Slobodyanyuk

Kyiv-based SkyUp has has seen enough crisis scenarios during its five-year history; first, the COVID-19 pandemic, which made demand collapse. Then, a war which has kept the Ukrainian airspace closed since February 2022.

Originally designed as a low-cost carrier, the model could get through a pandemic despite reduced demand, but the war naturally interrupted everything. Now, SkyUp’s fleet operates ACMI contracts (wet lease, where another airline hires their aircraft with crew) around the world.

Aviacionline had the opportunity to have a Q&A, via e-mail, with SkyUp’s Chief Commercial Officer, Lyudmila Slobodyanyuk.

The interview was edited for clarity.

What was SkyUp’s financial and commercial position on February 23, 2022? It must have been two intense years after the pandemic.

As a newly established airline, we embarked on our journey in 2022 and achieved significant milestones within our three-year history. We were proud to announce that we have successfully served a total of 2.55 million passengers during this short period.

Furthermore, according to UkSATSE (Ukrainian State Air Traffic Services Enterprise), we ranked second among Ukrainian airlines in terms of the number of flights conducted in the Ukrainian airspace in 2021. This recognition highlights our commitment to providing efficient and reliable air travel services to our valued customers.

We didn’t actually stop in 2020, in the midst of a pandemic, travel restrictions, and border shutdowns:

• evacuated Ukrainians from Wuhan (China);
• during the first week of the lockdown, operated more than 100 special flights to 30 countries around the world to enable Ukrainians and foreign citizens with a residence permit in Ukraine to return home. In total, 18,500 passengers returned to Ukraine on these flights;
• diversified our operations: converted 7 aircraft to cargo planes and later continued to transport cargo in special compartments of passenger aircraft. In total, in 2020-2021, we transported 2,410.5 tons of cargo.

Then, February 24th happened. What was the first thing you did once you got to the office on that day?

I found myself on a business trip abroad when Russia launched a full-scale invasion of Ukraine. On that fateful day, I had important meetings scheduled with airport authorities. However, our immediate priority became ensuring the safety and well-being of our entire team, consisting of approximately 1,200 individuals.

Without wasting any time, we initiated a comprehensive check to confirm the safety and location of each team member. We assessed their needs and determined how we could provide assistance during this crisis.

Within a week, we had already formulated plans for evacuation flights. Over the next few months, we conducted numerous flights, transporting Ukrainians to destinations such as Israel and Portugal. Additionally, we organized the evacuation of our team members to Turkey. To facilitate these operations, we successfully negotiated with Moldova’s authorities to reopen their airport, which had initially closed its airspace due to the full-scale war.

In our commitment to aid those affected by the conflict, we established partnerships with organizations such as the United Nations and other non-governmental organizations. On our return flights to Moldova, we utilized our aircraft to transport essential humanitarian aid destined for Ukraine.

The situation remains challenging, but we are determined to provide support and assistance wherever possible. Our focus on collaboration, both within our team and with external organizations, reflects our unwavering dedication to helping those affected by the ongoing crisis.

Apart from the chaos it must have been outside the office, there was still a company to run. At the time, how did the evacuation go — and how many aircraft were already outside the country?

Approximately a month prior to the invasion by Russia, we took proactive measures to safeguard our fleet. In collaboration with lessors and insurance companies, we devised a meticulously planned flight schedule aimed at minimizing the time our aircraft spent in Ukraine. Through this innovative approach, we ensured that, at the time when the Ukrainian airspace was closed for civil aviation, 10 out of our 11 planes were strategically positioned abroad.

However, one lone aircraft remained within Ukrainian airspace at the time of the airspace closure and was subsequently compelled to return to Boryspil airport in compliance with the NOTAM (Notice to Airmen). Fortunately, we were able to execute the evacuation of this aircraft in April 2023 and this unit has started successful operation after the involuntary interruption and proper maintenance done.

SkyUp’s entire fleet is leased. Did any of the lessors (or insurers) asked for their aircraft to be returned? How did you manage the payment of leases and debt once all revenue stopped?

Our fleet is leased. Since the full-scale war began we didn’t have any unresolved issues with our lessors and partners. We have long-standing relationships with our partners, and they find us as reliable partners fulfilling commitments no matter what, therefore any questions that may arise are considered together to find a win-win solution.

Furthermore, we added our fleet with a new aircraft in summer 2022 and will continue the fleet expansion.

After the initial shock, how did you manage to close your first ACMI deal?

We concluded our first ACMI contract with Air Moldova. The first two months after the invasion, one of our aircraft was actively involved in evacuation flights and based in Chisinau airport, so at the same time we’re negotiating about following engagement of the plane into ACMI deals as we’re able to provide the plane for work almost immediately.

Since 24 February, we have cooperated with 15 airlines: Air Albania, Air Moldova, Corendon, Corendon Europe, ETF Airways, FlyOne, Freebird Airlines, Marabu, Smartwings, SunAir, Tailwind, Tunisair, WizzAir Abu Dhabi, WizzAir Hungary, and WizzAir Malta.

Right now, most of the fleet is committed to ACMI deals — and to your parent company. But is the majority of the office activities still going on in Ukraine?

Referring to the “parent company” is not entirely accurate. The establishment of SkyUp [Malta], the European company, has propelled the SkyUp brand with its Ukrainian DNA to an international level. This accomplishment marks a significant milestone in Ukrainian aviation history, as we are among the pioneers in achieving such a feat. Notably, obtaining the European operator’s license enables us to enhance our regular flight services.

Presently, our primary focus lies in ACMI services. However, we also provide charter flights for tour operators as well as the specialized flights for Ukrainian and international foundations, NGOs, professional associations, etc. Additionally, we have plans to revitalize our cargo operations on passenger flights.

Is SkyUp already breaking even?

Through our ongoing operational endeavors, we have managed to retain our team of 1,200 individuals and sustain a business that has encountered a temporary setback. Despite the challenges, we have diligently fulfilled our tax obligations, having already contributed more than UAH 165 million since the commencement of the extensive invasion. Additionally, we have remained committed to honoring our responsibilities to partners and passengers.

In college, one learns about running a company in “normal” times or perhaps to endure a crisis — but nothing like a war. How is SkyUp coping with financing in a war economy — is access to capital markets possible and, if not, how do you manage?

The field of civil aviation is characterized by its dynamic and demanding nature, making crises a regular part of our operations. We must always be prepared for various scenarios, including the unexpected, such as the outbreak of war. While some of us may have been reluctant to believe it until the last moment, we were aware that the possibility existed, and we made preparations accordingly.

When the full-scale war commenced, the most challenging aspect was managing the emotional response to the situation and maintaining the team’s morale amidst uncertainty and the unpredictable nature of unfolding events. Providing individuals with routine tasks became crucial during such uncertain times, as routine acts as a stabilizing force, offering hope and strength to endure.

Our people are our utmost priority and greatest asset. It is the dedication and passion of our team that upholds the company and propels it forward. Their unwavering commitment and love for what they do are the driving forces behind our progress.

Last year, you also opened a branch in Malta. What will be the scope of this venture? That is, what will it do that SkyUp Ukraine currently does not — and why adding complexity to the operation?

Last year, we only started to work on founding a European company. SkyUp MT airline has received an Air Operator Certificate (AOC), Continuing Airworthiness Management Organization certificate (CAMO), and an Air Operator License (AOL) in May 2023.

Contrary to common belief, establishing a company in the European Union (EU) in today’s circumstances brings  simplification rather than added complexity. It opens up a multitude of opportunities that were previously inaccessible to us as a non-EU Ukrainian company. The establishment of SkyUp MT allows us to operate as an EU resident, enabling us to expand our range of services, including the introduction of regular flights.

Regarding organizational structure, it is true that there may be increased complexity. However, when considering the sociopolitical complexities that currently significantly impact our business, our move into the EU market has actually helped eliminate unnecessary complications that hindered our progress.

Beyond ACMI: is SkyUp planning for regular operations in Europe?

We are actively engaged in the process, diligently exploring various possibilities, developing a comprehensive flight program, and undertaking all necessary preparations to commence sales and orchestrate flights. Our goal is to open sales for our regular flights within this year.

Is growth in later 2023 and 2024 on the cards for SkyUp?

We have strategic plans to broaden our fleet, despite the ongoing conflict in Ukraine, which presents challenges in maintaining both our team and business operations when our domestic market is inaccessible. Additionally, the economic burden of the war continues to mount, necessitating the acquisition of additional resources to ensure our survival.

Just recently you apparently lost a plane in Khartoum. Is everyone fine there and, if so, how will you recover them and the other 737 that remained seemingly untouched?

We actually can say about the unequivocal significant damage and probable loss of two aircraft based on the available evidence, and that all relevant evidence has been submitted for further analysis to the competent organizations, insurance companies, aircraft owners.

All 36 SkyUp employees were successfully evacuated from Sudan. It was a complex multi-stage operation under the supervision of the airline’s crisis center and representatives of government agencies, as well as with the informational support of international partners.

Is SkyUp making plans for a post-war Ukraine (and is it reasonable to do so)?

We are diligently preparing to be at the forefront of reclaiming the Ukrainian skies as the first to resume operations. By preserving our team, we aim to contribute to the swift revitalization of Ukrainian civil aviation. Our dedicated personnel will be fully prepared to resume work without delay, eliminating the need to invest time in renewing their flight licenses, unlike those who have faced compulsory downtime and a lack of employment opportunities.

Where do you see SkyUp in five years? And where do you see it in ten years?

In 2018 SkyUp started its operations with only 2 aircraft and one charter destination but a long-term strategic intention to enter the European market was our beacon since the beginning. However, no one could have imagined those days that we would have to start operations in Europe in such circumstances as a full-scale war.

Despite the ongoing war, we proudly commemorated our fifth anniversary on May 21, standing strong as an operational entity. We have expanded our horizons by establishing the SkyUp brand internationally, venturing into the European market, and successfully launching our European company.

Since our inaugural flight, we have been instrumental in transforming the perception of Ukrainian aviation. By offering classic carrier high-quality services at affordable low-cost prices, we have revolutionized the industry. Our commitment to expanding route options has been unwavering, with over 90 routes opened in just one year. It is our steadfast mission to connect Ukrainians with the world and showcase Ukraine to a global audience, a mission we will tirelessly pursue.

We shattered stereotypes and challenged aviation standards when we put an end to heels and pencil skirts for our flight attendants and replaced it with white sneakers, a loose orange suit, and white t-shirts.

Looking ahead to the next five years, we envision SkyUp as a thriving participant in the European market, boasting a diversified business model. This hybrid approach will combine both regular and charter flights, encompassing approximately 70 routes in the first years. Our target is to achieve a passenger turnover of 2 million per year within the next two years.

To remain adaptable, we prefer to plan in shorter intervals, ensuring flexibility in the face of modern risks and challenges. As evidenced by our recent experience, adaptability is crucial in navigating uncertainties.

Currently, we actively seek opportunities for collaboration and expansion. South America holds particular appeal for us, and we are actively seeking local partners for medium and long-term ACMI contracts for the winter of 2023-2024.

Aviation transcends boundaries, we invite you to cooperate together in creating new opportunities for our beloved passengers. Let us embark on this collective journey, embracing the spirit of unity and fostering a harmonious future in the skies and peace on the ground.

The post Running an airline during a war: a Q&A with SkyUp’s CCO, Lyudmila Slobodyanyuk appeared first on Aviacionline.com.

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