European Parliament's Commission to Examine Ongoing Dniproavia-Lufthansa Route Clash

The appeal by Ukraine's parliamentarians for the European
Parliament to examine a Ukrainian-German airline controversy has been
accepted. The appeal, signed by Ukrainian MPs Sergey Chukmasov
(Socialist party), Evgeni Zimin (Block of Yulia Tymoshenko) and Dmitry
Svyatash (Party of Regions) calls for the involvement of the European
Parliament as well as the German Bundestag in settling a dispute
between Ukraine's air carrier DniproAvia, German aviation authorities
and Lufthansa. According to MP Dmitry Svyatash, a positive reaction
has already come from Paolo Costa, head of the European Parliamentary
Committee on Transport and Tourism, has who promised that the
committee will "launch its own investigation into the situation with
DniproAvia."

The appeal was paralleled with a vigil in front of the European
Commission building in Brussels by the European Association of
Ukrainians. Association President Mikhail Kuzmin stated that the
protestors were insisting on the investigation in order to shed light
on the actions by Lufthansa and the German aviation authority against
Ukraine's commercial air transport providers, to restart negotiations,
and to renew flights to Germany by Ukraine's air carriers.

German government has supported Lufthansa since an October 2005
scheduling problem, when Lufthansa rejected DniproAvia's confirmation
of 5 of 6 Lufthansa-requested time slots. The sixth request was
shifted by a few hours in order to fit into existing flights on the
Dnipropetrovsk-Frankfurt am Main run.

The scheduling issue escalated in March 2006 when the German
Federal Department of Civil Aviation (hereafter - LBA) revoked
DniproAvia's landing rights first at Frankfurt and then throughout
Germany. The reasons given included Lufthansa's scheduling problems
and allegations that the airline had not been given a permit by the
Ukrainian authorities for flights in the Summer 2006 period, though
the information provided by Lufthansa to the LBA should show that the
Ukrainian government did indeed act in a timely manner.

At the same time, Lufthansa unilaterally decided to stop servicing
routes to Dnipropetrovsk. Thus the city has been without direct air
links to Germany's major cities for months. As this is not the first
dispute between Lufthansa and a Ukrainian carrier, it is hoped that
the high-level commission will serve to shed light on a practice that
has literally severed ties between communities.

Dniproavia's management is hopeful when forecasting the results of
the parliamentarians' actions. The EC is perceived as generally
maintaining a high level of competition among air carriers, and
protectionist measures are frowned upon. In an interview with the
Ukrainian business daily Kommersant, DniproAvia Deputy Director Sergey
Tkachenko stated that, "To us, it is apparent that upon the resolution
of the conflict, Lufthansa will operate flights to Dnipropetrovsk on
the same terms that were initially offered by us as a result of
Ukrainian-German inter-parliamentary agreements."