TRAIN TICKETS ARE BECOMING MORE EXPENSIVE, AND UKRZALIZNYTSIA REPORTS LOSSES. WHAT’S WRONG?

PHOTO:UNIAN

There are many reasons for this problem, but here are the key ones

1. Tickets are below cost
2. The underperformance of the Ukrzaliznytsia
3. Toll evaders
4. Concessionary fares
5. Plundering

Unfortunately, today in Ukraine the railway ticket prices have long lagged behind the market and have become unprofitable for UZ.

The increase in prices is constrained because Ukrzaliznytsia is a state monopolist. As a result, not only the UZ does not make a profit, but also related industries that are not able to compete on the ticket price have a shortfall in profits or losses.

This is one of the reasons why domestic airlines do not really work in Ukraine, despite the considerable territory: because this market is constrained by low prices for railway tickets. The same applies to bus transportation.

Conclusion: Ukrzaliznytsia today is an extremely inefficient monopolist, and is an albatross around the necks of other modes of transport.

Volodymyr Shulmeister, director of the UIF Infrastructure programme.

First published: Liga.Business