Transcarpathian multimodal cluster and the European perspective of Uzhhorod airport

Wartime infrastructure challenges

Amid russia’s full-scale military aggression against Ukraine, the recovery, diversification, and expansion of supply chains is becoming a matter of national security. The war has changed and boosted the demand for new imported goods, namely for goods to meet the needs of the army, building materials, easily assembled structures, equipment, machinery, etc. The issue of not only delivery, but also the creation of value-added products, the localization of import-dependent enterprises and their integration into new logistics routes becomes more relevant. To meet this demand, it is necessary to develop multimodal clusters that combine the production, logistics and handling capacities. The priority is given to multimodal clusters located closely to the EU, namely the border ones.

The state has adopted some legislative initiatives aimed to support the implementation of such large-scale projects, in particular:

• New Article 43 of the Law of Ukraine “On Transport” that enables the Ministry of Infrastructure of Ukraine to determine the appropriateness of setting up/expanding multimodal terminals as well as the production, loading and unloading facilities based on the need for such facilities during martial law to overcome the adverse impact of hostilities and to meet the needs of the defense sector, the population, and business.
• Tax and customs incentives for participants of industrial parks (Law No. 5688 and Law No. 5689 on amendments to the Tax and Customs Codes to create favorable conditions for attracting large-scale investments in industrial production dated 22.06.2021).

There should be a border multimodal cluster in Transcarpathia as well. In addition to the already mentioned general arguments, there is a specific aspect – the political border situation, the need to “bridge” the region and the center. Moreover, Transcarpathia has a unique geographical location – the borders with Poland, Slovakia, Hungary, and Romania.

Multimodal Transcarpathia

Development of multimodal cluster (MC) in Transcarpathia requires a comprehensive plan for the expansion and integration of various transport infrastructure facilities, in particular:

1. Expansion of the border crossing points (BCP) capacity, according to our estimates, by at least two-fold during the next year and by 5-6 times in the future; opening of new BCPs, including one with Slovakia near Solomonovo village. For this purpose, first-class highway I/79, stretching through the territory of Slovakia to its border, was built back in the 90s.
2. Integration of Transcarpathian rail infrastructure with the European one, development of standard gauge railway on promising cargo flow routes, particularly across the territory of existing and future industrial parks.
3. Repair and expansion of the Kyiv-Chop highway and development of the overland road infrastructure due to increased demand for freight vehicles.
4. Analysis of prospects for cargo shipping and construction of the river port near Chop-Zakhon BCP. The Tisza River has the potential for cargo and, possibly, passenger transportation from the Ukrainian border to the confluence with Danube. Waterway E-80-01 from the Tisza River to Szeged is stipulated in the European Agreement on Main Inland Waterways of International Importance (1996). At first glance, the initiative looks doubtful from the commercial (what will be the cargo structure?) and political (the waterway will pass through Hungary and Serbia) perspectives. On the other hand, it is worth exploring further given the crisis of domestic exports and low throughput capacity on the borders. The idea of a Ukrainian river port on the Tisza River was discussed in the early 2010s. New feasibility study and negotiations at the level of the Tisza basin states should determine whether there is any prospect for this.
5. Construction of modern production, logistics and handling facilities in the region. In the current conditions, it is obvious that this will require a private initiative of Ukrainian business as well as involvement of international strategic partners. The state should support the initiative with the administrative and financial incentives, including various forms of public-private partnership across all elements of multimodal infrastructure. For this purpose, it is necessary to study the experience of neighboring states. Domestic legislative incentives mentioned above, in our experience, may contribute to the relocation of business from the east of the country to the region. But they are outdated and insufficient to compete with the regional neighbors, where European industrial parks thrive near our borders.

All border MCs, not only the Transcarpathian one, should develop under a similar scenario. However, Transcarpathia has something unique that can create a special synergy, the “fifth infrastructure element” – and that is Uzhhorod airport.

The now overlooked regional airport needs our special attention. The infrastructure section of the Recovery and Development Plan of Ukraine presented in Lugano, although containing a description of a large number of projects, does not mention the airport at all. Quite undeservedly. After all, it has the potential of becoming the leading Ukrainian airport.

The most international airport of Ukraine

Ukrainian sky is closed for civil aviation. However, Uzhhorod airport was not operating even before the full-scale war. For a long time it was considered problematic due to the close proximity of the runway to the border of the Slovak Republic and the need to use airspace of Slovakia even for domestic flights. In this regard, shortly before the invasion, there were statements about the need to build a new Transcarpathian airport in Mukachevo, Serednie or Chynadiieve. Even then, we opposed the implementation of such a wasteful project near the already existing airport. However, these discussions faded away as there were no resources and time for a new project, while the “disadvantage” of Uzhhorod airport has turned into its advantage for security reasons: aircraft takeoff and landing via NATO territory.

Even today there is interest from private investors in public-private partnership and the development of both the passenger and cargo airport. But for the airport to function at its full capacity the runway must be extended. Currently, it is unacceptably short, only 2,080 meters long. Given its current state, the airport can function at its minimum capacity. However, to get an international status, it is necessary to extend the runway by at least 720 meters to 2,800 meters to accommodate Boeing 737 passenger aircrafts. It is also desirable to extend the useful runway length by 1,600 meters to 3,600 meters to be able to accommodate cargo aircrafts.

Given the available information, we can see that extension of the runway within the territory of Ukraine is technically impossible given the lack of free land plots and urban development around the airport. Considering its configuration for commercially attractive use, it may be appropriate to complete construction of the runway on the territory of Slovakia, where there are only empty fields. Thus, the airport would become functional and competitive, both de jure and de facto international, and partly located on the EU (and NATO) territory.

At first glance, the idea may seem unrealistic, but it is not so.

How can it all “takeoff”

First, now is the time to develop and implement big and bold Ukrainian projects. Second, it is the European integration project. Third, it will be a Transcarpathian project with Slovakia, which will have the effect of multivectorness and balance for the region. And finally, there are relevant precedents: EuroAirport Basel Mulhouse Freiburg – a French-Swiss airport located in France on the border with Switzerland. The agreement for its construction and operation was concluded between France and Switzerland in 1949. France provided the land plot and Switzerland covered the costs, engaged contractors, and hired personnel. The operator is Basel-Mulhouse Airport, a joint venture headquartered in France and managed by the Board of Directors composed of 16 people, 8 from each state.

In other words, there is a perspective for a joint international use airport, and it needs to be studied. As for the risks, this model may be less commercially attractive for a private investor in case of developing the terminal infrastructure on the Ukrainian side without gaining a full control over an entire facility. Therefore, it is reasonable to explore, together with Slovak partners, the possibility of obtaining by Ukraine the legal control over the required site located in Slovakia solely for the purpose of completing the runway construction. This can be achieved, for example, through a long-term use, lease, purchase by public or private law entity or even through the exchange of equivalent land plots between Ukraine and Slovakia.

Does the exchange of land plots also look unrealistic? Not at all. There is a precedent of land exchange between Ukraine and Moldova. The State Border Agreement with the Republic of Moldova dated 18 August 1999 and the Additional Protocol to it stipulated the transfer of Odesa-Reni highway section that passes through the territory of Moldova near Palanka village into the ownership of Ukraine. In exchange, Moldova received a land plot on the coastline near Giurgiulesti with the right to build a port, thus turning Moldova into a maritime state. The parties also undertook to build a joint checkpoint. Although the agreement implementation was accompanied by a dispute between the parties, the exchange of land plots (which, by the way, was also driven by international infrastructure needs) took place. A similar scenario for Uzhhorod should not be dismissed. Although one should not put high hopes on it, as this would involve an exchange of territory with a country at war.

Uzhhorod airport is in communal ownership. Construction of the airfield to the level proposed by us is an impossible task for the regional budget, and it can only be accomplished by using the state budget. To finance the aviation infrastructure development, there is the State Target Program of Airport Development until 2023 (Resolution of the Cabinet of Ministers No. 126 dated 02.24.2016), in the elaboration of which we were engaged as consultants. Currently, this program is not being implemented; however, it is the only effective organizational and legal instrument to finance the runway construction works. It is advisable to hold consultations on the renewal and prolongation of the program. At the same time, implementation of the program at a specific municipal airport may raise the issue of transferring the airfield (a strategic infrastructure object, prohibited for alienation to a private investor) or an entire airport into the state ownership.

Another risk is the political and economic attractiveness of the project for Slovaks. The Slovak airport Kosice (runway 3,100 meters long) is less than 100 km from Uzhhorod. This is also a small regional airport with a passenger traffic of about 560 thousand people before the pandemic, and 166 thousand passengers during the 2021 pandemic year – quite impressive figures for a relatively sparsely populated region of Europe. There are also Hungarian airports located nearby: a large airport in Budapest and a budget one in Debrecen. Therefore, the key to Uzhhorod’s European air perspective is the project support by the EU, as well as a convincing feasibility study.

It is necessary to develop a project for the completion of the airfield and development of an entire airport, to resume the state program, to start international diplomatic consultations at the EU level on the prospects of the project, as well as consultations with the government of the Slovak Republic on the allocation of necessary land plot for the completion of the runway and further operation of Uzhhorod airport jointly or exclusively by Ukraine.

Ukraine will win!