Aviation is part of defense: Aerospace Association of Ukraine called to consider the interests of the industry in the Defence City project

The Aerospace Association of Ukraine welcomed the stated readiness of the authorities for a constructive dialogue with business within the framework of finalizing the Defence City legislative initiative. The organization positively assessed the statement of the head of the relevant Verkhovna Rada Committee, Danylo Hetmantsev, regarding his readiness to take into account market proposals, UNN writes.

Quote

"The Aerospace Association of Ukraine sincerely welcomes the authorities' readiness for a constructive dialogue with business and the finalization of the Defense City legislative initiative, voiced by Danylo Hetmantsev, Chairman of the Verkhovna Rada Committee on Finance, Tax and Customs Policy. We are confident that taking into account amendments aimed at softening the criteria for inclusion in residency regarding the share of income from defense activities and opening access for manufacturers of dual-use goods will strengthen the state's defense capability, preserve production infrastructure, and provide Ukraine with additional advantages in the international market of defense industry products," – it is emphasized in the statement published on the website of the Aerospace Association of Ukraine.

The Association notes that since the presentation of the Defence City initiative, the organization has consistently supported its concept as an important tool for the development of the defense-industrial complex. At the same time, they draw attention to the fact that the current version of the draft laws risks leaving the aircraft manufacturing industry, which plays a key role in ensuring the combat capabilities of the Armed Forces of Ukraine, outside the special regime.

This is not just about production – Ukrainian enterprises modernize and repair military aircraft, service Western aviation equipment, manufacture parts for strategic aviation, and implement export contracts with dual technologies. In the conditions of a full-scale war, this is a critically important segment of the defense infrastructure

The requirement in the draft, according to which a company must receive at least 90% of its income from defense activities, is considered unrealistic, especially for the aviation industry. Most enterprises traditionally worked in a mixed civilian-military format, and even with active re-profiling, they will not be able to reach this threshold. As a result, such flagships as "Antonov", "Motor Sich", "Ivchenko-Progress", as well as dozens of smaller companies involved in helicopter repairs, production of components and assemblies for combat aviation and drones, are effectively excluded from the initiative.

Of particular concern is also the abolition of tax benefits from January 1, 2025, which have been in effect within the special regime for supporting the aviation industry since 2010. This led to a significant increase in production costs (by 25-40%), limited the import of critical equipment due to VAT and customs duties, and reduced opportunities for reinvestment, which threatens the preservation of tens of thousands of highly qualified jobs.

In such a situation, the refusal to allow aircraft manufacturers to become residents of Defence City only exacerbates the crisis in the sector

The organization emphasizes that the amendments to the draft laws proposed by people's deputies for the second reading are in the interests of the state. In particular, it is about:

• reducing the defense threshold to 40-50% taking into account annual income;

• including modernization and maintenance of aviation equipment in defense activities;

• applying benefits for enterprises that reinvest profits in development; official inclusion in the list of residents of enterprises defined by the current government decree as critically important;

• transferring the function of forming the list of such enterprises to the Cabinet of Ministers, and not to a separate department.

Also, representatives of the Association reminded that according to the Law of Ukraine "On the Development of the Aircraft Industry", aircraft manufacturing is recognized as a priority sector of the economy. This law also defines that research and development work on the creation of new aviation equipment belongs to the category of critical technologies. The law creates legal conditions for the development of the industry, the preservation and creation of jobs in related sectors, and ensuring the competitiveness of Ukrainian aircraft, engines.

Our goal is not to receive funding from the budget, but to create conditions under which enterprises can independently invest in development at the expense of released resources. This corresponds to both economic feasibility and international practice of stimulating defense production. The experience of 2010-2024 has shown the effectiveness of such decisions: bringing new models to the market, increasing exports, increasing tax revenues, and – most importantly – strengthening national security

The Aerospace Association of Ukraine calls on the parliament to continue a professional dialogue on the preparation of draft laws for the second reading. According to the organization, now is the chance to create an effective legal regime that will not only support the development of the defense industry, but also preserve the industries that have formed the intellectual and industrial basis of Ukrainian statehood for decades. The inclusion of the aviation sector in Defence City, as emphasized, is not an exception, but a logical component of state policy in the field of security, economy, and technological development.

Recall

Earlier, the Head of the Trade Union of Aircraft and Machine Building Workers, Yarema Zhugaievych, stated that the aviation industry remains one of the most preserved among the industrial sectors of Ukraine and demonstrates a high level of qualification and effectiveness. According to him, the aviation industry not only survived in the difficult conditions of the war – it holds on thanks to specialists who are able to implement the most complex technological tasks.

The industry has the potential to become the core of machine-building recovery and the locomotive of the entire economy. Zhugaievych also emphasized that one job in aviation creates 8 to 12 jobs in related sectors – from education and metallurgy to logistics and services. In his opinion, for further growth, it is critically important to preserve human capital, ensure investments, introduce new technologies, and restore state defense orders at aviation industry enterprises.