Cyprus Airways and Eurocypria puts Cyprus Tourism in checkmate
The bankruptcy of Eurocypria Airlines and the more than possible bankruptcy of Cyprus Airways put Cyprus Tourism in checkmate. According to the Minister of Finance Charilaos Stavrakis, talking to the control committee of the Cypriot Parliament, Cyprus airways is heading the same way of Eurocypria. The Minister mentioned that if Cyprus airways is not able to return to profits it will have to close in 18 months from today.
In my opinion the structure and the political backstage of Cyprus airways does not allow to the company to operate with profits. High salaries, high overheads, and the fact that the company is the carrier of political backstage gives all the necessary ingredients to the airline to crash financially in a very short period of time.
Cyprus as a tourist destination depends only on air transport. Despite that a huge investment was made by Hermes Airports to upgrade the airport services and put Cyprus back in the international airport map, the destination suffers from low competiveness and total dependency on tour operation.
There is very small margin of manoeuvre and the stakeholders of Cyprus tourism are fed up with the policies followed the past years.
The Cyprus Tourism Organisation has started preparing a new Strategic Plan which now they will need to throw in the bin since it was based on the fact that Cyprus will have 2 airlines, one charter and another scheduled. Now the panorama is different. Now we are more than sure that the 2 airlines will have to close down and probably pass their flights to other foreign airlines.
The problem gets bigger since there are no guarantees that Cyprus as a country can sustain a new state made airline. Cypriot investors and travel stakeholders have no support for the Cypriot Banking System in order to put together a fast operation and recover the slots and the routes of the two airlines. According to all indications 2011 summer season will be the hardest tourism season of Cyprus. All the bookings and tentative bookings to hotels need an airline to transfer them; the unsecure future of Cyprus airways will defiantly push the UK and other European Tour Operators to redirect tourism traffic to other Mediterranean destinations.
Looking at this panorama, the only solution I can personally see is that the Cypriots stakeholders will need to make a move towards foreign investment. Search for a long term strategic investor who will undertake the risk to invest and turn Cyprus airports to a regional hub, investors from Greece or the Middle East who are interested in diversification of their investments. At the same time the destination will need to finally convert itself into a destination that does not depend on tour operators but co-exists with them in new tourism environment. Here the role of Hermes Airports is crucial and I am sure they understand it.