Is Cyprus Air­ways worth sav­ing?


Financial Mirror (Cyprus) - - FRONT PAGE -

There is no doubt in any­one’s mind that the po­ten­tial demise of our na­tional car­rier is all-round bad news, both for the econ­omy in gen­eral and the strug­gling tourism sec­tor in par­tic­u­lar.

But re­cent events have re­vealed the ex­tent to which mer­i­toc­racy has been thrown out the win­dow in ex­change for po­lit­i­cal and other favours, mak­ing “pub­lic in­ter­est” or­gan­i­sa­tions, such as the trou­bled air­line, sus­cep­ti­ble to pres­sure, thus de­press­ing lev­els of com­pet­i­tive­ness.

Could it be that the present gov­ern­ment is se­cretly wish­ing for the Euro­pean Com­mis­sion to dis­ap­prove of the 100 mln or so euros in sub­si­dies and loan guar­an­tees to be con­sid­ered as un­favourable state aid?

And if so, will the clo­sure of Cyprus Air­ways spell the be­gin­ning of the end of favouritism and trade-union bul­ly­ing in pub­lic cor­po­ra­tions that no politi­cian has ever dared to stand up to?

The fact that re­cently-re­struc­tured Aegean Air­lines and low-cost op­er­a­tor Ryanair are set­ting their sights on es­tab­lish­ing a Cyprus hub does not, in it­self, re­solve the prob­lems of the is­land’s trans­port iso­la­tion.

The Greek air­line has made some rel­a­tively good of­fers to trav­ellers in past years, but would not be able to re­place CAIR as it has its own share­hold­ers to re­port to.

On the other hand, the cheaper fares pro­vided by Michael O’Leary’s out­fit do not nec­es­sar­ily re­place Cypriot trav­ellers’ pref­er­ences or whims.

What is of greater con­cern, though, is that Cyprus Air­ways’ mar­ket share has been dwin­dling in re­cent years and fallen to a his­toric low of 10%, due mainly to high wage costs that have kept it un­com­pet­i­tive and forc­ing past boards and man­agers to cut down on work­force, wages and even­tu­ally as­sets and routes.

This has cre­ated a vi­cious cir­cle as the air­line has not been able to re­cover and re­turn to a path of growth, with ri­vals breath­ing down their necks and vy­ing for any piece of the ac­tion.

What the gov­ern­ment should de­cide fast (and not drag its feet as with other de­ci­sions) is whether the is­land needs a “na­tional car­rier” and if so, what the real ben­e­fits will be to the is­land’s trans­port sec­tor, ex­ports and tourism.

Some­one should also have the courage to ad­mit that past pres­sure forced the clo­sure of the much leaner and more flex­i­ble Euro­cypria, sim­ply be­cause par­lia­ment and past gov­ern­ments weighed that the voter-staff of the char­ter car­rier were more ex­pend­able than the na­tional car­rier, three times its size.

As a re­sult, the suf­fer­ing.

So, do we need a new Cyprus Air­ways or does the gov­ern­ment adopt a reg­u­la­tory role and su­per­vise the avi­a­tion sec­tor, leav­ing hote­liers to the mercy of a hand­ful of air­lines?





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