Aeroflot will con­tinue Tran­saero flights to De­cem­ber

Financial Mirror (Cyprus) - - FRONT PAGE -

Trou­bled Rus­sian car­rier Tran­saero will con­tinue to fly to and from Cyprus un­til Oc­to­ber 15 af­ter which state­con­trolled Aeroflot has pledged it will take over Tran­saero flights sched­uled un­til De­cem­ber 15, ac­cord­ing to the Rus­sian am­bas­sador in Cyprus.

He re­as­sured Energy and Tourism Min­is­ter Gior­gos Lakkotrypis that the flights would con­tinue and Cyprus would not be af­fected by a loss of some 30,000 pre-booked hol­i­day­mak­ers.

A Min­istry of­fi­cial briefed the par­lia­men­tary trade com­mit­tee that from Septem­ber un­til Novem­ber, Tran­saero was sched­uled to carry 32,000 pas­sen­gers from Rus­sia to Cyprus, while Costas Koumis, Vice Chair­man of the Cyprus Tourism Or­gan­i­sa­tion said that the clo­sure of Tran­saero was a cause for con­cern, es­pe­cially af­ter takeover talks with Aeroflot did not pro­ceed.

“We are con­cerned about de­vel­op­ments, but we can deal with the sit­u­a­tion,” he told MPs, not­ing that “the sit­u­a­tion is chang­ing.”

Ac­cord­ing to Koumis, there was a 16% in­crease is in ar­rivals from the UK while tourists from Ger­many in­creased by 70%, both of which com­pen­sate for the lsos of tourist ar­rivals from Rus­sia.

He that the CTO never aban­doned the pro­mo­tion ef­fort in Ger­many and that “we con­tinue to in­vest in that mar­ket”. He added that there is also an in­crease of tourists from the Dutch mar­ket and from Is­rael.

Koumis added that the num­ber of tourist ar­rivals from Is­rael was 96,000 while a 50% in­crease in ar­rivals from France is ex­pected in 2016.

On Fri­day, Trans­port Min­is­ter Mar­ios Deme­tri­ades had said that the po­ten­tial col­lapse of Tran­saero, Rus­sia’s sec­ond big­gest air­line, will have a “min­i­mal” im­pact on Cyprus, as only 30,000 are sched­uled to ar­rive on the is­land un­til the end of the year, with 350,000 al­ready car­ried this year.

Trasaero is the pri­mary car­rier to Cyprus for Bi­b­lioGlobus, the tour op­er­a­tor that ac­counts for 70% of all Rus­sian ar­rivals on the is­land. Ri­val state-con­trolled Aeroflot, with whom takeover talks failed on Thurs­day, will prob­a­bly take over this added traf­fic for the rest of the year, un­til a sec­ond sched­uled air­line is des­ig­nated for next year in ac­cor­dance with bi­lat­eral treaties be­tween the two coun­tries.

As­so­ci­a­tion of Cyprus Travel Agents (ACTA) chair­man Di­nos Kakkouras said that Tran­saero flights were con­tin­u­ing as nor­mal, also con­firmed by Adamos As­pris, spokesman for air­ports op­er­a­tor Her­mes.

“We are wait­ing to see how the Rus­sian gov­ern­ment will han­dle the de­vel­op­ment and we are wait­ing to be briefed by tour op­er­a­tors about what hap­pens next,” Kak­ouras said.

Some 40 weekly Tran­saero flights be­tween 18 Rus­sian re­gional air­ports and Cyprus are car­ried out ev­ery week, with Rus­sian now ac­count­ing for the sec­ond big­gest tourism mar­ket of the 2.5 mln ar­rivals, fol­low­ing the U.K.’s 1 mln tourists.

De­spite the eco­nomic cri­sis in Rus­sia, due to sanc­tions and spi­ralling in­fla­tion hurt­ing con­sumer spend­ing, Rus­sian air­lines car­ried 63.9 mln pas­sen­gers dur­ing the first eight months of the year, up 0.4% year-on-year, while in Au­gust pas­sen­ger num­bers grew 2.3% to 11.5 mln, con­tin­u­ing a trend of the pre­vi­ous months. In­ter­na­tional traf­fic was down 13.6% com­pared to a year ago to 28.2 mln, ac­cord­ing to Rus­sia’s Fed­eral Air Trans­port Agency.

In Jan­uary-Au­gust, Aeroflot car­ried 17.3 mln, up 10.2% yo-y, Tran­saero car­ried 9.4 mln, up 3.6% y-o-y, Saint Peters­burg-based Ros­siya, an Aeroflot Group mem­ber, car­ried 3.4 mln, down 0.9% y-o-y, S7 Air­lines car­ried 5.5 mln, up 1% y-o-y, while Globus Air­line, a mem­ber of S7 Group, car­ried 1.6 mln pas­sen­gers, up 18.9%. UTair car­ried 3.8 mln, down 38.7% y-o-y.

All these car­ri­ers fly to Lar­naca and Paphos, but have not clearly ex­pressed a de­sire to take over Tran­saero’s ca­pac­ity.

On Thurs­day, Aeroflot dropped its of­fer for a con­trol­ling stake of just over 75% of Tran­saero. It said that Tran­saero didn’t sub­mit a for­mal pro­posal for the deal by the agreed dead­line and that its board of di­rec­tors wouldn’t ex­tend the dead­line for talks.

The gov­ern­ment-bro­kered deal was aimed at staving off bank­ruptcy at the heav­ily in­debted Tran­saero, which has cur­tailed air­craft pur­chase deals to save money.

The col­lapse of talks could have ram­i­fi­ca­tions be­yond Rus­sia as Tran­saero is a buyer of Boe­ing and Air­bus jet­lin­ers.

Air­bus had al­ready de­layed de­liv­ery to Tran­saero of the first of the car­rier’s A380 su­per­jum­bos, orig­i­nally due this year, be­cause of weak­ness in the Rus­sian air­line sec­tor. Tran­saero had or­dered four A380s. Air­bus has been strug­gling to sell A380s which re­tail for more than $400 mln at list price, though cus­tomers typ­i­cally get dis­counts.

The air­line also had or­ders four Boe­ing 747-8 jumbo jets, which re­main to be de­liv­ered.

The ac­qui­si­tion of Tran­saero would have bol­stered the Aeroflot Group’s share of Rus­sia’s air­line mar­ket be­yond 50%, ac­cord­ing to the Wall Street Jour­nal. The man­age­ment of Rus­sia’s dom­i­nant air­line was ap­pre­hen­sive about the deal, though, be­cause of Tran­saero’s fi­nan­cial sit­u­a­tion, Rus­sian air­line ex­perts have said.

Aeroflot Chief Ex­ec­u­tive Vi­taly Saveliev said Aeroflot would en­sure Tran­saero pas­sen­gers won’t be im­pacted by the col­lapse of talks. “Pas­sen­gers will be guar­an­teed trans­porta­tion or a re­fund in the event that a flight is can­celled,” he said. Aeroflot ef­fec­tively took over op­er­a­tional con­trol of Tran­saero al­ready last month.

Founded in 1990, Tran­saero had a fleet of 97 air­planes and an out­stand­ing debt of 67.5 bln rou­bles ($1.03 bln) at the end of the first half of 2015. Her­man Gref, head of Rus­sian len­der Sber­bank, which lent money to Tran­saero, said ear­lier this year that the com­pany’s debt is­sue was “se­ri­ous.”

Cyprus Tourism Or­gan­i­sa­tion Deputy Di­rec­tor An­nita Deme­tri­adou said that she ex­pects no dis­rup­tions in Oc­to­ber, in which more ar­rivals are ex­pected com­pared to Novem­ber and De­cem­ber.

Trans­port Min­is­ter Mar­ios Deme­tri­ades said that a prob­a­ble fail­ure of Tran­saero could cre­ate a gap in Cyprus’s con­nec­tiv­ity to Rus­sia af­fect­ing the tourism in­dus­try.

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