Cyprus Airways ceases operations; Blue Air moves in with Larnaca base

On 9 January, the state-owned Cyprus Airways applied for voluntary liquidation after it was forced to cease all operations. This decision has come due to the European Commission having ordered the flag carrier to pay back around €65 million ($76.78 million) out of a €103 million ($121.67 million) state aid package, which was received in the 2012-2013 period.

Founded in September 1947 as a joint venture between the Colonial Government of Cyprus, BEA (British European Airways) as well as private interests, Larnaca-based Cyprus Airways is the latest victim of a weakened Cypriot economy. On 9 January 2015, the European Commission ruled the money-losing 93% state-owned flag carrier to pay back around €65 million ($77 million) out of a €103 million ($122 million) state aid package, which was received in the 2012-2013 period. According to the European Commission, this financial investment has given Cyprus Airways an unfair advantage over its competitors. Following this decision, the carrier’s board of directors decided to initiate the procedure for voluntary liquidation last Friday. With regards to the passengers that have already booked flights after 9 January 2015, the airline will arrange for the issuance of a new flight ticket via other operators. In addition, its demise has been widely expected according to local media due to being a legacy airline overloaded with cost and large staff numbers. At the moment it ceased all services, Cyprus Airways operated a fleet of just six A320s (according to Planespotters.net).

A total of 20 destinations served for S14

Examination of Cyprus Airways’ network for last summer reveals that the carrier served 20 destinations in 11 countries from its Larnaca base with a combined total of 82 weekly flights. Not surprisingly, the 932-kilometre sector to Athens was the airline’s most served airport pair with 19 weekly flights. This was followed by the 11 weekly services to the second most populous city in Israel – Tel Aviv, which accounts for the most extensively competed route of the carrier, flown against the incumbents El Al (six times weekly), Arkia (five times weekly), Sun d’Or International Airlines (weekly). Overall, the airline has been operating services to a total of seven capital cities (Amsterdam, Athens, Beirut, London, Moscow, Paris and Sofia).

Following the sale of some London Heathrow slots to Virgin Atlantic Airways for €22 million in 2011, the airline once again tried to improve the company’s liquidity for 2015 by selling its last remaining daily slot pair at London’s primary gateway to American Airlines for €26 million. As a result of this, Cyprus Airways switched its Larnaca-London operations to London Stansted on 14 September.

The following table summarises Cyprus Airways’ network for week commencing 19 August 2014:

Origin Destination WF* Competition
Larnaca (LCA) Athens (ATH) 19 Aegean Airlines (28)
Tel Aviv (TLV) 11 El Al (6), Arkia (5), Sun d’Or International Airlines (1)
London Heathrow (LHR) 7 British Airways (7)
Thessaloniki (SKG) Aegean Airlines (6)
Beirut (BEY) 6 Middle East Airlines (11)
Amsterdam (AMS) 4
Paris CDG (CDG)
Moscow Sheremetyevo (SVO) Aeroflot (14), Transaero Airlines (4)
Zurich (ZRH) 3 Helvetic Airways (2), Edelweiss Air (8)
Frankfurt (FRA) 2 Lufthansa (6)
Heraklion (HER) Aegean Airlines (2)
Skiathos (JSI)
Munich (MUC) Lufthansa (4)
Sofia (SOF) Wizz Air (3), Bulgaria Air (2)
Barcelona (BCN) 1 Vueling (2)
Chania (CHQ)
Mikonos (JMK)
Santorini (KVA)
Preveza (PVK)
Rhodes (RHO)
Source: Innovata / Diio Mi for w/c 19 August 2014. *WF: Weekly Frequency.

According to Innovata schedule data for last August, Cyprus Airways – the largest operator at Larnaca with over 16% of total seat capacity, faced competition on 12 out of the 20 served airport pairs from its base. Notably, Aegean Airlines competes directly on three of the 20 routes. Following the demise of the airline, Larnaca will lose its links to a total of six Greek destinations, but most importantly to two major European capitals, namely Amsterdam and Paris; which could provide opportunities for the likes of KLM and Air France.

Blue Air moves in at Larnaca with Athens and Thessaloniki flights

Nonetheless, the first beneficiary of Cyprus Airways’ demise is Romania’s LCC, Blue Air, which has announced on 13 January the opening of its third operational base at Larnaca. Therefore, the airline that celebrated its 10th anniversary in December, will commence services to Athens and Thessaloniki with daily and thrice-weekly flights respectively starting on 19 January. In fact, Blue Air’s decision to set up a permanent base at Larnaca is a natural step given the relative lack of LCC activity in Cyprus. Historically, the Romanian LCC operated flights from Larnaca to Milan/Bergamo, Vienna and Warsaw Chopin between March 2010 and September 2010. Blue Air’s other two bases are at Bucharest and Bacau in Romania.

Aegean expands at Larnaca as well

Besides Blue Air, Aegean is also taking advantage of Cyprus Airways’ demise, as it will commence daily operations from Larnaca to Tel Aviv on 30 March as well as thrice-weekly flights to Kiev Zhulyany on 31 March. As a matter of fact, the Greek flag carrier announced plans to operate four A320s from Larnaca starting 30 March. This will increase to 14 the number of destinations connected directly with Cyprus.As regards direct connections with Greece and 7 other countries, total yearly capacity will exceed 1.5 million seats. More specifically, with the company’s summer schedule as of April 2015, the connection between Greece and Cyprus is boosted with more frequent flights to Athens and Thessaloniki, and the introduction of a direct flight between Athens and Paphos. The new summer schedule also includes direct connections with Heraklion and Rhodes, while direct connections with Myconos and Santorini will be added in July and August. Eight to nine direct flights with destinations in Greece will depart daily. The company’s planning focuses on the direct connection of Cyprus with Western Europe; and therefore five important destinations are added: Heathrow, Paris, Munich, Rome and Milan.

Blue Air Crete

Following Cyprus Airways’ demise, Blue Air announced that it will open its third base at Larnaca on 19 January with daily flights to Athens and thrice-weekly services to Thessaloniki. Tickets are already available at prices starting from €29.99.


Comments

  1. David says:

    please note that Aegean airlines is opening a base.
    hence the profitable routes will remain… as always.. it is a world of economics these days…. if there is a demand there will be a supply..

    http://en.aegeanair.com/all-about-us/press-office/press-releases/press-release/?prid=513

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