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TRAVEL: Small impact for Cyprus, Greece hurt by Russia Labirint collapse

03 August, 2014

The collapse of two Russian tour operators in as many weeks has caused concern among Cypriot holiday companies, with hoteliers once again fearing they will be left unpaid or lose long-term bookings.


On Saturday, one of Russia’s bigger companies, Labirint, announced its bankruptcy, leaving about 25,000 tourists stranded in Greece, Turkey, Spain, Bulgaria and Cyprus, with the primary reason being the oversupply and fierce competition among low-cost operators.
Labirint’s mother company, Ideal-Tour, accumulated debts of 31 mln euros and on Saturday morning, Aeroflot’s holiday carrier Οrenburg Airlines refused to board passengers booked with the travel agency. Labirint and Ideal-Tour are Russia’s fourth and fifth biggest travel companies.
Stranded holidaymakers will be repatriated by the travel fund Turpomosch, while a further 200,000 customers are booked on and have paid for their vacations until the end of September, news sources suggested.
The biggest hit market seems to be Greece with five flights cancelled to Corfu, Heraklion, Santorini and Zakynthos. Unfortunately, this has also affected smaller creditworthy tour operators whose seats have also been cancelled.
Labirint, that start operating to Greece in 1995, has recently supplied an average of 150,000-200,000 holidaymakers a year, with a further 10-15,000 a year to Cyprus, said Victor Mantovanis, President of the island’s travel agents’ association ACTA.
“On July 16, another company called Neva, that sent about 3,000 holidaymakers to Cyprus, suspended payments to creditors,” Mantovanis said.
He added that of the nearly 600,000 Russian holidaymakers to Cyprus, the impact from the collapse was “minimal” as the two companies sold about 20,000 packages for the whole year, most of whom have already come and gone.
However, Mantovanis warned that in recent years, there had been a rapid boom among Russian tour companies, with some of them expanding too fast and beyond their means, causing a king of bubble. He said that this other bankruptcies may follow.
Labirint and Ideal-Tour claimed that their demise was affected by the rise in exchange rate of the rouble, making holidays more expensive, the negative political and economic climate in the country, the prevention of members of the armed forces from travelling overseas and the ongoing conflict with Aeroflot’s subsidiary Orenbourg Airlines.
Roza Vetrov Mir in Moscow also announced its bankruptcy recently, while Expo-Tour of St. Petersburg admitted last month that it, too, was in financial trouble.