Hermes Airports Ltd took over in May 2006 the management of the existing airports and at the same time the construction of new airports at Larnaka and at Pafos at a cost of about €856.000.000, an amount which includes equipment and the new extensions which are now under way.
The Pafos airport will be completed early in September and is expected to become fully operational early in November 2008. The Larnaka airport will follow one year later, that is, its construction will be completed early in September 2009 and will go into operation early in November 2009.
The State will not pay any amount either for the cost of the construction or for the management of the airports nor will it provide any guarantee for this purpose. In addition to the amounts which are spent on the construction of the new airports, Hermes has spent since May 2006 an amount exceeding €10 million for the improvement of the existing building installations and their maintenance, the increase of parking places and the addition of new rooms in order to ensure their satisfactory operational functioning until the transfer of the airports’ activities to the new buildings.
At the new Larnaka airport Hermes is going ahead at its own cost, over and above its contractual obligations, with the creation of additional new building installations of an area of 2400 square metres in order to enhance their functionality and to provide improved services to the traveling public. Also over and above its contractual obligations it is adding new installations and sophisticated facilities in order to ensure the more efficient and smooth functioning of the new airports.
BENEFIT TO THE STATE
The State benefits by collecting a significant percentage (33%) from the income of the turn over of the two airports. In the two years since Hermes took over until May 2008 the Government has collected an income of about €90 million.
AIRPORT TAXES
Airport taxes, a percentage of 33% of which goes to the Government, were fixed by the State before the invitation of tenders for the construction of the airports and are included in the agreements between Hermes Airports and the Republic of Cyprus.
Consequently, the allegation made by some that Hermes has unilaterally and arbitrarily imposed the level of the airport taxes which – compared to those of many other airports in South Europe including the Athens airport, are not in any case higher – is entirely unfair.
It should be particularly stressed that Hermes, on the basis of its Contract with the Cyprus Government, has the right to impose an increase in taxes which were fixed in advance in May 2007 and in May 2008. Despite this, Hermes in its desire to contribute to the further restraining of the airport taxes has decided not to go ahead now with the readjustment of taxes, as it had a right to do, but to suspend their introduction until May 2009. It has informed those concerned about this. As a result of this decision Hermes will suffer a loss of €1 million.
Hermes will be sustaining great losses for many years until it is in a position to recover the funds it has invested and to cover the cost of the funding of the two new projects, i.e. until the activity becomes profitable at reasonable levels. It should also be noted that throughout the period of the management of the airports by Hermes there is always the risk of exogenous and non foreseeable factors affecting the passenger traffic and reducing the company’s income.
PARKING FEES
Regarding the fees which are charged in the parking areas of the two airports, which have been extended and improved, the public are informed that they have the right to free parking for the first 20 minutes, an advantage which is not offered in any other parking place in Cyprus. It is also noted that now with the re-distribution of the time periods and the gradual increase of fees a reduction of fees has been achieved. Thus the relevant suggestion of the Ministry of Communications and Works and the competent House of Representatives Committee is complied with.
GROUND HANDLING SERVICES
It is recalled that before Hermes took over the management of the Airports, in May 2006, there were frequent strikes and stoppages of work for various reasons. The Management of Hermes has made and continues to make sincere efforts to maintain industrial peace and this it has until now achieved.
Hermes, for the first two years during which its Contract with the State was in force, had the responsibility to offer, and it did offer, satisfactory Ground Handling Services.
Also Hermes has made and continues to make every possible effort to ensure the improvement of the quality of the services to the travelling public, through the upgrading of the arrival and departure areas, the cargo activities, the cafeterias and all the procedures related to the movement, waiting and service of passengers.
However, under a contractual obligation to the State, which arises also from a relevant European Directive, Hermes was obliged to liberalise the Ground Handling Services and to assign them, under a procedure of invitation of tenders, to two independent companies, for the purpose of creating fair competition conditions and ensuring that Hermes does not enjoy a monopoly.
Thus, it has awarded, with the consent and permission of the State, the contract for the supply of Ground Services, to two organizations: Swissport Cyprus Ltd and LGS Handling Ltd. The majority of the shares in Swissport Cyprus Ltd are held by Swissport International, which also carries out the management. Cyprus Airways holds more than 25% and GAP Vassilopoulos holds a smaller percentage. LGS consists of the Louis Group, the Goldair Handling S.A., the Servisair U.K. Ltd and Clin Co. Ltd. It is clarified that Swissport has been chosen as its associate and partner by Cyprus Airways, which also had the right to be evaluated for securing of one of the permits.
During the transitional period until the taking over of the services by the two companies, it was established that there were both omissions and errors because they had failed to make proper and timely preparations, as they ought to. Immediately after they took over, serious problems were created at the airports due to the insufficient number of staff and the shortage of experienced inspectors and trainers. This resulted in the traveling public not being provided with the services they were entitled to and delays being observed both in departures and the delivery of luggage.
Unfortunately, the problems regarding the supply of services to the traveling public have not yet disappeared and for this reason Hermes in cooperation with the competent ministry, the Ministry of Communication and Works, is closely and meticulously monitoring the activities and actions of the two companies and has pointed out, mainly to the one of the two Companies, that it should improve and upgrade the level of its services and fill up the gap in order to serve the public properly.
Severe warnings, written and oral, have been given and there is round the clock monitoring. As a result the Companies have taken positive steps and it is recognized that there has been a substantial improvement. If, however, the situation is not improved to the desirable extent, in accordance with the commitments of the Companies, Hermes will not hesitate to terminate the contract with the Company at fault and to take over again itself the Ground Handling Services until new tenders are invited so that high quality services may be provided at the airports. Hermes apologizes for the inconvenience to the traveling public and asks for their understanding until the solution of the problems which have been created and for which the Strategic Investor is not responsible.
SECURITY AT THE AIRPORTS
There has never been a security problem at the airports, because the procedures which are followed are strict and any shortcomings which may affect security are spotted on time.
At this point it must be said that passenger control and the policing of the airports are in the hands of the State, while the equipment for passenger checking has been brought and installed by Hermes.
The cooperation between the competent State Services, Civil Aviation, the Airliners and Hermes in the security field is continuous and very close because the security field is one of paramount importance and priority to all.
THE DELAYS
It is right that the public should know that Hermes is not responsible for the delays or other problems which may crop up at the airport from time to time. They are due as a rule to other factors such as delay in the arrival of aircraft, technical faults, weather conditions, delay in the receipt of luggage because of obstruction by other cargo on the aircraft etc. Delays are also caused by the fact that the police authorities carry out, and rightly so, strict daily checks on luggage for understandable reasons. For example, for the combating of drugs trafficking, the search of luggage with the use of special methods such as specially trained dogs on some flights causes delays of more than 20 minutes in the conveyance of luggage and their delivery to passengers.
Some technical problems and minor delays are inevitable and this happens – as all those who travel know very well – at airports all over the world.
INCREASE IN THE AIR PASSENGER TRAFFIC
Despite the various problems which appear due mainly to the dilapidated building installations, their size and layout, there has been an increase in the number of airliners which use the Larnaka and Pafos airports while new routes have been inaugurated resulting in an increase in the number of passengers.
HERMES wishes to assure and to repeat once more that not sparing efforts and expenses it has been very meticulously monitoring the whole situation in order to ensure the best possible and most effective functioning of the airports.
THE OLD BUILDINGS ARE OBSOLETE
The fact that the Larnaka and Pafos airports with their dilapidated buildings and their outdated layout are functioning in an acceptable manner is due to the significant improvements effected by Hermes and to the great effort which is being made by all those working in them and by the Hermes management. The existing building installations, which have become obsolete, constitute an obstacle to the supply of high quality services to the public and impede the staff in the carrying out of their work. The radical solution of the problems and a real change at the airports will be achieved soon with the completion of the construction works and the operation of the new super modern airports within the timetables and according to the conditions of the Contract awarded to Hermes.
