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As Paphos ushers in a new era with the inauguration over the weekend of its brand new airport, a year ahead of its bigger sister in Larnaca, the travel industry is bracing for tough times ahead with the world financial crisis expected to hit the island’s tourism sector quite hard.
The new airport’s capacity of 2.7 mln passengers may not bet met in its first years of operation, which is why the operator and the state should consider revising or even redefining some aspects of the lease agreement, in order to ensure viability and profitability.
One hot issue is that of telecoms and security, an argument that is bound to continue over the next few months and will drag in politicians and social stakeholders alike. Whereas Cyta, the state-owned telco, has held a tight grip on the market over the years with little willingness to give up any share to its rivals without a fight, it is being challenged by an unexpected competitor who did not exist when the airports deal was first being brokered. Alternative mobile provider MTN, has grown to become a fully-fledged telco with a comprehensive package of telephony services ever since the Shacolas-controlled OTENet group took a major stake in the company and wants be on an equal footing with Cyta for the airports service.
Any serious government should be able to rely on any one of its local telcos to ensure that its airports security is in competent hands. However, the consumer should be free to choose the provider of his liking, which means that Paphos airport cannot afford to have monopolistic situations.
Another serious issue that is bound to arise is that of unavoidable layoffs that the airport operator and its services partners will have to implement in order to prepare for the lean tourist seasons ahead resulting in lower revenues. Does this mean that reducing quantity will also reduce quality, as was the case of the private ground handlers taking over last May? We hope not.
On the other hand, the operator, Hermes, must be pondering over the prospects of lower income due to reduced passenger traffic and fewer euros spent in its shops. This is why the company is adamant over its refusal to renegotiate the airports contract, despite the raving and ranting of a few politicians.
It is possible that the airport will have to reconsider its high fees as airlines will be forced to make cutbacks of their own with the easiest cost-cutting measure being the termination of a route altogether, flying off to destinations where airports operators are more flexible.
Before this crisis-scenario escalates, the government should tell the operator to reduce its fees charged to airlines and passengers, but in exchange, should also consider some incentives or reductions in its own revenue, with all sides sharing some of the strain until Cyprus enjoy record tourist arrivals again.
