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We may not be aviation industry experts, but simple logic dictates that the government – and in particular the Accountant General – should hasten the review of the request from state-owned Eurocypria for a capital increase of about 35 mln euros.
All the arguments raised in the past about why the charter airline should close and hand over its operations to Cyprus Airways on a silver plate, were based on hasty decision to keep the national carrier afloat and secure the union-controlled jobs for the many employed there.
Fortunately for the tax payer, the Flying Moufflon is no longer eligible for any further state aid, but it continues to enjoy privileged services and monopolistic advantages that should have turned it into a nice little profit earner a long time ago.
On the other hand, a capital injection for Eurocypria will turn out to be a quicker return on investment for the government as ensuring its viability will also benefit the tourism industry as a whole.
For one, efficiencies make it 30% cheaper to run than CAIR, allowing it to pitch for new business from and to other markets. It has a significantly smaller, yet agile, crew and ground staff, it has secured 70% of its seat capacity for the year and rakes in a turnover of about 100 mln euros. Although it is showing a loss of just over 10 mln, airline officials say this could be turned around because Eurocypria enjoys a flexible structure and can respond to new markets and new needs almost immediately.
However, the greatest advantage of all is that by ensuring the company’s near-term viability, it makes it more attractive to potential investors that need to have a stake in the carrier with which they cooperate in order to secure future capacity and routes. This is the case of what is happening in the U.K. right know with the collapse of many mid-size carriers and charter airlines, of which there are only a handful left and tour operators must move fast if they want to have seats to carry their customers.
Moving away from the British market, as Eurocypria might eventually do, also opens up new opportunities for Cyprus as a destination. Be they Polish or other investors, one thing is for sure, that these tour operators may also consider sending their holidaymakers Cyprus’ way. If not, the least that Cyprus will benefit from is to secure the jobs for the 250 employees, which would otherwise be lost if the airline were to be absorbed by any other entity.
Ironically, despite all the nasty things said of them, Eurocypria’s management is even willing to cooperate with Cyprus Airways in order to achieve economies of scale and keep costs to a bare minimum, making it even more competitive to grab a bigger piece of the international pie.
Now, why didn’t anyone think of this earlier?
