Cyprus said on Thursday it would pay to ensure that hundreds of tourists stranded on the island can return home safely in the wake of the sudden closure of cash-struck Cobalt Air.
After an emergency meeting on how to handle the situation, Cypriot Transport Minister Vassiliki Anastassiadou said everything would be done to minimise the inconvenience to those stuck in Cyprus and abroad.
She said the state will cover the cost for passengers to return home up until October 24, but this did not absolve the airline of its liabilities towards customers.
Two local travel operators have been instructed to manage the repatriation programme and issue tickets on other airlines but there is no exact number of how many people are affected.
“The cost of the ticket will be covered by the state for repatriation purposes only,” Anastassiadou told reporters.
She added: "We, as a Ministry and as a state, feel the need to help passengers trapped either in Cyprus or abroad who want to return to their place of residence."
Anastassiadou described the situation as “regrettable” as it comes at a time when Cyprus is enjoying a records tourism year with arrivals expected to exceed last year’s high of 3.6 million tourists.
The minister confirmed that the airline was struggling financially but had said it was looking for funding.
“It seems they were not able to do this, but we had also given Cobalt a deadline of October 22 to present its financial situation,” said Anastassiadou.
Cypriot low-cost carrier Cobalt Air announced it was cancelling all flights from Thursday after just two years in operation, leaving passengers stranded and scrambling to get their money back.
The airline warned customers its offices would no longer be staffed and urged them to seek refunds through their travel agent or credit card company.
In a brief announcement issued on its website without prior warning late on Wednesday, the airline said it was cancelling all flights from 23:50 pm (2050 GMT) "due to indefinite suspension of Cobalt’s operations".
"As a result, future flights or services provided by Cobalt will be cancelled and will no longer operate," it added without elaborating on the reasons.
The airline advised passengers who have tickets not to go to the Mediterranean holiday island's main airport at Larnaca on Thursday or attempt to contact its offices "as no Cobalt flights will operate and no Cobalt staff will be present".
"For refunds, please contact your credit card provider or travel agent," its statement said.
"We sincerely apologise once again and would like to thank our very loyal customers for their support over the last two years of Cobalt operations."
€100 mln black hole
Officials told the state-funded Cyprus News Agency that Cobalt had accumulated tens of millions in debt, since its first commercial flight in July 2016. Other reports put the debt at around 100 million euros.
CNA said the demise was down to the lack of a proper distribution and pricing policy while Cobalt lacked cooperation deals with other airlines. IT started as a low-cost airline but recently introduced a business class service.
Cobalt operated 13-15 flights daily carrying up to 3,000 passengers to destinations such as Athens, Heathrow, Gatwick, Paris, Beirut and Tel-Aviv.
Cobalt, the largest Cypriot airline since the collapse of the state-owned flag carrier, ceased operations after reports that it had failed to reach a deal with a potential European investor.
Nine flights had been scheduled to arrive and nine to depart from Larnaca airport on Thursday. Larnaca airport said there was no panic at the departures, but passengers did turn up not knowing what had happened to find their flight cancelled.
Reportedly, the company has only 15 million euros in its accounts, which it needed to pay its 200-air crew and 50 ground staff.
There was speculation that the budget airline was facing cash flow problems after two of its aircraft were grounded for two days.
Although Cobalt refused to comment on the rumours, sources within the company reportedly attributed the liquidity problems to difficulties faced by Chinese investors in exporting capital due to Chinese government restrictions.
The airline's largest shareholder is AJ Cyprus, with 49 per cent of the shares. AJ Cyprus is owned by China's AVIC Joy Air.
Cobalt stepped in to replace bankrupt state-owned Cyprus Airways, which shut down in January 2015 – many of the pilots were from the defunct national carrier.
Cobalt started flight operations in 2016 and acquired six aircraft — two Airbus 319s and four Airbus 320s –- flying to 23 destinations.
Cyprus is a hugely popular holiday hotspot for Britons – with over a million flying to the Mediterranean island every year. The UK is the island’s biggest tourist market.
The closure comes just two weeks after Latvia-based Primera Air filed for bankruptcy and a month since Belgian airline Skyworks took the same course.
