Romanian low-cost air carrier Blue Air suspended all flights from Wednesday until 12 September, spreading concern among analysts that Cyprus could feel the knock-on effect.
Blue Air carries out some seven weekly flights from Larnaca Airport to Athens and destinations in Romania.
The airline said it would be grounding all aircraft upon their return to Romania as it cannot make payments to staff and providers.
The company said it has no access to its bank accounts as Romanian authorities have blocked them due to its failure to pay €2 mln in fines for cancelling more than 11,000 flights between April 2021 and April 2022.
Blue Air entered a debt restructuring agreement in 2020 as it took a hit from the COVID-19 pandemic.
Tourism stakeholders fear that more low-cost airlines could follow in Blue Air’s footsteps.
In comments to the Financial Mirror, Charis Papacharalambous, spokesperson of the Association of Cyprus Travel Agents, said that although Blue Air’s contribution to Cyprus connectivity is small, it is still a blow.
“Considering the airline carries out scheduled flights to Cypriot’s favourite destinations, Athens, this could spell problems for the island’s connectivity,” said Papacharalambous.
He said that although Blue Air’s announcement was unexpected, stakeholders believe smaller airlines face difficulties after two and a half years of COVID and travel restrictions.
“The real problems will begin if the airline does not come back online, and more follow.”
Cyprus authorities fought tooth and nail to keep the island’s connectivity intact during the pandemic, but the war in Ukraine dealt another blow.
According to analysts, Europe’s weaker airlines face a heightened risk of collapse this winter as nations that rescued carriers during the Covid crisis focus support elsewhere amid rising inflation, said Sanford C. Bernstein, widely recognised as a premier sell-side research firm.
Sanford C. Bernstein argues that while the pandemic brought few airline failures in the region amid a deluge of aid payments, carriers now face a squeeze from higher fuel and labour costs combined with a seasonal decline in travel.
“Smaller carriers in Central and Eastern Europe will be most vulnerable,” Bernstein analysts Alex Irving and Clementine Flinois told Bloomberg.
They said the most exposed carriers include one from Cyprus and two from Albania, as well as airlines based in Belarus, Bulgaria, the Czech Republic, Georgia, Moldova, and Romania.
“That should favour the strongest players in Eastern Europe, chiefly Budapest-based Wizz and Ryanair, according to Bernstein, which it said have the ability to rapidly allocate jets to newly vacated markets,” said the analysts.
Cyprus-based airlines TUS Air and Cyprus Airways refute any notion they are trouble but said they are expanding their flight schedule.