THOUSANDS of tourists came close to grief yesterday after Hermes threatened to cancel passenger handling services to 11 mainly British and German charter airlines which had refused to pay an increase in airport fees since April.
The airlines finally paid up around the 5pm deadline, but the standoff could have implications for the long-term future of tourism if the carriers decide to reduce their programmes to Cyprus in protest at the rate of airport charges.
The 11 airlines, including Cypriot carrier Eurocypria, are all members of the International Airline Carriers Association (IACA), and owed Hermes a total of around £1 million to cover the 44 per cent extra in fees since the April hike.
Ronald Taylor, the spokesman for IACA told an earlier news conference they would probably pay under protest by the 5pm deadline but warned that in the long term, unless the issue was sorted out, member airlines could very well rethink their programmes to Cyprus.
Hermes spokeswoman Jenni Fernando said later yesterday that all of the airlines had either paid, or were “nearly there”. Eurocypria was one of the last. “We have reached a financial agreement,” she said. “The majority have paid and the remainder have given assurances that they will pay in the next few hours.”
IACA members operate over 8,000 flights a year to Cyprus, carrying 1.5 million tourists to and from the island and accounting for 30 per cent of total tourist traffic. The majority of the “defaulting” airlines involved are from the UK, which is the island’s largest source of tourism.
Taylor said passenger charges had increased 44 per cent from April 1, and by November would have gone up in total by over 70 per cent, from 18.27 euros per person in January, to 32.28 euros per person by the end of the year. Hermes took over the operation of the airports last year.
According to Taylor the charges in Cyprus are 200-300 per cent more expensive than airports in Turkey, Greece, Egypt and Spain. He said all of these countries were experiencing tourist growth and that Cyprus was missing out due to the increasingly hostile environment for airlines.
“Airlines want to pay for what they get,” said Taylor. “They want a decent infrastructure, and Cyprus does not offer this. Cyprus airports are in an appalling condition.”
Because Hermes will not complete the new 622 million euro airport until 2009, it has been forced to shell out for improvements to the existing inadequate structure at Larnaca.
IACA says this is effectively forcing the airlines to pre-finance the new project. They say because the increases were sprung on them, the charter and budget airlines did not have a chance to pass on the increases to the prices of brochures holiday packages, leaving them holding the bill.
Next year, the charges will increase the price of flights and packages to Cyprus, which could put more tourists off coming to the island.
IACA said Hermes was refusing to negotiate fairly over the fees issue. Taylor said they asked Hermes on July 9 to open discussions but were ignored. Hermes said yesterday they have been in negotiation with the airlines since last year. The operator head repeatedly said the higher charges reflected the changes it had to make to the existing airport.
The issue came to a head this week when Hermes sent final warning letters to Thomas Cook Airlines and to Eurocypria, warning that unless their respective payments of 267,147 euros and 610,796 euros were paid, “we will suspend the provision of ground handling services to your airline” by 5pm on July 19.
“We refuse to accept this type of behaviour,” said Taylor. “We will not be threatened and bullied in monopoly business conditions and we are seriously considering how we can do business in a country that treats us this way.”
He said the service at the airports was “very, very poor” and not improving, and that an official complaint would be lodged against Cyprus with the EU for failing to open ground-handling services to competition. The airlines would also resort to the Protection of Competition Committee.
Taylor also warned that once some of the airlines start planning for 2008, they could very well decide to reduce traffic to Cyprus.
IACA said that from an estimated 113 million euros in passenger charges in 2008, 33 per cent would go to the government, which means that 37.6 million euros “are taken away from tourists without any economic justification or improvement of service”.
