Tourism authorities were left reeling on Friday on news that Russian airline Transaero had been declared bankrupt, and scrambled crisis talks to assess the situation.
With 40,000 Russian tourists currently on the island, Russian tour operator Biblio Globus, which brings in 70 per cent of all Russian tourists to Cyprus and relies on Transaero, said on Friday evening the airline would maintain its schedule until the end of October. Transaero flies to Larnaca and Paphos from 18 airports in Russia.
Transport Minister Marios Demetriades said the airline had carried around 350,000 passengers to Cyprus so far this year and had another 30,000 bookings in the pipeline for November and December, after the airline is slated to cease operating. “At least for the rest of the year it will not significantly impact on our tourism,” he said
Tourism Minister Giorgos Lakkotrypis called it “a negative development”.
“The first dimension is to see how it affects tourists who are now in Cyprus and, secondly how will affects the planning by tour operators who have worked with the company as far as the coming months are concerned,” Lakkotrypis said.
The Famagusta Tourism and Development Company’s Lakis Avraamides told the Cyprus News Agency that Transaero would continue to fly until the end of October in order to meet its obligations, at least for Cyprus, Biblio Globus had assured tourism stakeholders in the district, he said.
“If the company had ceased operations today, the Russian government would be obliged to repatriate about 70,000 people from various countries,” he said.
“At this time in Cyprus there are around 40,000 Russian tourists,” he said, adding that Biblio Globus was also negotiating with other airlines to complete their programme for the remainder of this year and for next year.”
Avraamides said the industry in Cyprus had no need to worry as other Russian airlines could take up the slack.
Demetriades agreed the gap needed to be filled as soon as possible but as Cyprus no longer had a national carrier, the void would have to be filled by Russian airlines under the bilateral agreement between Nicosia and Moscow. No airlines have been given a licence as yet however, the minister said, though there were three applications.
The other snag, he said, was the fact that due to the Turkish embargo on Cyprus-related air and sea traffic, any airline would be looking at adding another 40 minutes to their flight path to avoid Turkish air space, which could prove to be a disincentive.
Demetriades said even when Cyprus Airways was still flying, the airline’s market share in Russia was only 4 per cent. But, he said, he was confident that a solution would be found in time for bookings to begin for next year.
Akis Vavlitis, chairman of the Association of Cyprus Tourism Enterprises, a business group representing hotels, and other tourism related services, told CyBC that Transaero’s competitor Aeroflot had agreed to take over winter season obligations.
Cyprus Tourism Organisation (CTO) deputy director Annita Demetriadou said she did not expect any disruptions in October, when far more Russian arrivals were due compared to the rest of the year. The situation would be closely monitored, both in Cyprus and by CTO representative offices in Moscow and St Petersburg, she said.
Russia is Cyprus’s second largest source of incoming tourists after the UK. In 2014, ten Russian tour operators went out of business, including four with operations in Cyprus, leaving affected tourists unable to return home for several days. In the first eight months of 2015, the number of Russian tourists visiting Cyprus dropped almost 20 per cent to 388,398 compared to the respective period of 2014.
The devaluation of the Russian rouble by 46 per cent in a year, caused by Russia’s falling revenue from energy exports and western sanctions prompted by the country’s support to separatists in Ukraine, also resulted in a considerable drop in revenue from Russian tourists.
Indicatively, Russian tourists reduced their daily per-person spending in Cyprus by 18 per cent to €80 in June, the month with the latest available figures. Directly or indirectly, tourism makes up roughly one quarter of Cyprus’s economy.
Concern over Transaero’s possible failure emerged after Russian Prime Minister Dmitry Medvedev gave the airline the go-ahead to file for bankruptcy after state owned competitor Aeroflot refused to inject money in to the ailing company, the pro-Kremlin news website reported on Thursday.
Reuters reported that Transaero, which had a total of €1.6bn in debt in 2014 and saw its passenger numbers rise 2.7 per cent in the first seven months of the year, was affected by the slowdown of Russia’s economy.
Reuters also reported that Russian transport minister Maxim Sokolov ordered Transaero to stop selling flight tickets. Around 650,000 people have bought tickets from the ailing company may expect that all obligations will be fulfilled, Reuters reported citing Sokolov.
