It is both an honour and a privilege for me to
address this first Aviation and Tourism Conference organized by HERMES Airports
with the theme “Air connectivity Development for Cyprus through Change,
Cooperation and Innovation”. Indeed this theme is more than topical in the
current difficult economic environment and for this reason I gladly accepted to
put this conference under my auspices. I would like to extend my
congratulations to the organizers and a very warm welcome to our distinguished
speakers and guests from abroad.
Cyprus relies heavily on the development of air
connectivity in order to sustain year-round tourist arrivals as this is
considered as one of the main drivers of economic growth.
The decision of the Euro Group in March 2013 and
the subsequent Memorandum of Understanding with the international lenders
forced the Government to re-engineer the economic policy followed hitherto, in
order to stimulate growth and restart the economy.
Although this task is difficult, it is
achievable. It requires concerted efforts by all stakeholders, hard work,
patience and a strong belief that things will improve if we all work towards a
common vision. There is no room for complacency in the endeavor.
Air transport in Cyprus has seen a healthy
growth in the past years. However, this has leveled off. The growth observed
was coupled with the tourist industry. The traditional markets of Western and
Northern Europe such as the UK, Germany, as well as Greece, have shown fatigue
in the past few years. Although some other markets, such as Russia, have seen
tremendous growth this has not been enough to offset the reduction in the
traditional markets. Cyprus, being an island nation, depends on air transport
for connecting to other countries. The intra-EU traffic constitutes 75% of the
total air traffic. As an EU member state, Cyprus applies the EU acquis in air transport.
This means that any EU carrier can operate within the scope of the single market
without any restrictions. However, the operators determine when to enter new
markets or withdraw from existing ones on solely economic criteria.
In the last few years we have witnessed the
differentiation of travel to Cyprus.
The traditional legacy carriers and charter
operators have, to a certain degree, been displaced by the low cost carriers on
some intra-EU routes. In order to encourage air carriers to introduce new
routes to Cyprus that would improve air connectivity, the Government, in
partnership with the airport operator HERMES, has since early 2012 initiated a
program of providing incentives to these carriers in cases where new
destinations are introduced or extra capacity is added. As a result, new routes
were introduced, mainly from low cost carriers flying from secondary airports.
Air traffic with non-EU countries is regulated
by bilateral air services agreements. Cyprus has a number of such agreements
with major partners in the region. The Ministry of Communications and Works has
the overall responsibility of developing and facilitating air transport with
third countries outside the EU. On this subject let me refer to the recent
efforts and the results achieved.
Significant developments have been achieved in
our bilateral air transport relations with the Russian Federation. On the
routes from the two main cities of Moscow and St. Petersburg, the number of
designated carriers on scheduled flights has been increased to two and the
restrictions on the operation of charter flights have been lifted. The benefits
of the recent arrangements with Russia will be visible from this coming IATA
summer season as there was not enough time available to tour operators to plan
and market their programs for the current winter period.
It is anticipated that these arrangements will
extend the tourist season as Cyprus offers good weather, almost all - year round.
Russia is the main market for passengers outside the EU with a share of 18% of
the total. The growth rate in the last few years was tremendous with an average
annual rate of 25.3%.
Ukraine and Israel are two markets where there
is a promising potential. With the State of Israel the EU has recently signed a
comprehensive air transport agreement. Although Cyprus will soon ratify the
said agreement, some parts of the agreement, especially those concerning
traffic rights, have been applied since November 2013. EL-AL has been
designated by Israel to operate scheduled flights in addition to the existing
designated carrier ARKIA. EL-AL currently plans to increase the number of
frequencies as from April 2014 to six per week in the peak summer months. The
increased competition on this route will offer the benefit of reduced fares and
the increased capacity will stimulate passenger traffic.
With Ukraine the existing bilateral air services
agreement was further liberalised and now there is no limit on the number of
carriers on the routes. The existing number of frequencies on the routes can
serve adequately the market needs for the time being. If extra capacity is
needed then this will be provided. Concerning charter flights from this country
no restrictions exist. Ukraine is a new and promising market for Cyprus. The last few years an average annual growth
rate of 25,06% was observed.
With other markets such as the Gulf Region and
Middle East the existing bilateral arrangements are adequate in terms of
frequencies allowed and in some cases provide unrestricted 3rd and 4th freedom
traffic rights. The Ministry of Communications and Works is willing to approve
5th freedom rights to the carriers of this region on an ad hoc basis. Emirates
airline already operates successfully, since 2005, the route Larnaka
-Malta-Larnaka using 5th freedom traffic rights.
The Ministry has approved a number of code share
agreements for several carriers of the region such as Etihad and Emirates in
order to facilitate connectivity to Cyprus and offer a seamless product to the
passenger. In this way there is a potential for connecting Cyprus through the
Gulf with East Asian countries such as China, and this endeavour requires promotion through the various
stakeholders. Despite the recession in Cyprus, Qatar Airways has recently
announced the start of operations to Larnaka from their hub in Doha as from
IATA summer 2014, thus confirming the confidence that the situation will
improve.
As everyone knows, the majority of passengers to
Cyprus are visitors who spend their holidays in the island. However, Cyprus
faces extensive competition from other destinations in the Mediterranean region,
which offer a similar tourist product at very competitive prices and target the
same customer base, namely north Europeans.
The Cyprus Tourism Organisation can promote the
island to other untapped markets as the existing ones are becoming saturated.
Even within Europe there are markets with good potential such as Germany,
Poland, France to name a few. In the Far East, China and other emerging
economies of Asia can become the pool for new tourists in Cyprus. The Ministry
of Communications and Works is exerting continuous efforts in order to create
the conditions for facilitating the operation of flights from this region.
So far I have spoken about the tourist market.
However Cyprus, due to its geographic location, high quality of services and
well educated population, can offer benefits to international businesses if
they wish to use it as a base for their operations. Being the entry point to EU
from the Middle East and the Gulf Area, gives Cyprus an additional advantage.
However connectivity must improve in order to support and facilitate the
establishment and relocation of businesses to Cyprus.
I must stress that the process of reinventing Cyprus
as a destination point for visitors/tourists or as a hub connecting Europe with
other parts of the world requires a concerted effort by all stakeholders, the
Ministry, the airport operator, the tourist industry and the airlines
themselves. We must all have a common vision and develop the necessary strategy
to achieve it. I can assure you that we shall work incessantly for the benefit
of Cyprus.
I expect that this conference will provide fresh
ideas and insight on how to achieve better air connectivity for Cyprus in order
to assist us in developing our common vision in this respect. HERMES’s
initiative to invite distinguished speakers to this conference is much
appreciated. I have seen the impressive CV's of the speakers and I am sure that
they will offer their ideas and wealth of experience to the audience. By the
end of the conference everyone will be wiser and use the acquired knowledge for
the benefit of the country and our economy.
Thank you for your attention and I wish every
success in this effort.
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