Wednesday, 07 March 2012 16:03

Cyprus Airways

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- Commercial war with Aegean & Olympic, in Greece.
- A Cypriot business game


The surprising announcement, by Cyprus Airways, of carrying the trade war with the two (2) major Greek airlines within Greece, bears multiple messages.

So, the beginning of three flights daily from Athens to Thessaloniki with a low fare, since the 26th March 2012 (v/v), will become a “double – edged sword” project.

The one or more aircraft needed by Cyprus will be in disadvantage, as operating outside their country.

With what this means for crews, the aircraft itself, landing fees and handling at one of the most expensive airports in Europe, and their daily technical monitoring.

All above are against low fare.

And if the ¨load factor¨ is high, then, the ¨per seat cost¨ will show minor damages.

But if, is below 75% per leg, then the company will show damages.

For how long can it suffer something like that Cyprus Airways?

And why did it decide something like that?

There are various explanations for this.

The first one is that, in view of the company’s privatization, the Government of Cyprus wants to increase, with this route, the value of its under sale, (70%), participation, in it’s capital

The second one is that, Aegean και Olympic may start a purchase offer procedure, in order to “take out” a real future competitor from their territory

For many years Cyprus is operating the route Heraclion – Rhodes, and its load factor is medium to very good. Therefore it has experience of domestic flights in Greece.

It lacks though the experience of the Athens Airport.

It seems that it hopes not to pay extremely high for this experience, as there are several ways to reduce slightly the costs of El. Venizelos.

To combine slots, whereby each aircraft may have overnight, (hub), in S.K.G. airport. To pay low ground parking fees.

To find some solutions for it’s crews to avoid their continuous movement.

This Commercial war against Aegean and Olympic must be short.

Till the Government of Cyprus will estimate the company’s Commercial value.

As now it’s no possible to count any offer reg. the 70% of their owned shares.

On the other hand, the company’s fleet is under a very difficult operation structure.

The route network is not properly distributed.

The “alliances” of the company are not enough strong.

The company is now trying to “build” its new international ¨Profile¨.

It is “marked” by the medium business effort of Hellas-Jet, and it’s charter company

Moreover, the Civil Aviation Authority of Cyprus, is at a ¨young age¨.

This has been shown many times till now.

Another present handicap strangely following Cyprus Aviation Field.

Which has not yet acquired the experience of the sophisticated British Civil Aviation Authority.

Although has collected from the British, many of their advantages in other areas.

So, this operation is a ¨gabling¨ in Greece. Hopefully it will not regret it.

Of course the big Winner from that war may be the PASSENGER.

The same, who damaged daily from this “informal oligopoly, in Greece.

By paying to fly Ath-S.K.G., or Ath.– Santorini, (v/v), more expensive fares than to the most Trans – European destinations.

Glorifying the ¨competition committees¨, which ¨look¨ selectively the monopolistic policies.

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