Cyprus Airways possible bankruptcy is probably the biggest scandal in the recent history of Cyprus and defiantly the biggest in the history of Cyprus tourism as an industry.
The airline has been for years now the easy vote tank for all political parties in Cyprus. The airline was run by incompetent political boards of directors for many years whose only worry was how to jump from the darkness of a board of directors to the enlighten stage of the Parliament or of a Ministry.
The airline suffered different stages of transformation, all of them invisible to the general public since their corporate image is the same since the seventies. Despite the intends of making the airline a profitable company nothing went right. The entry of the airline in the stock market was a fiasco. Private investors, mostly workers from the tourism sector lost lots of money, during the crack of the stock market in Cyprus in 2001. The airline stocks from 10 Cyprus pounds (17 euros) to 5 cents of the euro today. The state did nothing to prevent it and until today people who invested in the airline have very bitter memories and lost fortunes.
The people who work in the travel sector of Cyprus wanted to invest their savings in a company with future and growth perspectives. At that time Cyprus Airways was the sole airline of the Country with lots of great slots and many promising routes in an almost monopolistic regime.
The scandal of Hellas Jet, the sister airline of Cyprus airways which never had a plane and never had a flight that was covered quickly from the government at that time, was only the beginning of the end. Purchasing 2 long hall A340 was probably the other whole in the finances of the company. The bad management was always covered by the different governments of whatever political colour. Now the situation is dramatic. The workers of the airline have made steps to cut down costs by accepting lowering their salaries and taking more responsibilities but the measures come too late am afraid.
Closing down the airline would mean the biggest crash of Cyprus Tourism. The Cyprus Tourism Organisation technocrats and Board of Directors are under lots of pressure since they have no airline to rely a decent strategic plan on. The credibility of the destination will suffer and the country will lose competitiveness. And this happens at a time when the Turkish Cypriots are moving with alliances to boost tourism in the occupied part of the island.
Cypriot economy relies on tourism and for the last 3 years numbers are not the best. The big tour operators find Cyprus too expensive in comparison with destinations like Crete, Turkey of even Dubai. The possible bankruptcy of Cyprus Airways by the end of 2011 (my prediction is November 2011), will give the final shot on the head to the already troubled economy.
Now, what should we do today? In my modest opinion the only way out the Cypriot Travel business man has is to take the airline sector in his hands. Cyprus has a great potential in tourism especially attracting visitors from the eastern part Europe. This potential can only be developed when the Travel Sector of Cyprus makes a move to find a strategic investor and in collaboration with him get the airline sector back on the air.
Hoteliers, Travel agents and local authorities have an important role to play, the matter is now who is going to lead such a movement. The key in my opinion is creating a new airline that will undertake all the slots of Cyprus Airways in the Cypriot and foreign airports, use the trained staff of the airline but be legally based in an EU country that will assure the flights over Turkey. The business model needs to be adapted to a low-cost airline that gives access to Tour Operators as well and open to the public serious and collaborative web strategy.
The path is long but is an one way road to pull Cyprus out of the Tourism crisis and probably is a unique opportunity to redesign Cyprus Tourism from scratch. Having the experience of the past and understanding the errors we made the recovery is possible only under a sensible and open leadership.