Cyprus Mail

Our View: Authorities should consider reducing airport taxes

ALL THE doomsayers that were predicting Cyprus tourism would be adversely affected by the closure of Cyprus Airways appear to have been proved wrong. The latest edition of the Sunday Mail reported that since the demise of the national carrier airline seat capacity to and from the island had increased. Seat capacity on the routes operated by CY had gone up from 1.12 million to 1.18 million since it closed down in January.

This has happened within a few months as new airlines have arrived and those already here have increased the number of flights to the island. Since January, Larnaca has seen four new destinations added and 20 more weekly flights while Paphos has added nine new routes and three extra weekly flights. Airlines saw there was a gap in the market and immediately tried to take advantage, which is how the free market operates. And all this at zero cost to the taxpayer who had been covering the huge losses of CY on the spurious grounds that he was helping the tourism industry.

The tourism industry has not suffered, with arrivals from the UK and central Europe recording an increase this year. The fall in arrivals from Russia is a result of the weak rouble and has nothing to do with closure of CY. A Cyprus Tourism Organisation (CTO) report said that fares for France and The Netherlands were now cheaper, while visitors from Poland, Austria and the Czech Republic were expected to increase by between 15 and 20 per cent over the next year. The Tel Aviv route has also benefitted with the CTO expecting a 30 per cent increase in passenger traffic from Israel over the next year.

The greater seat capacity and increase in the number of airlines would also mean more price competition to attract passengers. This also has a downside. The seat capacity may have increased for now, but if airlines saw that these were not being filled and routes from Larnaca or Paphos were unprofitable they would cancel them. They would not keep operating loss-making routes, as CY had done, and this would be perfectly understandable; CY was filling less than 75 per cent of its seat capacity.

Perhaps the government and Hermes Airports should explore the possibility of reducing airport taxes, which tour operators, have been saying were too high, as a way of boosting passenger traffic and helping the tourism industry. It would be a pity not to take advantage of the increased seat capacity that is now available and there is no doubt the benefits to the economy would far outweigh the losses to state revenue.

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