The taxpayer footed a bill of €3.3 million paid out to those who had booked tickets with now-defunct Cyprus Airways, after the national carrier was wound down in January last year, state treasurer Rea Georgiou told parliament on Monday.
According to daily Simerini, Georgiou was responding to a request for information by the Greens’ MP Giorgos Perdikis.
In a letter, Georgiou said that, following the announcement that Cyprus Airways would no longer be operational, on January 9, 2015, the state paid the sum of €3.3 million to Top Kinisis travel agency.
Of this amount, the state treasurer said, around €100,000 was paid to the travel agent for administrative expenses, whereas €3.2 million was the total cost of replacing the pre-paid Cyprus Airways tickets with those for other airlines.
According to Georgiou, the government had started planning for the eventuality that Cyprus Airways went under before a final decision had been made.
Three days prior to the official announcement that Cyprus Airways was no more, a meeting was held at the State Treasury with all state agencies involved as well as Top Kinisis.
At the meeting, options on how to best cater to travellers who had already bought Cyprus Airways tickets in case the airline failed were discussed.
The carrier’s board said that the only travel agent that could seamlessly undertake the task was Top Kinisis because it was the only one with access to Cyprus Airways’ reservation-booking system.
Prior to the company’s demise, Top Kinisis was Cyprus Airways’ official representative in Greece.
“It was thus clear to all present that Top Kinisis was the only travel agent that could undertake the complex project immediately,” Georgiou said.
Thus, she added, on January 9, 2015 the state treasury assigned the task of redirecting or reimbursing all passengers who had booked flights with Cyprus Airways over the next 30 days to Top Kinisis, reserving the right to extend the contract beyond this time.
The deal was that the travel agent would be paid a €10 administrative fee for every passenger it reimbursed or diverted to another airline.
According to Georgiou, despite the uncertainty clouding the airline’s future, it had been selling tickets for travel as late as October 25, 2015.
Simerini quoted Perdikis as saying that the letter “confirmed the suspicions of parties and deputies, as well as complaints by fired Cyprus Airways employees, that the government had decided to shut down the national carrier long before the European Competition Commission’s ruling”.
He was referring to a January 2015 decision that a 2012 state-funded bailout of the airline, to the tune of over €100 million, had been in breach of the EU’s state-aid rules and had to be repaid by the ailing company, resulting in its immediate bankruptcy.
“The government had pre-arranged the handling of passengers who had bought Cyprus Airways tickets after the company would be shut down,” Perdikis said.
He also voiced reservations over the selection of the travel agent as the sole facilitator of diverting passengers after the closure of the airline.
“This company was assigned the handling on the day after the national carrier’s closure through obscure procedures,” he said, adding that the issue needs to be reviewed by the competent authorities, and blame allocated accordingly.