Air connectivity opportunities in 2016 and beyond 38 th Annual Hotel Conference
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1 REPUBLIC OF CYPRUS Ministry of Transport, Communications and Works. 2 nd of February 2016 Air connectivity opportunities in 2016 and beyond 38 th Annual Hotel Conference
2 Airport traffic in 2015 at record levels despite problems at the beginning of the year 2/22
3 Airport traffic increase over the last years remained low compared to other competitive airports 3/22 7,6m passengers in 2015 which is the highest since 2006 Airport Traffic (in millions) 8 6% Capacity for growth relatively high for 2016 estimated total capacity 10m 7 6 4% 2% Total increase of 11% since 2006 Vs 20% for Eleftherios Venizelos % -2% 8% increase during the last two years Vs Eleftherios Venizelos increase of 44% % -6% -8% Main category of travellers tourists Change Larnaca Pafos Total Source: Hermes Airports
4 Recent report shows that Cyprus connectivity is satisfactory 4/22 Source: ACI (Airport Council International) study
5 Cyprus is well covered by a large number of airlines 5/22 70 airlines serving Cyprus Diversified portfolio of routes over 130 different routes Large number of markets served 40 different countries THOMAS COOK WORLD 4.0% BRITISH AIRWAYS 4.1% WIZZ AIR 3.6% 2015 Top Ten Airlines JET2.COM 2.8% MONARCH AIRLINES 2.7% AEGEAN AIRLINES 13.4% Charter-Full Service-Hub-Hybrid-Pure LCC Carriers 2015 PURE LCC 18.1% CHARTER 18.8% FULL SERVICE 1.5% THOMSON AIRWAYS 8.1% TRANSAERO AIRLINES 8.6% RYANAIR LTD 9.3% EASYJET 9.3% HYBRID 18.7% HUB 43.0% Source: Hermes Airports
6 Overdependence on three countries shows need for diversification Over dependence on three markets (63% of total) despite Russia s drop Largest market UK with potential for growth Greece is primarily outbound market Large increase in flows from Israel and Germany during 2015 but still small market shares ISRAEL 3.0% AUSTRIA 3.2% GERMANY 3.4% RUSSIA 13.2% 2015 Top Ten Markets SWEDEN 2.8% UKRAINE 2.0% GREECE 17.8% POLAND 1.8% ROMANIA 1.7% EU-Russia-Middle East-Other Markets 2015 UNITED KINGDOM 33.3% 6/22 MIDDLE EAST 8.5% OTHER 6.4% RUSSIA 13.2% Source: Hermes Airports EU 71.9%
7 Opportunities in growing regulated skies traffic 7/22 Open skies markets already cover a large % of existing traffic Cyprus is already well covered in regulated markets (e.g. Middle East) Some potential remains with some additional Gulf destinations Fifth freedom rights could be an opportunity Regulated vs Open Skies traffic OPEN SKIES MARKETS 70% REGULATED MAKRETS TOTAL 30% Russia 64% of regulated markets Regulated markets Russia Open Skies' Markets Source: Hermes Airports
8 Cyprus airports expensive compared to other regional airports but impact of a general reduction in passenger taxes uncertain 8/22 Large increase despite higher passenger costs Source: Hermes Airports
9 Our objective should be to have the maximum possible connectivity at the lowest possible prices 9/22
10 Conclusions / insights from attending the recent EU Aviation Council 10/22 Aviation package and especially aviation agreements with third countries such as China, Mexico, ASEAN, Gulf and Turkey needs to be implemented the earliest possible Legacy airlines better at long-haul traffic and LCC at short-haul traffic. Could LCCs feed traffic to legacy airlines? Certain states still concerned with protecting their legacy carriers, mainly due to pressure from Unions Constant fight between Airport operators and LCCs re airport costs Cost of increased security a concern for all participants Number of airlines operating within the EU still very large, further consolidation needed Relaxed rules for PSOs requirement of small states as a means to increase connectivity
11 Measures implemented during the last two years to further promote aviation traffic 11/22 Fast implementation of Open Skies policy Improved incentive scheme in cooperation with Hermes Airports Encouragement and fast examination of applications for local Air Operator Certificate Formation of joint committee with Hermes and the Cyprus Tourist Organization to examine measures for better coordination between Tourism and Connectivity PSO for Brussels Study for strategy and branding regarding Tourism in effort to realize true potential of Cyprus Currently examining ways to decrease the cost of airports and / or enhancing targeted incentive schemes in cooperation with Hermes Outsourcing part of aviation security to the private sector
12 Active negotiation of Air Traffic Agreements and granting of fifth freedom rights 12/22 Re-negotiation of a number of agreements with third countries to make them more flexible e.g Egypt, Oman, Bahrain Granting of full fifth freedom rights to UAE and Qatar Re-allocation of Israel rights to Tus and Blue Air. Granting of right to fly to Iran to Blue Air (to start in April 2016) Available Traffic rights to be placed on our website: Algeria, Armenia, Bahrain, Belarus, China, Cuba, Egypt, Ethiopia, Georgia, India, Iraq, Kenya, Kuwait, Lebanon, Lesotho, Libya, Malawi, Moldova, Oman, Qatar, Russia, Saudi Arabia, Serbia, Singapore, South Africa, Sri Lanka, Syria, Thailand, Tunisia, Yemen, Zambia, Zimbabwe
13 Despite efforts during the last two years we need to do more 13/22 Extend the period of operation in currently served markets by promoting individual travel and identifying new customer segments Make use of the fifth freedom traffic rights to develop point to point traffic especially from unserved or underserved markets as well as transit traffic through Cyprus Evaluate the opening of new markets in the area as well as long haul destinations Enhance support for companies looking to establish a base in Cyprus (existing or new) Work better with all stakeholders in order to ensure improvements in the tourist offering particularly in relation to hotel capacity, specialised products, targeted promotions Exploit more the bilateral agreements Reduce the cost of our airports
14 In order to succeed we need to 14/22 Bring everybody together Become more aggressive in promoting tourism Improve our product infrastructure Exploit all opportunities from Agreements Encourage more airlines to operate in Cyprus through incentives such as lower costs
15 3/22
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