Larnaca Airport: Going Low-Cost?

Romanian carrier Blue Air entered the Cypriot market in March 2008 with flights linking Bucharest and Larnaca. Two years on, (on March 28), Blue Air is now setting its sights on the routes it will operate from its new permanent base. One aircraft will be positioned in Larnaca and another is likely to be added by the end of this year, confirms Ken Hassard, Hermes Airport's marketing director.

"Blue Air felt that Cyprus was a strong candidate for opening new markets outside Romania - and Cyprus has flown over 125,000 passengers on the Larnaca and Pafos routes in the last year and a half," he says.

Blue Air's schedule (from Larnaca) will include a daily flight to its home airport in Bucharest (with onward connections available to Luton), as well as direct services to Milan, Vienna and Warsaw. From Paphos, there will be four-times weekly flights to Thessaloniki in Greece.

Where's the Competition?

Positioning a no-frills Romanian-based carrier in the heart of Cyprus could be seen as a sensible move, as Blue Air is moving in to an uncompetitive market: 37% of all scheduled flights are operated by legacy carrier Cyprus Airways, which is trying to improve its financial position.

The carrier has just announced it will add over 100 new charter flights during the summer season to destinations across Europe, Greece and Egypt following an agreement with Royal Holidays.

Meanwhile doubts abound over the future of Cyprus' other state carrier, Eurocypria and its charter operations. Sold by Cyprus Airways to the Cypriot Government in 2006, Eurocypria is in desperate need of new capital.

And against this backdrop, the inauguration of Larnaca's new terminal in November, with an initial capacity for six million annual passengers, has inevitably put pressure on the airport to add to its portfolio of 32 scheduled carriers.

The potential for expansion from Cyprus within mainland Europe can also be seen where Larnaca serves just 43 destinations. All in all, there are 294 weekly departures from Larnaca (year round).

In fact, Hermes Airports believes there are over 50 major cities within four hours flying time of Cyprus that have no direct services. Hassard explains: "Cyprus relies on established markets such as the UK and Greece, which are strong O&D markets for tourism, but in recent years, Scandinavia, Germany, Eastern Europe, Russia and the Middle East have all shown increasing potential for development."

Routes News has examined Larnaca Airport's current network and there are some clear targets that Blue Air could consider. Given that Blue Air has already announced it will serve three major capital cities from Larnaca, it would seem that its strategy will be primarily to link LCA with other major cities.

Data shows that there is currently no service to either Istanbul or Munich, however the Greek capital, Athens, has 42 and 35 weekly frequencies respectively to these markets, and are within the four hour range.

Other major targets for Blue Air in Larnaca, with no current services potentially could be Barcelona, which has 13-times weekly flights into Athens (operated by Iberia, Vueling and Aegean Airlines), Hamburg, Copenhagen(although Cimber Sterling will launch service S2010), Madrid and Berlin Tegel. All of these markets have direct services to Athens, but have no scheduled non-stop services to Larnaca.

If Blue Air is to consider opening markets with existing services from Larnaca, it may well look at the lack of capacity on some of these routes compared with Athens. As an example, Larnaca has four-times weekly services to Paris (CDG) and three-times weekly flights to Rome (FCO).

Compare this with Athens (with 53 and 49 services), Blue Air could well look at establishing new services to Paris Beauvais or Rome Ciampino (CIA). There is a similar story in Milan and Copenhagen where new low-cost services could stimulate what is a very limited service compared with Athens.

A Low-Cost Airport?

Hassard acknowledges the inevitable growth in low-cost carriers at Larnaca and Paphos and says that the airport's future success lies in being price sensitive in the market rather than moving towards a low-cost operation, he suggests.

"While the number of low-cost carriers are increasing here each year, as a destination, Cyprus continues to offer value and choice to travellers on a range of budgets, without commodifying its tourism product."

"Having a low-cost carrier base in Cyprus should enhance Larnaca's focus on optimising cost saving and operational efficiencies that will benefit all airlines," he concludes.