Cobalt Air collapse to cost Cyprus up to €2 million
Cyprus has set aside €1.5 million to €2 million to repatriate passengers left stranded by the collapse of Colbalt Air last week.
Transport minister Vasiliki Anastasiadou said about 18,000 passengers, which includes many from the UK, were left holding worthless tickets after the Cypriot low-cost airline grounded all flights on Wednesday evening.
She said the Cyprus government had decided to cover the cost of flying all passengers home, even though it was not legally obliged to do so. However, she has not ruled out suing Cobalt Air to recover the money.
The two-year-old airline, which was launched to fill the void left by the collapse of Cyprus Airways, cancelled all of its services after its Chinese backer pulled the plug this week. It was reported to be losing €30 million a year.
Passengers who were due to travel in the first 48 hours after the collapse on October 16 were told by the Cyprus government to re-book flights and use the receipts to reclaim the cost of their flight. It is not clear whether the government is planning to refund passengers who were due to travel after October 18. An announcement was promised on Wednesday but so far none has been forthcoming.
Several airlines, including Ryanair, announced cheap ‘rescue’ fares for passengers left stranded, but some are also reported to have increased the cost of tickets for future flights. Anastasiadou admitted there had been a spike in fares since Cobalt announced it was suspending operations at midnight on Wednesday, but she said they were expected to return to normal by next month.
"We believe passenger traffic will be covered by other companies and by the summer … everything will go smoothly," Anastasiadou said. "Of course, it is an unpleasant development but it is manageable."
About 280 staff have lost their jobs.
Cobalt Air chairman Grigoris Diakos told the Cyprus state radio on Friday that the airline has asked the government for more time to find a new investor, but instead its licence was revoked.
Senior transport ministry official Alecos Michaelides said there was no reason to temporarily suspend the license as there was no sign of a solid rescue plan.
"A company that is constantly posting losses, and especially losses of around 30 million (euros) a year over a three-year period cannot survive, while finding an investor becomes even harder," Michaelides told Ant1 TV.
He said that Chinese investors, which owned 49% of the carrier, are estimated to have put in €100 million already.
Some have argued that Coblat grew too quick with an over-ambitious flight programme, but others have blamed the airline’s lack of a proper distribution and pricing policy and the lack of co-operation deals with other airlines. The airline, which operated up to 20 flights a week from the UK, increased commission on GDS bookings from 1% to 3% in August.
Linsey McNeill
Editor Linsey McNeill has been writing about travel for more than three decades. Bylines include The Times, Telegraph, Observer, Guardian and Which? plus the South China Morning Post. She also shares insider tips on thetraveljournalist.co.uk
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