‘Air transport liberalization and its
impact on the aviation and tourism
industries:
a case study on Cyprus’
By Sotiroula Liasidou - Lecturer at
Americanos College Nicosia – Cyprus
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ZILINA - SLOVAKIA
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PRESENTATION’S STRUCTURE
INTRODUCTION
AIMS
AIRLINE LIBERALISATION
AVIATION & TOURISM INDUSTRIES
THE REPUBLIC OF CYPRUS
REASERCH FINDINGS & DISCUSSION
CONCLUSIONS
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INTRODUCTION
Regulation – an industry is ruled by the government.
New terminology emerge declaring deregulation/liberalization
Liberalization - ‘frees an industry from the state’s control
over prices, entry and exit’
Airline Liberalisation
Freedom of entry/exit - Freedom on capacity –Freedom on
fares - Freedom of operations - COMPETITION
Transformation of the European Airline’s scene.
Since the 1st of May 2004 Cyprus is member of the EU.
As a consequence, the aviation industry’s landscape has
been harmonised under the
EU
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AIMS of the research
Assessment of the possible changes and the impact on
the Aviation industry
As a consequence of this to reveal the impact on the
Tourism Industry
In this respect, the views of experts from the private and
public sectors in the both aviation and tourism industries
of Cyprus are studied through in-depth interviews and
questionnaires.
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European Airline Liberalisation
‘The Three Packages’
First Package or December 1987
Declared flexible terms concerning the fares
Abandoned the single designation provision
As well as had released any capacity restrictions
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Second Package (June 1990)
Released even more the provisions of the
first one
Allowed multi-designation of airlines on
specific routes
As well as it allowed operations under the
Third and Fourth Freedom of air into intercontinental flights
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Third Package (January 1993)
Came into effect in 1997
Was the basis for the creation of the
‘open skies’ agreement with full traffic
rights everywhere in the community
Freedom in entry and exit
At any capacity
At any route
At any rate determined
LIBERALISATION
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AVIATION AND TOURISM: A
RECIPROCAL RELATION
Transitional process between the tourist
generating area and the tourist destination country,
This process is facilitated through a transportation
system
The aviation system is an essential part of the
tourism industry, which connects even the most
remote places on earth in a relatively short time, in
comparison with other transport modes.
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THE REPUBLIC OF
CYPRUS
‘The island of Cyprus is
situated at the
crossroads of three
continents, Europe,
Asia and Africa in the
Mediterranean sea.’
‘Its history and culture is
a living proof of its agelong function as a
bridge between
civilizations of the
Southeast Europe and
Middle East’ (PIO,2000)
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TOURISM INDUSTRY
•The unique beauty of the island with a long
lasting history in combination with the three main
attraction ‘cores’ of sun-sea-sand, generated
demand for tourism
•Approximately 2,6 millions tourists arrive on the
island each year
•Undoubtedly, tourism development has been
considered as the ‘magic wand’ for the economic
development and viable progress of the country
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AIRLINE INDUSTRY
The airline industry of Cyprus has been based on the
law, which was inherited by the British Colonial rules
Declaring a regulatory status characterized by
bilateral agreements between different countries
Regulation
Cyprus Airways
Flag Carrier (Monopoly - Bilateral Agreements –
Protectionism in the markets of Greece and the UK)
Plethora of Charter Airlines Vertically Integrated with
major European Tour Operators – Seat Only
purchase prohibited
Helios Airways – 1st private company - flights to
restricted destinations
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METHODOLOGY
Methodological triangulation – combination
qualitative & quantitative methods
A non-probability sample and in particular a
purposive sample is used, both in the interviews
and the questionnaires
Semi-structured interviews
Respondents 22 people expertise in the field of
tourism and the aviation industries
Distribution of questionnaires at the end of each
interview (7-point Likert scale format 1 very
unlikely –7 very likely)
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RESEARCH FINDINDS &
DISCUSSION
Impact on the Aviation industry
Significant Impact (85%)
Insignificant Impact (15%)
New airlines will enter the
market
On charter flights.
On seat availability - On fares
On frequencies-On seat demand
On outbound/inbound traffic
On Cyprus Airways
Increase interest on the two
illiberal routes Larnaca-London
Heathrow / Larnaca-Athens
Spata
Renovation of the two airports
Larnaca and Paphos
(BOT).Regional Hubs
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Saturation of the market
Small Market
Is adequately covered by the
existing airlines
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Competition
‘European private airlines will enter the Cypriot market
as far as there will not be any governmental
restriction and the skies of the country will be open
to competition’
On fares – Lower fares
On the capacity
On slots allocation
On in-flight services
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New strategy for Cyprus
Airways
To enter a strategic alliance
Exploitation of it’s present to Greece
New strategy on the fares
‘Although for Helios Airways the
opportunity is to reschedule its flights to
destinations that are considered
prosperous for the air traffic for example
Larnaca-Athens route’
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‘A carrier can depart from Stockholm
then to arrive in Athens and then to
operate to Crete and to have as a final
destination Cyprus.’
Operation of the 5th Freedom right
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Impact on the Tourism
Industry
Significant effect (85%)
Insignificant effect (15%)
Due to the existence of
Accessibility of the
charter flights
market
More flexible airline services
Increase of the incoming tourism
Decrease of the tourism package
price due to lower fares which
accounts for 40%-50% in total
Great effect on the SMEs, having
as s result the vertical distribution
of the revenue
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‘The impact will attributable to the decrease of air fares
because of the competition among the different carriers.’
‘ As a positive impact, is considered the increase of tourism
arrivals which leads in an increase of the country’s
revenues.’
‘There will be a significant increase in the arrivals from
Greece manly because Greek and Cypriot carriers will
enter the routes of Larnaca-Athens having as a result the
introduction of lower fares and an increase in the
arrivals.’
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Negative or positive impacts on the
tourism industry
Positive impacts (75%)
Negative impacts (25%)
Decrease of the tourism
package
Increase of tourism arrivals
Increase of revenue
Increase of
independent
travellers
Developments of different
forms of tourism
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Increase of mass tourism
with socio-cultural
problems
Low spending tourism-Bag
packers
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CONCLUSION
The findings of the study revealed that there
would be a remarkable impact concerning the
different aspects of the two industries.
A liberalised environment will force in a sense
the natural development and performance of the
airlines and made them able to compete in every
aspect of operation
Flexibility in the airline industry leads to positive
impact on the tourism industry since Cyprus is
an island
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CONCLUSION
The importance of the airline industry on
the island and the fact that is the most
popular transport mode leads to the
conclusion that a liberalised aviation
industry will contribute even further on the
development of tourism.
Airline Liberalization should be the
cornerstone and the motivation for the
development of sustainable
tourism.Therefore the benefits will be
more.
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Thank you for your attention!
Any Questions?
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