Cyprus Airways prepares to exit airport duty-free business

Dermot Davitt

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The airline's duty-free subsidiary posted its first loss as operator of the shops at Larnaca and Paphos, blaming the loss of intra-EU duty-free

Cyprus Airways expects to hand over the operation of duty-free shops at Larnaca and Paphos airports by mid-May, according to chairman Lazaros Savvides. Speaking to the Cyprus Mail, Savvides said the airline was willing to continue operating the shops on a transition basis until new airport operator Hermes, which includes Aer Rianta International (ARI), takes full control. ARI-Middle East will manage the shops on behalf of the new consortium.

Cyprus Airways has been operating the shops since 1996, and for a period had management consultancy services from ARI. In full-year results for 2005, Cyprus Airways duty-free subsidiary reported a fall in turnover of C£5.1m ($10.7m) to C£39.3m ($82.6m). The company attributed the fall to Cyprus' accession to the EU and the loss of intra-EU duty-free sales from May 1 2004. Strike action by employees during the first half of 2005 also hit the company's sales. Cyprus Airways Duty Free Shops made a pre-tax loss of C£124,000 ($260,000) in 2005, compared to a profit in 2004 of C£3.8m ($5m). Profits from the duty-free shops peaked in 2002 when the company recorded a pre-tax figure of C£7.1m ($14.9m).

Savvides also said that duty-free staff had agreed a deal with Hermes, under which 170 staff would retain their jobs under the same conditions as they had under Cyprus Airways.