European investigation threatens Cyprus deal, say reports

Gavin Lipsith

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Cypriot reports suggest that Aer Rianta International-Middle East's involvement at Larnaca and Paphos airports could be jeopardised amid calls to re-tender the airport management contract

The complaint concerns changes to the terms of the contract, made after initial winner Alterra pulled out of the process in July 2004. Under the new terms, the Cypriot government was charged with taking over security at the two airports, while lower penalties will be imposed if the Hermes consortium--in which Aer Rianta International-Middle East holds an 11% stake--fails to meet the targets set by the contract. Aer Rianta International-Middle East and local partner Cyprus Trading Corp are set to operate duty-free and duty-paid retail at the two airports, most likely under the Cyprus Duty Free fascia.

The Commission first voiced its concerns to the Cypriot government in a letter last November, in which it said it suspected there had been irregularities in the awarding of the contract. A source told RavenFox.com that a fresh tender was "extremely unlikely". 

Keep an eye on RavenFox.com for more developments.