The closure of GermanWings is an indication of the dire situation the travel and tourism sector will face coming out of the pandemic.There is a consensus in the field that demand will take years to recover and this will disproportionately affect Cyprus. https://www.ft.com/content/48fcd03c-3043-4485-a1e7-c7c07cebe444

The airline industry got used to to the high load factors prevalent in the last few years, resulting in reduced prices and better connectivity across the board. A win win situation for all stakeholders. What we will be facing coming out of the pandemic is

1. Low load factors with a proportionate increase of ticket prices
2. Due to muted demand, marginally profitable routes will have to be dropped or subsidized in order for carriers to continue operating them.
3. Reduced competition due to forced market consolidation will also

increase prices
4. A significant number of carriers will go bankrupt or will be taken over by the state
5. Cascade effects on the airport industry and other related services linked to them.

Cyprus does not have a major carrier in need of a rescue and therefore can focus its efforts on damage limitation and planning for the day after. Given the fact that the tourism industry will take a lot of time to recover the loss of connectivity with third countries will be

significant, as big portion of that connectivity was due to our touristic product. Consequently the Government needs to start planning for significant market intervention though start-up incentives that will allow airlines to maintain essential connectivity with third countries

These incentives could take the form of PSO until a specific route reaches a certain load factor. Additional provisions should include the requirement to setup a base in Cyprus and operate from Cyprus rather from third country airports. This will have significant side benefits

to the local economy. The right time to start considering these options is now and we should be ready to put them in place immediately once we reopen our airports for EU destinations.