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Screenshot of a breaking news alert e-mail from Q2 2017
The Cyprus retail forex industry, made up of the many forex and binary options brokers, platform providers, prime brokers, regulatory advisors, online marketing experts, ad agencies, manpower firms among others has dealt with quite a number of setbacks over the years, and now has one more to deal with – the collapse of national air carrier Cyprus Airways.
An EU Commission decision Friday that Cyprus Airlines must repay €65 million (USD $77 million) of government aid the airline has received forced the Cyprus government, which owns 93% of the airline, to immediately shut it down and begin liquidating its assets.
According to Cyprus finance minister Harris Georgiades, “The company has ceased being a viable entity, and cannot continue to operate.”
Many of the CySEC regulated forex and binary options brokers located on the island are owned and run by groups outside the country – mainly from Israel, Russia, the Far East and the UK. They locate in Cyprus for a variety (and combination) of reasons, including Cyprus’ membership in the EU and ability to MiFID-passport the CySEC license across other EU countries, low cost of operation, low corporate tax rate, location (just a 45 minute flight from Tel Aviv), and the many experienced people on the island. Limassol has become one of the global industry’s three most important locations.
Anyone who has taken a Cyprus Airlines Monday morning Tel Aviv – Larnaca or Sunday evening London – Larnaca flight understands how important the airline was to the industry, bringing many industry executives back and forth for the work week.
There are many other flight options into the country – Transaero and Aeroflot from Moscow, Easyjet and BA from London, and more recently El Al’s FlyUp discount brand from Tel Aviv. And those airlines are likely now to add flights to pick up the slack. But the closure of Cyprus Airlines and immediate cancellation of all its flights will cause some near-term pain to many of those who travel regularly to and from Cyprus.
One Israel-based executive who travels the route regularly told LeapRate, “This is going to be a real pain for the next while. People like me who fly every week get into a routine, and this breaks it. I doubt that El Al has enough seats right now to get us all there and back, and certainly not in the time frame I’m used to. For now I’ll probably see my kids one less day each week.”
The Cyprus Airways closure is also something of an ego hit to those on the island. Cyprus is recovering fairly nicely from the 2013 Cyprus bank crisis, with the Forex industry in particular doing well and continuing to attract new brokers. The loss of the national carrier is just another reminder that the island still has a ways to go to fully recover and compete in the new interconnected world economy.
More on the closure of Cyprus Airlines can be seen here.