Hermes Airports' contract has officially been extended

The Ministry of Transport, Communications and Works and Hermes Airports have announced the signing of the Agreement regarding the settlement of disputes concerning the Concession Agreement for the two international airports of Cyprus.

The Agreement, which emerged after months of negotiation between the two parties, provides for the construction of Phase 2 with the implementation of a series of projects for the airports in Larnaca and Paphos, as well as the resolution of disputes and claims that had been pending for a number of years between the parties.

The construction works, which will be carried out in parallel at both airports, were agreed to begin at the end of the first quarter of 2025, after the loan agreements between Hermes Airports and the banks that will finance the projects have been completed and signed, and after the necessary urban planning consent has been obtained.

The negotiations that took place between the parties resulted in an agreement to extend the duration of the Concession Agreement by 18 months and to pay compensation of €30 million as well as a loan of €20 million from the Republic of Cyprus to the Company, in return for the withdrawal of the Company's claims and its rights to compensation due to the operation of the illegal Tymbou airport.

For the airport in Larnaca, the projects concern expansion works, with a total area of ​​approximately 20,000 square meters, of the terminal building, the construction of new passenger boarding/disembarking gates with the creation of a new wing that will be connected to the main building, as well as an increase in aircraft parking spaces, while their completion time is estimated at 30 months.

Projects will be implemented at the airport in Paphos that increase the building area by approximately 30% as well as expand the southern parallel taxiway to upgrade the safety and capacity of the runway/taxiway system.

The works are expected to be completed within 27 months from the start of the works. The works are expected to significantly improve the passenger experience at every stage of their journey by enhancing capacity and comfort for passengers before boarding.

The upgrade of Larnaca and Paphos airports on the basis of the Agreement reached will allow both in the short term, but mainly in the long term, even after the end of the concession agreement, to serve a greater number of passengers and aircraft, based on modern passenger management practices.

This will further enhance the development of connectivity and tourism in Cyprus in the coming decades, with all the benefits this entails for the local economy.

In a statement, the Minister of Transport, Communications and Works, Alexis Vafeades, said:

"The dynamic increase in passenger traffic that we achieved through joint coordinated efforts with Hermes Airports, the Deputy Ministry of Tourism and our partners in the tourism sector, has made the expansion work of the 2 airports necessary.

We are pleased that we have managed to reach an agreement with Hermes Airports, which is important both for the long-term development of the Airports and the securing of new air routes, further consolidating Cyprus' position on the international stage, as well as the development of the economy.

The expansions that will be made will be able to serve more than 17.4 million passengers, an increase of 43% compared to the 12.2 million expected this year without an additional financial burden on public funds, while differences between the parties are being settled in a mutually acceptable manner and the level of service at the Airports is being upgraded.

"We remain steadfast in our commitment to help the country's aviation sector and connectivity grow further and to foster a sense of trust with our partners. This agreement is a clear message that Cyprus is open for business and additional investment."

For his part, the Chairman of the Board of Directors of Hermes Airports, Christophe Petit, stated: “We are happy about the positive outcome of this negotiation, which is mutually beneficial and will offer solutions to chronic issues.

Larnaca and Paphos airports were constructed with an investment of around €640 million, while the Republic of Cyprus has collected over €607 million in concession fee revenue during the 18 years that Hermes Airports has undertaken their management.

Now, with the projects that have been agreed, they will be able to respond even more effectively and qualitatively to the needs of the new era that extends beyond the end of the current Concession Agreement.

As a management company, we have achieved a lot over the years in collaboration with the Ministry of Transport and all partners in the tourism and airport community, and with awareness of our significant footprint in the Cypriot economy, we look forward to starting and completing another important project, which will further upgrade Cyprus' two international airports."

(Source: InBusinessNews)