CEO Eleni Kaloyirou on how Hermes Airports is meeting geopolitical, Fit for 55, and other challenges

The start of the Phase 2 projects, which will be implemented in parallel at the two airports in Cyprus, without affecting passengers or the flight schedule, constitutes a special challenge for Hermes Airports in 2025, emphasises the company's CEO, Eleni Kaloyirou.

As she notes in an interview with InBusinessNews, within the framework of the ‘IN Business Forecasting 2024’ series, with the completion of the projects, Larnaca and Paphos airports will have even greater capacity and potential for further development of connectivity for the coming decades.

Regarding the goal of strengthening Cyprus' connectivity, Kaloyirou, after expressing satisfaction with the performance of the efforts so far, emphasises that "we are also working methodically to launch flights to more distant destinations, such as India and the USA, something which, however, requires more time, as it requires a series of combined actions by many tourism partners, in order to prepare the appropriate infrastructure that will make such a move sustainable in the long term."

Referring, to the aviation industry more broadly, the CEO of Hermes Airports indicates that it is today faced with a major challenge, that of ensuring sustainable development, where the effort is to limit the negative impacts on the environment from pollutants created due to air traffic, so that airports can continue to develop and therefore offer their significant support at a social and economic level to the communities they serve.

How do you think the Cypriot economy will perform in the new year? How optimistic are you about its prospects?

The Cypriot economy is expected to grow at high rates next year, following the successful course of 2024, where the growth rate is expected to reach 3.8%, while inflation is expected to decrease to 2%.

Equally important is the continued reduction in public debt, conditions that led to the recent upgrade of Cyprus' credit rating by the international rating agency Moody's.

We are optimistic about the prospects of the Cypriot economy, seeing the steady growth, year after year, of our own industry, air traffic and tourism, which has proven to be extremely resilient and flexible to the challenges that arise, particularly in recent years.

2024 ended with a new record in passenger traffic at Cypriot airports, exceeding 12 million passengers.

Given that every year the pie of connectivity and overall, but especially winter tourism, grows, we believe that the conditions exist to maintain this dynamic of further growth in the new year.

At the same time, for us, 2025 also marks the start of Phase 2 projects at Cyprus airports, which will create the conditions for serving an even greater number of passengers in future years.

What do you see as the biggest risks to our country's economy? What should be taken into account to ensure its growth trajectory?

In recent years we have seen a series of external developments affecting national economies, not excluding Cyprus.

Geopolitical risks in the near region, with the continuation of conflicts in the Middle East and Ukraine, maintain a climate of relative uncertainty that undoubtedly has an impact on the economy, in sectors such as energy, tourism, etc.

It is important that our country reads the developments correctly and continues to emerge as a factor of stability and security in our region.

Given the geopolitical instability, we expect that energy prices will continue to be a deterrent for the Cypriot economy and it is very important that there is a comprehensive strategic approach in this sector from the state's side, as well as that the liberalisation of the market progresses.

Moreover, 2025 marks the beginning of the gradual implementation of Fit for 55 in air transport, which is expected to result in increases in air fares.

In an island country like Cyprus, where air connectivity is the main route to and from the country, this measure could have knock-on effects across a number of sectors.

The cost of living also constitutes a significant - primarily social - challenge, which puts pressure on the productive forces, as we have seen from the recent strike mobilisations in various sectors.

It is important to ensure labor peace, as it is a necessary condition for the continuation of the economic growth path.

Related and not negligible are the shortages that are observed from time to time in several professions, something that we also experience in various positions at airports, as a service that operates on a 24-hour basis.

As the Cypriot economy grows, staffing needs will increase and it is important to have long-term planning for their timely and adequate coverage.

What should Cyprus do to become an even more attractive destination for foreign investments? And how important, in your opinion, are they for its economy?

Our country already has an attractive profile for interested investors: A resilient and solid economy that has over time demonstrated reflexes for adapting and dealing with crises, a pool of extremely capable and trained human resources, especially in the services sector, and a very attractive standard of living.

There are, however, individual areas that can be improved in order to attract even more investor interest, such as the stability of the state's tax and other policies, the acceleration of the administration of justice, as well as more rapid decision-making and the issuance of necessary licenses by the public sector, which are required for the implementation of investment decisions.

Judging from our own experience as the first and largest state-private partnership or PPP (Private Public Partnership), which spans almost two decades, we would say that it is necessary to seek reliable partners and cultivate relationships of mutual trust, which will allow significant investments and infrastructure projects to progress and prosper over time, creating the foundations for a more modern country and economy.

Regarding your company's sector of activity, how do you estimate it will develop in 2025? Are there any issues that concern you?

Our main concerns for the new year focus on geopolitical developments in Europe and the Middle East, where we operate, as they are unpredictable and at times have a strong impact on tourist traffic.

Furthermore, the airline industry has already begun to consider passing on the cost of implementing Fit for 55 to airfares, and it remains to be seen to what extent this will deter travelers.

As an airport management company, we are working to further enhance connectivity both through the expansion of existing flight schedules, with an emphasis on the winter season, and by adding destinations with which there is no air connection.

It is a permanent goal of ours that we are pleased to see bearing fruit year after year, as we have effectively penetrated significant new markets, beyond the traditional ones, thanks to the improved agreements we make with airlines.

At the same time, we are working methodically to launch flights to more distant destinations, such as India and the USA, something which, however, requires more time, as it requires a series of combined actions by many tourism partners, in order to prepare the appropriate foundation that will make such a move sustainable in the long term.

What are the biggest trends/changes you expect to occur in your sector and what are the most significant challenges?

The aviation sector has faced a series of very significant and immediate challenges in recent years: There was the pandemic, staff shortages at airports around the world, the war in Ukraine, which effectively canceled two major markets for Europe overnight, the crisis in the Middle East, etc.

Today, our industry is faced with a major challenge, that of ensuring sustainable development, where the effort is to limit the negative impacts on the environment from pollutants created due to air traffic, so that airports can continue to develop and therefore offer their significant support at a social and economic level to the communities they serve.

A particular challenge is that, on the one hand, airports are required to gradually transition to zero-emission operation and, on the other, to manage the cost of the planned reduction in the environmental footprint of flights within the framework of the European Green Deal.

A recent study presented by the Airports Council of Europe International documented the impact of climate policies and in particular Fit for 55, as they will inevitably increase costs and reduce traffic, especially for smaller airports, threatening the connectivity of smaller and more remote communities.

As Cyprus, it is important to ensure that there is an understanding by the competent European institutions of the special importance that air connectivity has for an island country on the edge of Europe, so that we can secure as much assistance or exemptions as possible in this energy transition process.

Significant steps have been taken in this direction in previous years and it is essential that this pursuit continues on our part, for the good of the local tourism industry.

At the same time, a special challenge for us in the new year will be the start of Phase 2 projects, which will be implemented in parallel at the two airports without affecting passengers or the flight schedule.

Upon their completion, Larnaca and Paphos airports will have even greater capacity and potential for further development of connectivity for the coming decades.

This is a project that, despite its challenges, we look forward to successfully completing within the set timeframe, as we did with the creation of the two existing airports, which were the starting point of the new era for Cypriot tourism.

(Source: InBusinessNews)