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Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for measure CY-2022-45/3025 – measures in Cyprus

New incentives schemes for airline companies

Νέα σχέδια κινήτρων για αεροπορικές εταιρείες

Country Cyprus , applies nationwide
Time period Temporary, 01 November 2022 – 31 July 2027
Context War in Ukraine
Type Other initiatives or policies
Category Ensuring business continuity and support for essential services
– Other
Author Loucas Antoniou (INEK) and Eurofound
Measure added 31 January 2023 (updated 21 March 2023)

Background information

The new incentives schemes proposed by the Ministers of Finance and Transport, Communications and Works were approved by the Cabinet in November 2022. The new schemes aim to address the consequences emerged with the war in Ukraine and to develop Cyprus’ air connectivity, the development of new routes, the maintenance of existing routes and the increase of passenger traffic. The new incentive plan is a continuation of the relevant trade agreements implemented for the period 2012-2022, with the participation of Hermes Airports and the Ministry of Transport, Communications and Works under relevant trade agreements.

Content of measure

Beneficiaries are all qualified airlines operating routes in Cyprus. The budget available for the implementation of the scheme is €165 million. The new plan covers the following basic schemes and grants:

  • new routes incentive scheme; the grant provided is based on the weekly frequency of roots starting from €10 per departing passenger for 1 route per week to €14 per passenger for 5 routes per week. These amounts are granted for routes operating for 20 weeks; routes operating less than 20 weeks receive the 50% of the set amounts.
  • volume of traffic-incentives for existing and new routes; eligible airlines are considered the companies that carry at least 400,000 passengers in annual basis. The grant is calculated on a blended manner. For example, an airline benefiting from the scheme would receive for the first 100,000 passengers €2, for the next 150,000 passengers €4 and for 1 million €11.
  • landing fees discount for incremental flights on existing routes; it offers a discount on landing fees depending on the type of route and the average number of weekly frequencies separately for the winter and summer periods. For example, a route operating for 3-5 times a week receives €7 discount in winter and €3.5 in summer.
  • winter growth for incremental passengers on existing routes; airlines operating between November-March receive an incentive between €6-€8 for every incremental departing passenger during the period in comparison with the respective previous winter period.

Use of measure

The government contributes 49% towards the cost and Hermes Airports 51%, percentages which are reduced to 27% and 73%, respectively, since the operator will continue to pay the concession fee of 32.38%. It is expected that the implementation of the new incentives’ schemes will bring about a 52% increase in the number of passengers from approximately 9 million in 2022 to 13.7 million in 2027.

Target groups

Workers Businesses Citizens
Does not apply to workers Sector specific set of companies
Does not apply to citizens

Actors and funding

Actors Funding
National government
Company / Companies
National funds

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role No involvement as case not in social partner domain No involvement
Form Not applicable Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

  • No involvement
  • Main level of involvement: N/A


The grant scheme emerged as a joint proposal of the Ministers of Finance and Transport, Communications and Work and in agreement with the airports’ operator, Hermes Airports Ltd upon the expiration of the latest corresponding incentives’ plan for airline companies. Social partner or political party have not been invited to participate in the consultation process. Similarly, social partners and political parties have no involvement in the implementation of the grant. The implementation body is the airports’ operator, Hermes Airports Ltd.

Views and reactions

The criticisms of the employers’ organizations and business leaders on the earlier decision of the government to suspend the initial incentives’ plan pressed the government to reconsider and the pressure led to the implementation of the grant scheme. Employers’ organizations and the Cyprus tourist sector – the Cyprus Hotel Association (PASYXE) and the Association of Cyprus Tourist Enterprises (STEK), in specific, welcomed the final decision of Cabinet; they said the incentives’ scheme is pivotal for the future of the Cypriot tourist sector, especially with the various challenges that the sector will continue to face in the coming years.

Sectors and occupations

    • Economic area Sector (NACE level 2)
      H - Transportation And Storage H51 Air transport

This case is not occupation-specific.



Eurofound (2023), New incentives schemes for airline companies, measure CY-2022-45/3025 (measures in Cyprus), EU PolicyWatch, Dublin,


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Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process.