Cyprus Airlines Given Insurance Indemnity By Government

by Lorys Charambolous, Tax-News.com, Nicosia

28 September 2001

Following the example of governments throughout the EU, the Cyprus Government has offered Cyprus Airways an indemnity on risks left uninsured when insurance companies limited cover to $50m per aircraft in the wake of the recent US terrorist strikes.

The national airline was saved from grounding its fleet yesterday after the government gave guarantees on certain types of insurance, if and when such demands are made. Attorney-General Alecos Markides said the mechanism reached is not a permanent arrangement, adding that Cyprus will fall in line with permanent arrangements as they develop in other European countries within the next month.

According to Markides, CAIR’s overall insurance cover at CY£800m for all risks is seen sufficient for now to cover the US$50m per aircraft cover that insurers are demanding for war risk and terrorist attacks. “If a foreign airport authority demands additional cover over and above US$50m, we shall then study the case and take action accordingly,” said Markides. The decision to add the government’s guarantees also covers Cyprus’ other private airlines, Helios and Libra.

Questioned about Cyprus Airways decision to impose a levy of US$1.25 per passenger per flight as of October 1 Chairman Haris Loizides said that events in the airlines insurance sector have a domino effect and what happens in one part of the world has repercussions in other countries too. He said Cyprus Airways does not intend to ask the government for a subsidy unless things get worse. Communications and Works Minister Averof Neophytou recently said the state could not be called in to bail out companies every time there was a crisis.

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