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Transportation Deployment Casebook/2023/Airlines of Cyprus

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1. Introduction to Civilian Aviation Industryncluding

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1.1 Technological Characteristics

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Civil aviation is a means of transportation, including the commercial and noncommercial usage of aircraft[1] . It comprises a vast array of operations, including passenger and freight air transportation, air ambulance services, and aerial firefighting. But it generally can be classified into three parts according to its characteristics. The first is transportation by commercial aircraft, which can include both planned and unplanned trips for people and things[2]. General aviation, sometimes known as GA, encompasses all other types of civil flights, whether they are private or commercial. Aerial work is any job that requires the use of an airplane, such as agriculture, photography, surveying, search and rescue, or any of the other specialised services available.

The majority of nations in the globe are members of the International Civil Aviation Organization and collaborate via that organisation to produce standard Standards and Recommended Practices for civil aviation[1]. The main technological elements of civil aviation are current aircraft designs, sophisticated avionics systems, and complex air traffic control systems. These technologies make it possible for aircraft to fly farther, at greater heights, and with better safety and efficiency than ever before. Modern airliners also integrate cutting-edge materials and production methods to make them lighter, stronger, and more fuel-efficient, therefore lowering the industry's carbon footprint[3].

1.2 Advantages

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The primary benefits of civil aviation are speed, convenience, and safety. In a matter of hours, rather than days or weeks, passengers may visit distant or island villages that might otherwise be inaccessible. As another example, civil aviation also played a crucial part in emergency response and disaster relief operations, including medical evacuations and humanitarian aid. Also, air travel is good for the economy because it boosts trade and tourism and connects markets around the world[4]. To be more specific, the airline industry creates millions of jobs around the world and makes a big difference to the GDP of a number of countries [5].

1.3 Main Markets

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Civil aviation is mostly used for commercial passenger and freight transport, private and business aviation, and government and military aviation [3](Halpern, 2018). However, the commercial passenger industry is the most profitable and accounts for the majority of aviation traffic and income. Private and corporate aviation, which provides air travel services to firms, executives, and the affluent, is also a substantial market[1].

2.History

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2.1 Transportation Modes Before the Airplanes

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Prior to the popularity of civil aircraft in the 1920s and 1930s, there were primarily three forms of transportation in the world: water, road, and rail.[6] Unfortunately, they all had limits owing to technical concerns at the time. The term "road transport" mostly relates to walking, carriages, and automobiles during that period[7]. Congestion, poor road conditions, and the expensive expense of creating and maintaining highways have hampered the use of the automobile as a form of road transit.

In the early days of road transportation, the lack of dependable vehicles and the requirement for regular repairs and maintenance faced considerable obstacles. In addition, the environmental implications of road transport and the growth in the number of vehicles have exacerbated the constraints of road transport[6].

Water transport was mostly comprised of ferries and steamships. Even though this means of transportation has a lengthy history, it has a high freight and passenger capacity.[6] Yet, it has been traditionally hampered by factors such as the unpredictability of weather, piracy, and the high expense of constructing and maintaining ports and canals. Water transport also necessitates costly infrastructure such as locks, canals, and dams. These devices have substantial construction costs and lengthy design cycles.

At the period, train travel was quite prevalent. However, considerations such as the high cost of establishing and maintaining rail infrastructure have constrained rail transportation. Rail transportation may also be rigid, as it is frequently restricted to set routes and less adaptive to demand fluctuations than other modes of transportation.[8] In addition, the marketing of rail travel has faced competition from other types of transportation, particularly vehicle transport.

2.2 Evolution of the Transportation Market

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During the Industrial Revolution, the introduction of the steam engine significantly altered how people travelled. [9] Trains and steam wheels improved the speed and efficiency of human transportation. Particularly, railways were crucial to the rise of trade and commerce throughout the era. With the introduction of globalisation in the second part of the 20th century, however, the transportation sector saw an additional transformation (Rodrigue, 2007). Globalization has necessitated the development of more rapid and dependable means of transportation that can link distant locations and enable the movement of goods and people[10]. International commerce and the globalisation of industry and consumption have placed increasing demand on the international transportation infrastructure[10]. Although traditional trains and steamships can carry out long-distance transportation, they are respectively limited by railway construction, time and cost, weather, etc. These reasons make them cannot become the most efficient mode of transportation at that time. In comparison, air transportation has the characteristics of faster and more efficient transportation across long distances, which was needed to support the growth of international trade and investment[10]. In particular, the development of the jet engine in the mid-19th century was a significant technological advancement that made international air travel quicker and more reliable, hence increasing people's desire for international travel[11].

3. The Invention of the Air Transport Technology

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3.1 Different Types of Technologies in Air Transportation

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The development of modern aviation technology has been a complex and collaborative process involving the contributions of numerous experts from various fields.  As the aviation industry developed and expanded over time, various technological expertise came together to create modern airplanes. The historical development of air transport highlights the significant contributions of different experts and their unique expertise in aviation. [12]

The development of air transport technology required the integration of various technological expertise. One of the critical technologies was aerodynamics, which involved the study of airflow and its effect on objects moving through the air. The Wright brothers were pioneers in this field, and their designs served as the foundation for many modern aircraft[12]. The first successful flight was achieved by them in 1903, which utilized a system of wings and a tail to control the aircraft.  In addition, Santos-Dumont also made significant contributions to early aviation with his design of a lightweight, air-cooled engine and the Demoiselle monoplane [13]. These technologies marked the beginning of modern aviation[14].

Another important area of expertise that contributed to the development of modern airplanes was materials science. The use of lightweight materials such as aluminum and composite materials in aircraft construction was pioneered by engineers such as William Boeing and Howard Hughes in the 1930s and 1940s[15]. These materials allowed for the creation of stronger, lighter aircraft that could fly farther and faster.

During World War I, aluminum became a key material in aircraft construction due to its light weight and high strength. The use of aluminum alloys in aircraft production was pioneered by German metallurgist Alfred Wilm, who in 1909 developed a high-strength aluminum alloy called duralumin[16]. However, duralumin is not without limitations, as it corrodes easily and can crack under stress, leading to catastrophic failure of aircraft. During this period, other materials such as steel, wood and fabric were also used in aircraft construction, but they were generally heavier and less durable than aluminum alloys.

Shift from initial technology to dominant technology: The initial technology used in air transport was based on piston engines, which limited the speed and range of aircraft. However, the development of the gas turbine engine in the 1940s and 50s marked a major shift in aircraft design[12]. These engines provide higher thrust and allow for faster and longer flights. Gas turbine engines have become the dominant technology used in modern aircraft and have undergone major improvements over the years. The growing interest in alternative fuels and electric propulsion systems in recent years could represent the next shift in aircraft design[17].

4. Birthing Phase

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4.1 Early Aviation Market Development of Cyprus

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During the earliest phase of civil aviation development in Cyprus in the 1930s, the colonial administration played an active role in fostering its expansion[18]. Cyprus's initial civil aviation laws were created by the British colonial administration in 1933[19]. These regulations establish the requirements for civil aviation personnel and aircraft licensing. Also, the government invested in aviation infrastructure by establishing runways and airports in strategic sites around the island, including the Nicosia Airport and the Larnaca Airport[20].

The government's attempts to develop civil aviation were motivated by a desire to improve Cyprus' connectedness with the rest of the globe and to facilitate the transfer of people and products[21]. The island's strategic location in the eastern Mediterranean makes it an essential stopover for flights between Europe and the Middle East. As a result, the development of civil aviation was deemed essential to the island's economic growth[22].

At this time, the government provided subsidies and financial incentives to airlines operating flights to and from Cyprus[21]. This enhanced the expansion of civil aviation and attracted more airlines to operate on the island. By the end of the 1930s, Cyprus had become a key aviation centre in the area, with frequent flights linking it to major cities across Europe and the Middle East.

5. Growth Phase

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Development of Civil Aviation in Cyprus:

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After the independence of Cyprus in 1960, civil aviation and civil aviation passenger numbers experienced significant growth[22]. Especially in 1973, the last year before the Turkish invasion, passenger traffic has reached a staggering 785,564[21]. This growth is the result of a combination of factors, including growing tourism, expanding international trade, and the island's strategic location as a staging point for flights between Europe and the Middle East.

Most importantly, both the public and private sectors played a role in the development of civil aviation in Cyprus during this period. On the public sector side, the government established the Department of Civil Aviation (DCA) in 1946, there were around 100 people in this department[21]. Their responsibilities were the regulation and oversight of civil aviation in Cyprus[23]. In addition to advising the government on the development of air transport, the department fosters the growth of private civil aviation in Cyprus by giving financial support to private airlines and investing in airport infrastructure[21].

The private sector also played a significant role in the growth of Cypru's civil aviation. Private companies such as Cyprus Airways and Eurocypria Airlines introduced new technologies and expanded their operations to meet the growing demand for air travel[23]. Cyprus Airlines plays an important role in the development of civil aviation by providing international routes and promoting Cyprus as a tourist destination[24].

One of the major policy issues that arose during this period was the Turkish invasion of Cyprus in 1974[25], which resulted in the island being divided into northern and southern regions, with the southern region becoming an independent state and the northern part occupied by Turkey[26]. The war had a significant impact on the aviation industry and air travel in Cyprus, with the economy, tourism, and transportation in the southern region being severely affected[27]. During this period, Cyprus Airlines faced problems such as fuel shortages and declining passenger demand. In order to solve these problems, Cyprus Airways adopted a variety of strategies. First of all, they have strengthened cooperation with airlines in other countries in the southern region to ensure the stability of supply and market[28]. Second, they have adopted some cost-saving measures, such as reducing the number of routes and flights, increasing flight utilization, reducing fuel and maintenance costs, etc. In addition, the government has taken some measures to support airline operations, such as granting loans and tax incentives. During this period, Cyprus's policy environment was more affected by war factors. Cyprus Airlines adopted a variety of strategies, including cooperation with other countries airlines, cost saving, government support, etc., to deal with policy issues. Although affected by the war, the development of civil aviation in Cyprus is part of a larger trend of globalization and the growing importance of air transport in facilitating international trade and travel[21].

6. Mature Phase

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During the mature (post-1980s) phase of civil aviation in Cyprus, the industry continued to experience growth and modernization[22]. Tourist arrivals to Cyprus have increased significantly, notably peaking at around 2 million passengers in 2004, leading to an increase in demand for air travel[29]. In response to changing market and competitive conditions, Cyprus Airways expanded its fleet and routes, and new airlines entered the market.

However, the civil aviation industry in Cyprus faces challenges due to the political situation on the island[28]. The island's continued fragmentation has made it difficult to formulate a comprehensive national aviation policy. Furthermore, the limited market size makes it difficult for airlines to achieve economies of scale and lacks skilled labor and technical infrastructure[30].

The industry also faces a lock-in effect due to the dominance of Cyprus Airlines[22]. The airline receives government subsidies and protections, which hinder the development of a more competitive and innovative aviation industry. Lack of competition and innovation limits the industry's ability to adapt to changing market conditions and technological advancements.

In order to reinvent the model and better meet the needs of today and tomorrow, Cyprus can consider several strategies. First, governments can encourage the development of a more competitive and diversified aviation industry, with a focus on reducing protectionist policies and subsidies. Second, investments in infrastructure and technological innovation can help the industry achieve greater efficiency and sustainability. Finally, the industry could consider expanding into new markets, such as low-cost airlines, and focus on travel and cargo. To sum up, Cyprus civil aviation continues to grow and modernize in its mature period, but it also faces challenges such as political division, limited market size and lock-in effect. To better meet the needs of today and tomorrow, the industry can focus on developing a more competitive and diverse aviation industry, investing in infrastructure and technology, and expanding into new markets.

7. Quantitative Analysis

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7.1 Description and fomula

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Historical data on passenger traffic on Cyprus Airlines from 1988 to 2008 was obtained from the World Bank website. The life cycle of Cyprus Airlines was calculated by the following formula.

Using a three-parameter S-curve logistic function:

S(t) = Smax/[1+exp(-b(t-ti)]

where:

The status measure is denoted by S(t) (e.g. Passenger-km traveled)

t is the time (often measured in years), ti is the inflection time (the year in which 1/2 Smax is reached),

t is the amount of time, which is often measured in years; ti is the inflection time, which is the year in which half of Smax is reached;

Smax is the saturation status level

The value of b is a coefficient that has to be estimated.

 
Cyprus Airlines the Passengers Carried from 1988-2008

7.2 Result and Discussion

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Variable Value
S_max 3600
b 0.090443687295
t_i 2003.4970024
Regression Statistics (1998-2008)
Multiple R 0.93284388863
R Square 0.87019772055
Adjusted R Square 0.86455414319
Standard Error 0.32261646976
Observations 25

The predicted passenger load is very close to the actual value. The inflection point was in 2004, and the data showed that the number of passengers carried by Cyprus’s civil aviation peaked at 200 in 2004, which highly overlaps with the content of the data. At the same time, it is worth noting that after 2004, the number of passengers carried by civil aviation in Cyprus began to show signs of decline.

  1. ↑ a b c ICAO. (2013). Operation of aircraft - ICAO. Retrieved March 8, 2023, from https://www.icao.int/safety/fatiguemanagement/FRMS%20Tools/Amendment%2037%20for%20FRMS%20SARPS%20(en).pdf
  2. ↑ https://en.wikipedia.org/wiki/Civil_aviation
  3. ↑ a b Halpern, N. (2018, January 31). The routledge companion to air transport management. Retrieved March 12, 2023, from https://books.google.com/books/about/The_Routledge_Companion_to_Air_Transport.html?id=vM1JDwAAQBAJ
  4. ↑ Wittmer, A., & Bieger, T. (2011). Marketing in aviation. Aviation Systems, 135-155. doi:10.1007/978-3-642-20080-9_7
  5. ↑ Wald, A., Fay, C., & Gleich, R. (2015). Introduction to aviation management. Wien, Germany: Lit.
  6. ↑ a b c Bagwell, P. S. (2015). The transport revolution 1770-1985. London, British: Routledge. doi:https://doi.org/10.4324/9780203221884
  7. ↑ https://en.wikipedia.org/wiki/Transport
  8. ↑ Francis, J. (1851). A history of the English railway; its social relations and revelations 1820-1845. London, British: Franklin Classics Trade Pre.
  9. ↑ O'Brien, P. K. (1985). Railways and the economic development of Western Europe, 1830 - 1914. Basingstoke, England: Macmillan.
  10. ↑ a b c Rodrigue, J. P. (2007). Transportation and globalization. Encyclopedia of.
  11. ↑ Bowen, J. T. (2010). The Economic Geography of Air Transportation: Space, time, and the freedom of the sky. Retrieved March 9, 2023, from https://www.routledge.com/The-Economic-Geography-of-Air-Transportation-Space-Time-and-the-Freedom/Bowen/p/book/9780415749916
  12. ↑ a b c Schmitt, D., & Gollnick, V. (2015). Historical development of Air Transport. Air Transport System, 19-38. doi:10.1007/978-3-7091-1880-1_2
  13. ↑ https://en.wikipedia.org/wiki/Alberto_Santos-Dumont
  14. ↑ https://www.wright-brothers.org/History_Wing/History_of_the_Airplane/History_of_the_Airplane_Intro/History_of_the_Airplane_Intro.htm
  15. ↑ https://en.wikipedia.org/wiki/Howard_Hughes
  16. ↑ https://en.wikipedia.org/wiki/Alfred_Wilm
  17. ↑ https://en.wikipedia.org/wiki/Gas_turbine
  18. ↑ Papatheodorou, A., & Busuttil, L. (2003). EU accession and Civil Aviation Regimes: Malta and cyprus as a case study - NASA technical reports server (NTRS). Retrieved March 6, 2023, from https://ntrs.nasa.gov/citations/20050139788
  19. ↑ Barrett, S. D. (1997). The implications of the Ireland-UK airline deregulation for an EU internal market. Journal of Air Transport Management, 3(2), 67-73. doi:10.1016/s0969-6997(97)00003-3
  20. ↑ Great Britain Civil Aviation Authority. (1998). The Single European Aviation Market: The first five years. Retrieved March 9, 2023, from https://books.google.com/books/about/The_Single_European_Aviation_Market.html?id=Me4JAQAAMAAJ
  21. ↑ a b c d e f Republic of Cyprus Department of Civil Aviation. (n.d.). The Aviation History of Cyprus. Retrieved March 8, 2023, from http://www.mcw.gov.cy/mcw/dca/dca.nsf/DMLhistory_en/DMLhistory_en?OpenDocument
  22. ↑ a b c d https://en.wikipedia.org/wiki/Cyprus_Airways
  23. ↑ a b Ioannides, J. A. (1985). "The Development of Air Transport in Cyprus,". Journal of Transport History, 6(1), 1-14. doi:https://www.jstor.org/stable/44590325.
  24. ↑ Hamill, T. (1993). WORLD AIRLINE DIRECTORY 1993. Flight International.
  25. ↑ Vincent Morelli (2011). Cyprus: Reunification Proving Elusive. DIANE Publishing. p. 1. ISBN 978-1-4379-8040-0. The Greek Cypriots and much of the international community refer to it as an "invasion.
  26. ↑ https://en.wikipedia.org/wiki/Turkish_invasion_of_Cyprus
  27. ↑ Kissane, Bill (15 October 2014). After Civil War: Division, Reconstruction, and Reconciliation in Contemporary Europe. University of Pennsylvania Press. p. 135. ISBN 978-0-8122-9030-1. were incorporated in the Greek Cypriot armed forces, gave Turkey reason and a pretext to invade Cyprus, claiming its role under the Treaty of Guarantees.
  28. ↑ a b Ioannides, D., & Apostolopoulos, Y. (1999). Political instability, war, and tourism in cyprus: Effects, management, and prospects for recovery. Journal of Travel Research, 38(1), 51-56. doi:10.1177/004728759903800111
  29. ↑ The World Bank. (n.d.). Cyprus . Retrieved March 7, 2023, from https://data.worldbank.org/country/cyprus?view=chart
  30. ↑ Wilson, R. (1992). Cyprus and the International Economy. New York, NY, United States: St. Martin's Press.
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