ECONOMY

Olympic Airways hit by fall in passenger loads, higher costs

Like most other airlines around the world, national air carrier Olympic Airways (OA) said yesterday that it was not immune from the fallout from the attacks on the USA and is considering applying for state assistance to help it out. Addressing the World Technical Conference in Athens yesterday, OA chief executive Dionysios Kalofonos said the company has been hit by reduced passenger traffic and higher operating and insurance costs, reports the Athens News Agency. Since September 11, when the USA found itself the target of unprecedented air attacks, the passenger load has fallen by 10 to 15 percent, he said. The company, which flies to New York among its international routes, had to cancel its flights to the city as well as to its Canadian destinations in the immediate aftermath of the attacks, as US authorities closed down the country’s airports. Kalofonos said that operating costs had soared by some 80 billion drachmas as a result of the fall in passenger loads and the sudden jump in the oil bill. More worrying is the surge in the company’s insurance cover, up by nearly tenfold to 6 billion drachmas from 700 million drachmas. Olympic’s head said that insurance companies are only willing to provide liability cover up to 20 billion drachmas instead of the traditional cover for 600 billion drachmas. He said the company is considering the possibility of asking the State to underwrite the remaining cover. Eurozone ministers meeting over the weekend in Belgium agreed to provide a form of assistance but not direct subsidies to airlines affected by the current crisis. A Greek National Economy Ministry official told Kathimerini English Edition that the government has yet to work out the details of state aid. He said it is possible that the state provide the bank guarantee for loans taken out by the airline or bear the additional insurance costs. In the meantime, OA has no plans to cut flights or raise ticket prices until the end of the month, a company spokesman said. Reports said the airline is considering slashing up to 12-15 percent of the total number of flights, with the bulk of it transatlantic flights. In recent days, major airlines around the world have announced both route and job cuts, while others have decided to add an additional ticket surcharge to cover the insurance hike. The spokesman said it was possible that OA could reduce the number of flights next month if capacity falls below a specified figure. He said that this was normal, as October is considered a low season for the industry. GSEE head Christos Polyzogopoulos, however, said the crux of the social security problem lies in the lack of funding, especially the State’s inadequate contribution. It was possible that the system could see its 5.6-trillion-drachma reserves disappear completely by 2004-2005 if no action was taken.