A new Cypriot airline plans to launch operations by the end of this year and return connectivity to the Mediterranean island that has been lost following the collapse of Cyprus Airways earlier this year. Although a number of existing carriers have boosted capacity in the Cypriot market, none more so than Greek operator Aegean Airlines, the start-up’s backers believe there is sufficient demand for the new full-service offering.

According to media reports, the airline, Cobalt Air, comes with a lot of backing and experience from the aviation sector and plans to launch operations across a network of ten destinations during the second half of 2015 with a small fleet of Airbus A320s. Its management team is said to include Australian Peter Kelly as chief executive officer, with former Jazeera Airways executive and Dobrolet / Pobeda deputy general director and chief commercial officer, Michael Hayden, and ex British Airways, Cathay Pacific, Dragonair and Virgin Atlantic executive, Andrew Pyne, in the senior team.

“We are establishing a ‘New Age’ airline that will be based in Cyprus and will operate regionally and throughout Europe. We believe Cyprus provides an excellent environment in which to develop a new airline for a pan-European market,” said Peter Kelly, chief executive officer, Cobalt Air in a launch statement.

The Australian-backed business submitted an application for a Cypriot Air Operator’s Certificate to the Department of Civil Aviation last week and has already registered as a local company on the island, according to sources in Cyprus, although it could take three to four months for the legislative process to be followed and the airline secure final approval for its launch.

The new business has already received the tentative backing of the Cypriot transport communications and works minister, Marios Demetriades, who told reporters that additional connectivity would be great for the island.

Following the demise of Cyprus Airways, Demetriades he said that “connectivity is high, passenger capacity has been replaced and more seats as well as connections have been added,” but noted there was still more room for improvement. “

“It is certainly a positive development that a company has applied for a licence. This application will be examined by the responsible Civil Aviation Department in accordance to the existing regulations. Let’s hope that this application will succeed since having this company operating from Cyprus, will improve the island’s connectivity,” he added.

Cobalt Air promises to offer the best attributes from both low cost and full service carriers and if approved, the company’s fleet of aircraft would bear characteristics specific to the island such as ‘Visit Cyprus’ branding. Subject to final approval from the regulator, the carrier could launch flights as early as late October 2015 at the start of the winter 2015/2016 schedules.

It is now four months since the Board of Directors of Cyprus Airways initiated procedures to place the embattled national carrier in voluntary liquidation at the start of the year resulting in the suspension of all of its air services from January 9, 2014. The closure of the carrier follows a ruling from the European Commission that the Cypriot government had breached rules on support for struggling companies when it offered state support to the ailing carrier between 2007 and 2013 and that the carrier must repay over €65 million of illegal state aid.

The airline’s closure followed many failed attempts to find a sustainable future for the business and unsuccessful talks to find a new investor. It has faced significant competition in recent years as foreign low-cost carriers introduced flights to the Mediterranean Island and other established carriers boosted their own activities from Larnaca and Paphos.

In reaction Cyprus Airways had downsized it activities over the past ten years with its network capacity last year falling to its lowest level in many years. This had seen its route map decline from 40 destinations in 2008 to just 16 destinations in 2014.

Data from OAG Schedules Analyser, shows that since Cyprus Airways’ closure in the second week of January, a number of airlines have boosted capacity from the island. Comparing April 2015 departure capacity from Cyprus with April 2014 schedules, Aegean Airlines and El Al have both more than doubled their offering from the country, while Wizz Air, Norwegian, British Airways, Austrian Airlines, AtlasJet Airlines and Russian carriers S7 Airlines and Transaero Airlines have all grown capacity by more than 25 per cent between the two months.

In the following chart we highlight the largest airlines in the Cypriot market by departure capacity between May 2014 and April 2015. This data also includes the operations of Turkish operators into Ercan Airport in North Cyprus, a disputed territory that is not officially recognised by any country in the world other than Turkey. These flights only operate to and from Turkey.