A start-up backed by a leading Russian airline is set to resurrect the Cyprus Airways brand and boost connectivity from the Mediterranean island. Established under the name Charlie Airlines, the business, which shares common ownership with S7 Airlines has paid just over €2 million to the Cypriot Government for rights to operate under the Cyprus Airways brand for the next ten years.

The ‘new’ Cyprus Airways is set to launch flights as early as this month with an initial fleet of two Airbus A319s. It plans to operate flights linking Larnaca and Paphos to destinations in Greece, Russia and the UK where it is understood to be seeking to fly to London Stansted, Manchester and Glasgow.

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.

Cobalt Aero has also already been established to partly fill the void from the collapse of Cyprus Airways, it is currently only flying to Athens, Chania, Heraklion and Thessaloniki in Greece; Paris, France; and Birmingham, London and Manchester in the UK.

Government officials believe their remains scope for another ‘Cypriot’ carrier to further boost links across the Continent and finance minister Harris Georgiades and transport minister Marios Demetriades described the agreement as an important development, which strengthens Cyprus’s connectivity and creates jobs, according to local media reports in Cyprus.

It is now almost two years since the original Cyprus Airways was place in voluntary liquidation at the start of 2015, resulting in the suspension of all of its air services from January 9 the same year. The closure of the carrier followed 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 was required to 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 had faced significant competition in the years ahead of its closure as foreign low-cost carriers introduced flights to the Mediterranean Island and other established carriers boosted their own activities from Larnaca and Paphos.

The government acquired the Cyprus Airways logo, brand name and trademark in December 2014, a month before the loss-making state-run airline run out of cash and under the licencing agreement with Charlie Airlines, the state will remain the owner of the Cyprus Airways brand name, logo and trademark. It will closely supervise the start-up through a special committee that will ensure adherence “to certain standards of quality with which the successful bidder has to comply”, says the Cypriot finance ministry’s privatisation unit.

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 international departure capacity from Cyprus in the recent summer 2016 with that of summer 2014, the final full schedule period flown by Cyprus Airways we see that the likes of Aegean Airlines, Blue Air, Qatar Airways, S7 Airlines and Ural Airlines have more than doubled capacity from the island. Meanwhile Alitalia, airberlin, Cobalt Aero, Danish Air Transport, EllinAir, Israir, Pobeda, TUIfly Nordic, TUS Airways, Yanair and Vim Airlines have all begun flights into Cyprus.

Our analysis shows that the international capacity offering from Cyprus has actually risen since the collapse with the number of departure seats up 6.2 per cent in summer 2015 compared to summer 2014 and up a further 13.3 per cent year-on-year this past summer schedule. In fact only three of the 20 largest international operators from Cyprus have a reduced capacity between summer 2014 and summer 2016 – Ryanair (-3.1 per cent), Monarch Airlines (-34.5 per cent) and Aeroflot (-9.5 per cent).