Around two weeks ago, following the decision of its Chinese majority investor to suspend its investment in the airline — the largest airline in Cyprus, Cobalt Air collapsed.
The airline suspended operations with immediate effect, leaving several hundreds of passengers ‘stranded’, and resulted in the termination of contracts for over 200 Cobalt Air staff (many of whom had experienced this before, with the collapse of bankrupt Cyprus Airways, back in 2015).
On the night Cobalt Air collapsed, the airline was working until the eleventh hour to attempt to secure investment from European and Israeli potential investors, who were said to have been interested in saving the young Cypriot airline. Failing to reach a deal with new investors fast enough, the airline collapsed and declared the end of its short lifespan, serving the island nation of Cyprus.
However, now in early November — Cobalt Air may have just been given another lifeline, thanks to aviation industry heavyweight…British long-haul carrier, Virgin Atlantic.
Virgin Atlantic lawyers have won an initial case in a Cypriot court, for the immediate return of the two air licences needed for Cobalt Air to continue negotiations with potential investors: the air operators certificate, and an operating licence.
Virgin Atlantic argued that Cobalt Air was not given enough time to seek new investment while legally able to do so (when it previously had both licences), and hence should be given a new window of opportunity by having the licences reinstated, in order for fresh negotiations with new investors to take place.
Why is Virgin Atlantic, a British carrier with no obvious link or connection to Cobalt Air stepping in, and demanding the small Cypriot carrier is given extra time? Virgin Atlantic has now emerged as the primary holder of the Cobalt’s expensive airport slots pair at London Heathrow (which explains why Cobalt was operating from London Heathrow’s Terminal 3, the home of Virgin Atlantic).
Airport slots give an airline the right to operate at an airport at particular times. They are used when the airport is constrained, either by the runway throughput (such as London Heathrow) or by the available parking space (such as at a number of Greek island airports). Obtaining slots at Heathrow is incredibly complicated, both because of the extensive waiting list of the world’s airlines who want to fly to Heathrow, and owing to the large cost involved in purchasing. Not too long ago, Muscat-based Oman Air purchased slots at London Heathrow for a huge $75 million.
With the cancellation of the Cobalt Air’s license, Virgin Atlantic was in immediate danger of losing its rights on the slot, given the ‘use it or lose it’ policy administered by the UK’s Civil Aviation Authority. Consequently, the British airline now has high hopes Cobalt Air will be able to resume operations, removing the risk of Virgin Atlantic owned Heathrow slots being revoked, and sold to competitor airlines.
This is fascinating. While the final Decree of the Court has not yet established, this initial period gives Cobalt Air enough time to negotiate with interested investors, thus increasing the chances of an agreement. Pending a successful outcome, we could see the resurrection of Cobalt Air. Furthermore, to have transatlantic airline Virgin Atlantic lobbying in a Cypriot court for more investment negotiation time for a young-Cypriot start-up airline is the perfect example of just how much occurs behind the scenes in this industry, in order to keep the world’s planes taking off.