Construction has finally started to renovate and expand Larnaka and Pafoa airports, Cypruss only international airports, increasing capacity by almost 12m passengers/year. The Hermes Airports consortium has taken over both airports to construct new passenger terminals and associated infrastructure. The new passenger terminal at Larnaca will be able to handle up to 9m passengers/year, and the extended terminal at Paphos will cater for 2.7m passengers/year. Construction began in early June, with Paphos due for completion at the end of 2008, and Larnaca at the end of 2009. The company will also undertake further expansion of the airports as demand requires.

The €622m project to expand the two airports was agreed with Hermes after two years of negotiations and a 25-year concession awarded. The structuring of the deal is more favourable to Hermes compared with other European airport deals – such as Budapest, Bratislava - that have closed in the interim. Hermes will pay 33% of gross revenues to the state, and a fixed annual concession fee of €3.5m.