Cyprus Turkish Airline KTHY should have been rescued by Cyprus Airways not Turkish-owned AtlasJet. To speed up the transition to Cypriot reunification Cyprus Airways with RoC government support should have offered to buy the Turkish Cypriot airline and service its debts. This would have been the most sensible thing to do.
Why?
Politically, such a move would have enormous impact on the peace talks. It will give the RoC through the national airline a say, for the first time, over an issue such as transport in the north of the RoC. It would give the RoC the responsibility to ensure transportation of its own citizens in the north and the jobs of KTHY's staff which number 600 +. Buying KTHY would integrate Greek and Turkish Cypriots workers forcing them to work together, join the same unions, cooperate and generally think as Cypriots.
As Cyprus Airways will have to use the Turkish language, the second official language of Cyprus, it will make it more inclusive giving it the real justification to call itself "Cypriot."
Economically, six KTHY planes at Ercan Airport would be an asset to Cyprus Airways - our national carrier, giving it access to the Turkish market for the first time since 1974. Turkish Cypriots through their use of Turkish will benefit as the intermediaries. Also, such a move would ensure EU standards are reached in the company.
More importantly, as Cyprus Airways is a national carrier, it will be easier to introduce direct flights from Ercan to London or Frankfurt as the RoC Civil Aviation Authority - the only authority that can decide on such issues, would not reject the national carrier from flying.