The launch of Barbados-based low-cost air carrier REDjet brought smiles to the faces of many travellers in Barbados, Jamaica, Guyana and Trinidad and Tobago.
However, although the inaugural flight from Barbados to Guyana lifted off on May 10, flights to Jamaica and the twin-island republic remain grounded.
Last week REDjet chairman Ian Burns accused the governments of Jamaica and Trinidad and Tobago of “delaying tactics”.
Noting that the low-cost carrier had met all the regulatory requirements, he said the failure of the service to get off the ground was due to “political delays”.
“There are forces out there that are determined to stop REDjet getting into the air to deny consumers the choice that they require,” he said.
Regional air travel, which is a significant part of the regional integration movement, has long been a source of contention for governments and travellers and it is clear that there is a need for a long-term solution.
While there have been concerns about the reliability of service or the misplacement of bags, the cost of travel has been the major bugbear.
LIAT has often been accused of abusing its position of dominance within the region as it relates to pricing. However, in the July 21, 2009 DAILY NATION, the main shareholder governments – Barbados, Antigua and Barbuda, and St Vincent and the Grenadines – defended the high cost of Caribbean air travel.
“Obviously, we would like to see regional air travel to be as cost effective as possible for our citizens. Our commitment to CARICOM means that we would like to ensure that people can move throughout the region,” then Prime Minister David Thompson had said.
He noted, however, that regional governments also had obligations that had to be met, including servicing the loans for upgrading their airports, as well as maintaining a high standard for aviation policy, “all of which come at a considerable cost”.
Antigua and Barbuda Prime Minister Baldwin Spencer shared similar sentiments.
“Clearly, the whole question of improving the product at the airports could be a very costly affair and therefore, governments have to look closely at the tax structure that they put in place to service these loans.
“Obviously, we try to be as conservative as we possibly can with respect to this, but clearly it is a situation [of] national imperatives and national policies towards ensuring that we improve the situation. . . .
“Of course, nothing is cast in concrete and everything is constantly being reviewed. We will continue to look at these measures but as it stands now, these measures are unavoidable,” Spencer said.
A white paper that was compiled following the Caribbean Hotel Industry Conference (CHIC) in June 2005 recommended the “operational integration” of the airlines of CARICOM into “an effective Caribbean regional airline group”.
“The operational integration of the airlines of the Caribbean will create an airline network that will have the scale and flexibility to significantly increase traffic and revenue through improved traffic flow across the network and the scale to permit the reduction of unit costs to a sustainable competitive level.
“Operational integration will see the airlines of the Caribbean operating an integrated flight schedule with head office functions combined along with marketing, reservations and station activities, with the individual airlines retaining their distinct airline brand identities and Flight Operations functions,” the paper stated.
It was suggested that cost benefits would result from one head office, one reservations system and one marketing organisation for all.
Also, common purchasing and higher volumes would reduce supplier prices, including fuel prices, and common scheduling would reduce overlap and increase connectivity.
“The integrated ‘airlines of the Caribbean’ network will be profitable, delivering improved reliability, expanded flight schedules and lower
fares regionwide. The consumer will benefit from lower fares, increased flight schedules and the ability to earn and use frequent flier points over a broader network. The taxpayer will benefit in no longer having to subsidise airline losses,” the document said.
It was also noted that regional and international investment interest in a regional airline solution would be attracted by the demonstrated profit potential of the integrated regional network, given a compelling business plan and acceptable commercial terms.
Additionally, Dr Brian Francis, a lecturer in the Department of Economics at the University of the West Indies, Cave Hill Campus, said in the June 4, 2007 BARBADOS BUSINESS AUTHORITY that a new business model is needed with respect to regional airlines if they are to continue to form a major plank in regional integration efforts.
“It is within this context that local and regional businesses should seek to exploit all available investment opportunities in regional airlines to assist these carriers in becoming more efficient and profitable.
“Regional travel should be conceptualised as a public good; it facilitates the movement of people, goods and services within the Caribbean, all of which could only redound to the benefit of regional businesses.
“Therefore, while it would be important for local and regional businesses to earn a ‘reasonable’ return on their investment in regional airlines, the main rationale for undertaking such investment should be to protect and enhance commerce and trade within the wider Caribbean,” he said.
Francis noted that increased commerce and trade among Caribbean people will most definitely have a positive impact on the profitability of regional businesses. Hence, increased profitability will be an indirect benefit to regional businesses that invest in regional carriers.
