Bwia’s strategic direction

If recent reports are accurate, effective ownership and total control of BWIA is now back with the Government of Trinidad and Tobago. Few issues are guaranteed to cause more dissension in this society than the future of BWIA, especially following a new announcement that the Government has once again been called upon to save the national carrier from collapse by pouring more money into the airline. One group of adherents is passionate that public funds should, under no circumstances, be used to prop up a failed commercial enterprise and that the existence of national flag carriers, as a concept, has long since passed its “sell by date.” The opposing group holds the view that BWIA employs a substantial number of nationals, and provides an essential national service, particularly in guaranteeing affordable access for the diaspora to visit friends and relatives at home, and vice versa.

In a very real sense both of these arguments are fundamentally flawed. Let us look at some facts:

1. BWIA provides some 2,000 TT nationals with employment.
2. BWIA generates considerable income in domestic freight and ticket sales that would otherwise go to other countries.
3. BWIA harvests considerable additional income from foreign freight and ticket sales that otherwise would never come into the country.
4. If BWIA were to cease serving its routes to London, New York, Miami and Toronto, there would be no competitive reason to prevent the other international carriers from significantly increasing their fares to those destinations and beyond.
5. BWIA has historically focused on the “visiting friends and relatives” (VFR) market largely because it generates a higher fare yield, despite generating significantly less benefits to the national economy.
6. BWIA has played a significant role in the growth of the Barbados tourism industry, which begs the question: why not Trinidad and Tobago, which according to official sources, is now set to launch a major new tourism thrust of its own?
7. TT is already the headquarters of the Association of Caribbean States.
8. TT aspires to provide the headquarters for the Free Trade Area of the Americas (FTAA).
9. TT is already the principle centre of business and commerce in the South Eastern Caribbean, and has the potential with its strong energy based economy, of significantly building on this.
10. There are two existing airline hubs in the Caribbean (three if you count Miami): the American Airlines hub in San Juan, and Air Jamaica’s hub in Montego Bay. There is certainly need for a third in the South Eastern Caribbean and Trinidad and Tobago is the logical choice.

Should the Government of Trinidad and Tobago prop up a losing commercial enterprise just to preserve a number of jobs? Obviously not. Does BWIA provide an essential national service with its existing operations? Equally obviously, it does not. Does BWIA have the potential to play a major role in TT’s future economic development and its strategic objective of becoming the commercial and diplomatic hub of the Eastern Caribbean? Absolutely. Of all the reasons to keep BWIA flying, the most important may be the airline’s potential to make Trinidad and Tobago become the crossroads of the Americas by providing appropriate air connections to multiple destinations throughout the hemisphere and across to Europe, in support of the FTAA headquarters in Port-of-Spain.  In fact, this may well be a prerequisite for TT’s successful bid.

What, then, needs to be done to convert the failed BWIA of today to the dynamic carrier of FTAA’s tomorrow? One clue lies in the role that Air Jamaica plays in its own national economy. Each year, the government of Jamaica, with far fewer resources than Trinidad and Tobago, continues to provide significant financial support to its national carrier to ensure its continued viable operations. The reason has little to do with national pride and everything to do with the overall impact on the Jamaican economy whose commercial and tourism interests are contingent on affordable, dependable market access. Beyond the Caribbean such carriers as Singapore Airlines, Cathay Pacific in Hong Kong, Emirates Airlines, Gulf Air and Qatar Airways, in the Arabian Gulf, have all been the essential platforms on which their parent states have built their not inconsiderable strategic and economic importance in some otherwise rather unlikely parts of the world.

Could TT successfully follow these examples? With a significantly different strategic focus there is every reason to believe we could. Instead of viewing BWIA through the narrow prism of Caribbean air service, BWIA, perhaps with an all embracing name change, should be regarded for what it is: the essential infrastructure necessary to link Trinidad and Tobago, not only with its Caribbean neighbours, but also to the rest of the Americas, and even the world. Obviously the investment necessary to transform BWIA from its present crippled condition to that of vibrant 21st century carrier with global outreach will be considerable, but the consequent commercial and industrial expansion, not to mention a vibrant new tourism industry would provide a handsome payback in the wider economic picture.

To begin with, this will require coming to terms with some very fundamental questions:

•What new route structure should BWIA serve to satisfy the national and perhaps regional interest, and with what frequency?
•On the basis of this decision, how many aircraft should BWIA have in its fleet and of what size and range?
•What refinancing package will BWIA need to move forward with a wider route structure and larger fleet?
•What strategic partnerships should be established with sister airlines such as LIAT?
•How should BWIA, Air Jamaica and other airlines work together to their mutual advantage and to the benefit of the region?

BWIA is, of course, not alone among financially challenged Caribbean airlines. Some 10 years ago a study on the benefits of functional co-operation among Caribbean airlines, using the successful TACA model in Central America to point the way, was conducted for the Caribbean Hotel Association and the Caribbean Tourism Organisation and was presented to the Caricom Heads in Nassau. The study concluded that if all the existing Caribbean carriers co-operated in the joint purchasing of fuel, spare parts, catering, training and ground services they would collectively save some US$65 million. Tragically, for no logical reason, nothing was ever done to implement those recommendations. Which brings us to the establishment of an airline hub in Piarco and what benefits it would bring to Trinidad and Tobago.

A successful hub needs:
1. An appropriate geographic location;
2. A modern category 1 designated airport capable of accommodating an escalating volume of lift;
3. An airline capable of building international trunk routes to strategic gateways cities;
4. A spoke distribution system to adjacent subsidiary destinations.
5. Obviously Trinidad and Tobago has the geographic location, the airport (still however in category 2), the airline and the financial capacity to make this happen.

Among the many benefits of such a development would be a massive boost to TT’s tourism aspirations and their potential as an incentive for new hotel construction, short-term and permanent job creation and the development of conference business that would be a natural, and very lucrative, adjunct of the ACS and FTAA headquarters in Port-of-Spain. It would also stimulate much needed improvement in the country’s present inadequate infrastructure. Such a re-orientation of BWIA, and the construction of a viable hub at Piarco would, of course, be an expensive undertaking, but should be viewed as an investment in the future, with a huge potential payback in the wider national and sub-regional economic development, as opposed to the current ad hoc expenditure required to keep BWIA lurching from crisis to crisis.

The administration’s Vision 2020 is currently being vigorously touted. If we are ever to graduate from Third World to First World status, with all the improvements this could mean to the lifestyles and living standards of the citizens of TT, then a strategic redirection of BWIA may well be a critical element of the platform on which to move forward. Bell is the President of the International Hotel & Restaurant Association (IH&RA). Bell is also the Personal Advisor to the Minister of Tourism,  Howard Chin Lee.