What about a single regional carrier?

With the operating deficits of the three major Caribbean airlines — BWIA West Indies Airways, Air Jamaica and LIAT — mounting and the airline passenger market showing no signs of strengthening, the need for a single regional carrier is greater today than when Government first broached the idea of BWIA as the regional airline in 1967. Intra Caribbean air passenger traffic alone cannot support even one of the three regional airline principals and the needed additional revenue from overseas has been substantially reduced following  the September 11 terrorist attacks which dampened travel from the US and Europe. This means that continued competition by BWIA and Air Jamaica, in particular, for dwindling market space makes little economic sense.

The negative impact on BWIA’s bottom line as well as that of Air Jamaica’s was further aggravated by the slide in the US economy  and the  increase in the cost of aviation fuel which flowed from the continued rise in international crude oil prices.  Only recently, Air Jamaica faced with massive losses announced a cutback both in staff and in salaries. While neither Air Jamaica nor LIAT, traditionally, has had  a direct charge on this country’s   Treasury (BWIA, which has received considerable bailouts from Government),  LIAT however received a grant of $120 million from this country’s Caribbean oil facility.  And although LIAT is a feeder airline for BWIA, the bailout nonetheless will assist it in a specific sense to compete against BWIA along routes served by both airlines.

Two crucial questions arise not only from the steady slide in BWIA’s earnings and with it an increasing dependence on the taxpayers in order to survive, but the clearly senseless duplication of services by the three Caricom airline majors.  Should the Trinidad and Tobago Government which now has a controlling interest in BWIA close it down and create an entirely new airline?  Or should it initiate discussions on a possible merger of BWIA, Air Jamaica and LIAT? But the question arises: Should there be a merger on whose shoulders will the responsibility for the discharge of the individual or combined debts of the airlines rest? This country, with its bid to be the headquarters of the proposed Free Trade Area of the Americas, will be required to have an airline servicing, in addition to Caribbean routes, Latin American principals as well, to facilitate ready access by air of their Missions, observers, officials and staff.  

From where we sit it would be impractical for Trinidad and Tobago to absorb the debt burden of LIAT and, equally so,  a not insubstantial portion of that of Air Jamaica. We admit that the second is not in the public domain.  In turn, the countries which derive the most benefits from LIAT in terms of intra Eastern Caribbean air travel and connections with BWIA and Air Jamaica to overseas destinations, in September of last year had their economies severely battered by Hurricane Ivan. The mere turning to Trinidad and Tobago’s oil facility by Eastern Caribbean Governments for the $120 million bailout of LIAT is a demonstration of their inability to deal collectively with LIAT’s mounting debts. What the Government of this country may decide on as a viable alternative is to either overseer  a merger of the three airlines or just let one survive. Which one? That is a matter for the governments to decide.