In support of a Caribbean regional airline

Collectively — as the issue demands analysis from the viewpoint of a viable solution for the region rather than the traditional narrow perspective of "the best" (usually loss making) solution for each individual airline — often at the expense of the others.

In the latter case, with a mandate to consider only the future of their own airline, these airlines have been able to dissemble and argue they can only deal with what they can control and that in any case solutions can be found.

They have been saying this for over quarter of a century. The solutions have not materialised. The past ten years since privatisation and the last time they were restructured has seen collective losses in excess of US$1.5 billion.

They argue that airlines everywhere lose money right now so they need continued taxpayer support for national strategic reasons. These arguments simply don’t hold water.

The new breed of low cost airlines has been setting fare levels and the older, higher cost airlines have been losing money.

Southwest, now the largest airline in the US in terms of passengers carried, has made money every year of its 30 year life because its costs are significantly below those of its competitors enabling it to charge lower fares — which the public have preferred to higher fares. Strategically, the Dominican Republic has seen the highest tourism growth in the region over the past several years and it has no national airline.

Tourism growth there with the arrival of service from the new low cost airlines has skyrocketed.

It’s important to bear in mind that none of the region’s airlines has yet been confronted with direct competition from these new low cost airlines — although Fort Lauderdale based Spirit is now targetting the region.

This competition will see revenues plummet and losses mushroom as the region’s point-to-point airlines compete head on with the lower cost US point-to-point airlines.

The lower fares will see increased traffic — both nationals and visitors — but the increased traffic is unlikely to bring profitability to the region’s national airlines.

This year we have seen US $400 million committed to a new Air Jamaica, US$250 million to a new BWIA is unlikely to bring profitability to the region’s national airlines.

This year we have seen US$400 million committed to a new Air Jamaica, US$250 million to a new BWIA and US$50 million to a new LIAT.

The national airline approach has resulted in losses in virtually every year of these airlines existences — and in the new environment of unrestricted Open Skies competition, those losses will increase unless they can design a network that accesses passengers that their point-to-point competitors cannot access — an integrated network.

The region needs a regionally based, viable, efficient, affordable air transport network as a fundamental element of its infrastructure.

JOHN PT GILMORE

New York