Merit in airbridge subsidy

Last week, George Bell, the manager of the Tobago Express domestic air-carrier, called for a fare increase from $200 to $496. This call has got strong negative reactions from citizens, with their focus being not so much on the money but on the performance of the Tobago Express. The carrier’s shortcomings were again highlighted on Sunday, when passengers in Trinidad and Tobago were left stranded because all the company’s pilots called in sick. As has happened before, Tobago Express displayed complete ineptitude in its customer relations. It is therefore unlikely that the Government, even if it had been predisposed to do so before, would now view the call for a fare increase with much sympathy, since doing so might well be impolitic.

But should the Government continue to subsidise the airbridge between the two islands at all? From a purely fiscal viewpoint, it is undesirable that the State fund an unprofitable venture. Yet making the airbridge a money-earning proposition is a challenge that, if any economist could solve it, might well merit a Nobel prize. It is quite possible, however, that the market realities of the operating cost of even a small airline set against the traffic of people and goods mean that an airbridge will never be profitable in itself.

Yet this does not necessarily mean that the airbridge doesn’t make economic sense. After all, a main purpose of such a service is to support the tourist industry.

This industry is a major foreign exchange earner for the Caribbean. But Trinidad, by itself, cannot compete with the other islands in terms of the sun-sand-and-sea formula. Instead, Tobago can fulfil that function, and serve as a foundation from which Trinidad can promote a different kind of tourism — one based on culture and the environment. But part of any such programme would need a reliable airbridge, which would pay its way, not in terms of its own profits, but in its contribution to the tourist industry. In that scenario, a government subsidy would be justified.

To this equation, the political factor has to be added. The Government has a responsibility to ensure that Tobagonians receive all the benefits that Trinidadians do from the energy largesse that is coming our way. Indeed, it is even more important that the sister isle’s infrastructure be built up. And electoral politics gives the government additional motivation. Tobago has played a significant role in the country’s politics, particularly so in the past 20 years.

This significance will probably not change with the increase in the number of constituencies in Trinidad.

The overall challenge is to work out a formula which solves the problems that face a twin-island state. If Trinidad and Tobago can do that, we will have something valuable to teach the wider Caribbean region.