Regional airline - still an elusive dream
By Linda Hutchinson-Jafar
Guyana Chronicle
December 2, 2002

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"We must find a way to lock the CEOs of these carriers in a room and refuse to open the door until they have a plan that will reduce our losses and increase our services to and throughout the CaribbeanĒ - Perry Christie, Bahamas Prime Minister

Port of Spain, Trinidad - In 1961, long before the establishment of the Caribbean Community (CARICOM), regional governments began pondering over the idea of the creation of a single Caribbean airline.

In 2002, the debate over a regional carrier continues as indigenous national airlines such as Air Jamaica, BWIA, BahamasAir and island-hopper LIAT among others are going through yet another period of financial turbulence.

Air Jamaica has lost more than US$70 million in revenues and counting and BWIA is expected to end the year with a US$20 million loss.

With the airlines once again turning to their governments for financial rescue and bail-out to remain buoyant, the Prime Ministers are once again pushing the single airline concept or at least some form of major cooperation to cut various costs and cooperate in areas that are being duplicated.

BWIA's Chairman and Chief Executive Officer Conrad Aleong is optimistic that in 2003, there will be more cooperation among the airlines, having already held discussions with Air Jamaica and BahamasAir.

"But if I had to do it from scratch, I think it would have been best to have one airline for the whole Caribbean," said Aleong, an airline veteran during a recent interview with Newsday.

In 1995, the CEOs of the regional airlines, small and large including BWIA, Air Jamaica, BahamasAir, Guyana Airways, Air Aruba and Suriname Airways sat on an air transportation Committee to looks at ways of cooperating and reducing costs.

"But by the time we get back to our offices, we get so consumed by the pressing day to day realities of trying to survive, itís difficult to go beyond," Aleong admitted.

"We are all short of cash, we are all on a survival mode and therefore when you are surviving, itís hard to think strategic, you're into tactical response."

But Caribbean governments are once again pressing the airlines to move closer to having a single regional carrier.

Although serving as Prime Minister for the first time having won the Bahamas elections earlier this year, Perry Christie seems to have had enough of the rhetoric.

"We must find a way to lock the CEOs of these carriers in a room and refuse to open the door until they have a plan that will reduce our losses and increase our services to and throughout the Caribbean.

"Maybe there is a black hole into which we can fly this entire hodgepodge of national and regional carriers and out of which will emerge the shining light of a single Air Caribbean. Just maybe," said an exasperated Christie.

He questioned why airlines could not adopt a similar strategy as the competitive cruise liners, which belong to the Florida Caribbean Cruise Association (FCCA) and have coordinated air services and route planning meetings.

"I maintain that these coordinated connections (for the airlines) do not exist to the degree that they should because we continue to see ourselves as competitors first and competitors last," said Christie.

St Lucia's Prime Minister Dr Kenny Anthony believes that a merger of the region's airlines is inevitable in the post-September 11 marketplace and has urged the carriers to forge greater alliances that will help them take advantage of economies of scale, cut costs and stay in business.

Referring to the financial crisis of some carriers in North America like USAir which had to file for Chapter 11 bankruptcy as well as the unhealthy price war in the Caribbean, Dr Anthony said itís time for the indigenous airlines to face up to reality.

"I can't see how they can avoid it any longer. I mean Bee Wee is in serious trouble, they are now negotiating with their staff to reduce their costs," said the leader of the Eastern Caribbean island.

"Air Jamaica was the most critical and crucial airline for us (after 9/11) and we know its value and its importance but I cannot see how BWIA and Air Jamaica can continue to operate as single airlines.

"The conditions are ripe, the timing is good and overall, the Prime Ministers of the region generally recognise that we need to rationalise the airline industry."

Trinidad and Tobago's Prime Minister, Patrick Manning also added his voice in support of single regional airline.

"We are experiencing a revolution of air transport in the region and it may be that all of this would provoke the consideration of the larger issue, that of air transport in the region. We are now trying to actively promote a regional airline in the Caribbean," said Manning who recently attended a mini-CARICOM meeting of several heads of government to discuss the air transportation crisis.

He said with the Caribbean moving forward on a single market and economy, there was need for viable air transportation.

Manning's Government approved a US$13 million loan for BWIA but one of the conditions attached to it was for the airline to meet with other carriers to begin discussions on mutual areas of cooperation, along the lines of a regional airline.

The debate on a single regional carrier goes back to 1961 during the restructuring of British West Indian Airways, a subsidiary of the British Overseas Airways Cooperation (BOAC), which managed BWIA in the Caribbean and British-South American Airways in South America.

During the restructuring, an attempt was made to establish a West Indian air carrier involving majority ownership by the then Federal and Commonwealth Caribbean Governments and BOAC.

This initiative was unsuccessful and the Trinidad and Tobago Government acquired the shareholding of the entire airline.

Six years later, in 1967, the Fourth Meeting of the Heads of Government of Commonwealth Caribbean countries held in Barbados established a Working Party to consider the establishment of a Regional Air Carrier.

In its Final Report submitted in 1969 the Working Party recommended formation of two multinational enterprises involving the assets of BWIA and LIAT, namely, a corporation established by Treaty to operate on extra-regional routes and a company to operate on intra-regional routes.

Commonwealth Caribbean Ministers at a meeting held in July 1969 in Trinidad and Tobago approved, in principle, the Report of the Working Party and agreed that a Ministerial Committee should be established to prepare a regional plan of action with a view to the early implementation of the recommendations of the Working Party.

It has not been ascertained whether the plan of action was formulated but this initiative was not successful.

A further effort was made in 1987 to address the issue of the regional air carrier.

On this occasion, member governments supported the conduct of an independent study of the feasibility of establishing a multinational air carrier involving private sector participation and the assets of BWIA, LIAT (1974) Ltd, Guyana Airways and CARICARGO, to serve the mid-Atlantic routes.

The general conclusion was that the Final Report of the study provided a broad framework for further discussion and elaboration of specific elements of the proposed Air Carrier.

Subsequently, in 1990, the Eleventh Meeting of the Conference decided that BWIA and LIAT (1974) Ltd should be privatised either separately or jointly with majority Caribbean interests and that proposals in this regard should be prepared for consideration by the shareholders of the respective airlines.

The proposals that were developed on the basis of a study resulted in the successful privatisation of the separate airlines in 1995 and 1996, respectively, involving majority regional interest.

Throughout the years the issue of a single regional carrier re-emerged but with no real effort to go beyond the rhetoric.

Bahamas' Deputy Director-General of Tourism, Vincent Vanderpool-Wallace believes that the owners of the airlines - whether private or government- need to deal with the issue once and for all.

"I think we need to make sure that we get the CEOs sitting down and the governments who own these carriers to say, 'I want you to come back with a solution to us.' No ifs and no buts. That's the starting point, "Vanderpool-Wallace said.

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