“Red” and “grey” areas impacting Caribbean airline industry

The current verbal storm over the bid by new airline, REDjet, to compete in Caribbean air space as the newest low-cost airline has served to highlight some of the prevailing ‘grey’ and ‘red’ areas impacting the region’s air transport industry.

In the absence of what continues to be so very elusive — despite all the official talk — about establishment of a single Caribbean airline with aircraft operating from bases across the region to satisfy domestic and international demands, the region’s airline industry remains replete with examples of financial failures, changing state/private ownerships, mergers and, yes, failed attempts to compete with low fares and dramatic closures.

The litany of airline casualties that, for varied reasons, failed to survive fair competition, even before Caribbean Airlines (the former BWIA) and Air Jamaica felt compelled to merge, would include in the Eastern Caribbean, the collapse of the relatively short-lived Carib Express (that involved some big names in Barbados and the OECS); and, of course, Caribbean Star and Sun, as owned by the now disgraced American tycoon Allan Stanford. Earlier, there was the appearance of a BWIA Express to compete with American Eagle before both disappeared under new arrangements by respective parent companies.

Without getting too involved in histrionics, REDjet’s publicity blitz on attractive air fare packages and a mix of complaints against claimed “delaying tactics” by authorities in Trinidad and Tobago, provoked a quick public response earlier in the week from T&T’s Civil Aviation Authority (TTCAA) in relation to the airline’s application for commercial operations in that country.

The Barbadian entrepreneur and investor in REDjet, Ralph ‘Bizzy’ Williams, as well as the airline’s chairman, Ian Burns, went public with their angry claims of “naked protectionism” being at the core of TTCAA’s refusal to date to give the okay for REDjet to start flying into T&T and, by extension also to Jamaica, in view of a current business partnership between Caribbean Airlines (CAL) and Air Jamaica.

Not so, according to TTCAA’s Director General Ramesh Lutchmedia who has told the media that “there are still outstanding operational issues that need to be resolved”. He has explained that following initial communication between the airline and the executive manager of the local civil aviation body (Francis Regis), documents were returned to the Barbados Civil Aviation Authority (BCAVA) with a request for a review of a number of “operational issues”.

REDjet’s blues

Until the claimed outstanding “operational issues” are resolved, the TTCAA, according to its director general, would not be able to recommend REDjet to the country’s Air Transport Licensing Authority for an operational licence.

This is the latest in a series of conflicting statements and complaints to emerge in what remains a confusing scenario in the region’s air transportation business, including completing provisions of the partnership agreement between Caribbean Airlines and Air Jamaica.

The right to compete may be at the core of the owners and operators of the privately owned REDjet, which was originally incorporated in St Lucia and subsequenty granted a licence by the Barbados Civil Aviation Authority.

REDjet’s initial operational plans involved flights from Barbados to Trinidad and Tobago, Jamaica and Guyana. However, while potential travellers on its humble fleet of two aircraft would be anxious to take advantage of its low-cost flights (the first of which has been made to Guyana), the airline’s duo of Williams and Burns are seeing ‘red’, as the saying goes, over what they perceive as “delaying tactics” — not divorced from “politics” — in the failure to obtain flying rights consistent with Caricom’s umbrella multilateral air transportation agreement.

Even as it is threatening legal action on the basis of claimed violation of the regional multilateral accord, other perspectives have emerged that, for instance, contend that being registered to operate in one community partner state does not automatically translate to required rights to access other markets within the community or for specific routes.

Compliance with domestic regulations, in accordance with the letter and spirit of the umbrella multilateral air transport accord, is required of all applicants

Previous failures

In this context, readers should also recall that just recently the St Lucia Government failed to secure the required permission of the Eastern Caribbean Civil Aviation Authority ECCA) to operate an airline that was marketed as Caricom Airways.

ECCA’s decision was based on its contention that this “new airline” did not conform to relevant regulations required for operations and, consequently, ordered that it immediately cease to fly within the subregion of the Organisation of Eastern Caribbean States (OECS).

That was a virtual slap in the face for St Lucia’s Tourism Minister Allan Chastanet who had previously aggressively sought to market Caricom Airways as a legal airline, and ended up having a verbal battle with Vincentian Prime Minister Ralph Gonsalves who has lead responsibility among Caricom heads for civil aviation matters.

So far as REDjet’s battle to do business with Trinidad and Tobago and Jamaica is concerned, it remains a work in progress amid countless uncertainties over its longevity.

The uncertainties are rooted in the earlier dramatic and painful demise of what once threatened the survival of island-hopping LIAT — Caribbean Star and Sun — during the halcyon days of Stanford, who was to quickly lose his expediently granted Antiguan “knighthood” following his imprisonment for massive frauds.

Though clearly concerned about having to sustain competition at a high cost to travellers but without currently depending on subsidy for survival — as had been an earlier pattern — LIAT continues to maintain a high profile in servicing the Caribbean (including Puerto Rico and the Dominican Republic) with some 100 flights daily.

As far as is known, the airline’s management has not yet been officially approached by any of its trio of shareholder governments — Antigua and Barbuda, Barbados, and St Vincent and the Grenadines — to ascertain the extent of its concerns about “unfair” competition from REDjet, whenever it is licensed to fulfil its operational plans.

Meanwhile, in Kingston, the Government of Prime Minister Bruce Golding has considered it necessary to go public with a reminder to the Trinidad and Tobago Government about its own anxiety for the consummation of the April 30, 2010 agreement under which Air Jamaica and Caribbean Airlines established their business.

According to Monday’s joint statement by the Jamaica Government and Air Jamaica, it is not a case of questioning the commitment of the T&T Government and CAL to honour the terms of the signed agreement, but that the Jamaican authorities are mindful of an obligation on their part by North American authorities to “legally preserve all rights” as signed.

As if to indirectly rebuff the contention by some critics, including from REDjet sources about “difficulties” in concluding the CAL/Air Jamaica partnership deal, Monday’s statement by Air Jamaica and the Golding administration said they were “confident that the transaction will be consummated within the next 14 days, based on the commitment of all parties”. It was originally due to be completed by the end of last month.

Altogether, there seems to be more in the mortar than the proverbial pestle, and a lot of ‘grey’ areas in the region’s airline industry, at a time of REDjet’s anxiety about its future. The final decision being awaited from T&T’s Civil Aviation Authority is crucial. On the other hand, failure to consummate the CAL/Air Jamaica partnership accord of last year, by this month end, is not a gamble they could risk.