May 17, 2013

Air transport and regional integration

Fri May 17, 2013

Some of the biggest challenges confronting the people of the Caribbean in their twin quest for regional integration and socio-economic development are those of connections by air and sea, allowing for unfettered movement of people and goods. It is an issue which, whether we like it or not, must always be on our front burner, but which we have had limited success in tackling.{{more}}

The geography of the region has left us divided by water, both a threat and an opportunity for our economic development, depending on our perspective. Yet, in spite of being surrounded by the sea, maritime transportation at an inter-regional level leaves much to be desired and our fishing industry is a long way from realising its enormous potential.

Ironically, when the English-speaking Caribbean embarked on the ill-fated Federation of 1958 to 1962, it was bequeathed two ships which transported people and goods from Trinidad to Jamaica, with daily stops in all the islands. What a boon that would have been today, had we been able to maintain and build on those valuable assets!

Alas, that was not to be, so we face the reality of it being far easier, if not cheaper, to ship goods out of Miami to any regional destination, than to get them from one island to another. In the past few years, there have been several grand announcements of private sector initiatives to provide marine links, but all seem to have quietly disappeared from the radar.

The field of air transport has turned out to be a quite contentious one. Post-independence ambitions in the Caribbean, as in many newly-independent states, gave birth to many “national” airlines. Few have survived, and most of those which have done so face severe financial constraints. Indeed the global aviation industry is similarly struggling. One would think therefore that a region of limited resources like the Caribbean, would recognize that it must be in the best interests of all for strategic co-operation in this area.

Sadly, this has not been the case and individually, it seems as though we have been making every effort to the contrary. From the highest political level down, we have been giving encouragement to all sorts of extra-regional carriers in the forms of subsidies, concessions, lucrative routes, at the expense of indigenous and long-standing initiatives, only for them to abandon us when it suits their interests.

We are now back to square one where forging a strategic regional co-operation in aviation is concerned. Much attention now centres on LIAT and CAL (Caribbean Airlines, formerly BWIA), the latter having swallowed up, and in the process of being financially choked by it, Air Jamaica. LIAT is entirely a regional service, while CAL, in addition to serving some international routes, also competes with LIAT on the regional level. The unfortunate outcome of this refusal to forge strategic links, is that both are suffering financial losses, thereby threatening their financial viability.

It has just been disclosed in Port of Spain, that, last year alone, CAL suffered loses to the tune of US$70 million, including major ones on the Jamaica and London routes. This is in spite of a generous fuel subsidy from the government of Trinidad and Tobago, which if added to the losses would take the total to some US$ 110 million (TT$ 704 million).

That subsidy is a real bone of contention between CAL and LIAT. Chairman of LIAT’s shareholder governments, Vincentian Prime Minister Dr Ralph Gonsalves has said that he is in possession of a legal opinion, which he is about to share with his Trinidad and Tobago counterpart, which concludes that the subsidy to CAL represents “unfair competition”. He estimates that due to this illegal subsidy, LIAT has lost some 78,000 passengers to CAL, amounting to forgoing revenue of some US$10.2 million.

It provides a backdrop to a crucial meeting of regional ministers of Transport to be held here later this month and a meeting between the Vincentian and Trinidadian leaders to precede it. We can only urge that good sense, and the interests of the region prevail and that we lift ourselves out of the trench warfare which hurts us all, constrains tourism expansion, stymies regional economic development and makes air transport in the region so difficult and expensive.