Editor: Competitive flights between JFK and Argyle International Airport (AIA) have arrived and the market will be changed, irrevocably so.
On Friday last week, the Searchlight published an announcement from the authorities of the AIA, stating that beginning on April 14, 2017, Caribbean Airlines (CAL) will operate scheduled flights on Fridays and Sundays between St Vincent and Trinidad, with connections to their North American destinations. Announced without fanfare and in perfunctory language, one might be forgiven for thinking this is but a minor matter in AIAâs effort to justify the tremendous investment expended in the building of an airport designed to accommodate direct flights between St Vincent, North America, and Europe.
Except, this is not a small matter. It is instead a big frolicking deal. And to understand why this is indeed the case, we need to invoke the name of Adam Smith, the greatest economist in the history of the world, whose seminal work, âThe Wealth of Nations,â sits in the library of Bill Gates, the worldâs richest man. Published in 1775, its central premise was astonishingly simple: that if left to themselves, individual consumers and producers, guided by The Invisible Hand of free choice, would set the perfect price to determine what should be produced, what should be consumed, and in so doing increase the wealth of all.
The global economy is dominated by a market of billions of people independently choosing what to consume and thousands of producers seeking to fulfill their needs. St Vincent is but a small dot in the global market economy. Yet, even here, Adam Smithâs insight carries equal power when applied to the Vincentian economy and the AIA.
Letâs be absolutely clear on this point: When CAL chooses to open up a route to AIA, it is not an act of charity. It is instead a profit driven decision.
This decision carries profound consequences for travellers flying between JFK and AIA. In making their travel plans these travellers value cost and convenience above all else.
CALâs entry into this hitherto restricted market explodes LIATâs monopoly and scrambles the duopoly enjoyed by JetBlue and American Airlines. From this point onwards, all pricing and scheduling of flights between AIA and JFK by the traditional carriers would have to account for an unyielding fact: CAL is offering flights whose cost and convenience have changed the landscape of options available to passengers. Indeed, the proof is already here. Anyone with access to the Internet can confirm right now that the market is already yielding competitive ticket pricing for travelling to and from St Vincent and New York.
The Vincentian Government acted with tremendous courage in constructing Argyle International Airport, the single greatest capital project in the history of our country. The Government has held steadfast to the view that greater airlift capacity and direct flights between North America and St. Vincent are the prerequisites towards building a stronger Vincentian economy. But unless airlines also make the calculation that flying passengers between St Vincent and New York is in the airlinesâ best interest, St Vincentâs path towards that new economic future would be clearly imperiled.
CAL has made itself a partner to this future. They have done so in a particularly ingenious way. Although the flight between AIA and JFK is not technically a direct flight, the passengers remain in the care of CAL all the way and can spend as little as 50 minutes on the ground in Trinidad. CAL is clearly seeking to build market share. And they expect to benefit from this. But they will not be the only beneficiaries. Passengers will benefit. The Government and people of St Vincent and the Grenadines will benefit. And all other airlines will be forced to respond. Indeed, other private entities have already entered the market by chartering direct flights between SVG and New York, thereby increasing the options available to travellers.
The Government of St Vincent and the Grenadines built the airport. But it is Adam Smithâs âinvisible handâ that will guarantee its success.