Don’t Burn Our Bridges: The Case for a Single Caribbean Airline

Jul 25, 2010 Features / Columnists, Ronald Sanders

By Sir Ronald Sanders

“Don’t Burn Our Bridges: The Case for Owning Airlines” is the title of a book authored by Jean Holder, the current Chairman of the Caribbean airline, LIAT. It is a serious work which should be read by all who are concerned with both Caribbean economic integration and the growth of the services industries at both the national and regional levels.
Holder is uniquely placed to write the book, not only because of his position with LIAT but also because of his past work as Secretary-General of the Caribbean Tourism Organisation and the Caribbean Tourism Research and Development Centre.
His basic argument is that Caribbean governments must own a regional airline. “To those who say Caribbean governments cannot afford to do this, I reply that they cannot afford not to”, he emphatically declares.
As Holder sees it, the countries of the Caribbean archipelago “depend on air transportation services to connect them with the world and each other, and for this, they cannot rely solely on foreign carriers, which would take decisions about services, routes, schedules and financial performances according to the best interests of their owners and shareholders”. He argues that “such decisions will not, and cannot, always coincide with the best interests of the Caribbean states”.
One of the compelling reasons that Holder advances for an airline that is a Caribbean Community (CARICOM) carrier, is the ambition to create a Single Market and Economy among the 15-member states of the grouping. “In a vibrant, working, single market and economy where there is a greater harmonization of regional and international policies than currently exist, the political directorate of the CARICOM member states must know for certain that it is not a hostage to external forces, for either political or economic reasons”.
“It should not be possible” he says, “for it (the Caribbean Single Market) to be cut off from the rest of the world and the member states from each other, simply because it offends some other country or some other person outside the community”.
He may be over emphasising the case to make the point. It is hardly likely that the region would ever be entirely cut off from the rest of the world by all foreign carriers. Equally, it is unlikely that all air transportation within the region would be cut off by all carriers at the same time. Some airline or airlines will always remain to pick up the slack and the business, even though it may be at a higher cost to the region.
But, it is the case not only that some foreign-owned airlines could desert some countries in the region if they considered that the destinations had become uneconomic, but also that the airlines that remain could demand higher prices for the services they provide. In this regard, it is important that all CARICOM countries should have a carrier, owned within the region, on which they can rely and which they can use to calm prices, provided that the governments of all the countries understand that they cannot expect other regional governments to subsidize their routes.
This is the contention right now about LIAT – the airline that serves the Eastern and Southern Caribbean.
LIAT is owned and financed by only three of CARICOM’s governments – Antigua and Barbuda, Barbados and St Vincent & the Grenadines.
The St Vincent Prime Minister, Ralph Gonsalves, makes the point repeatedly that many other CARICOM countries (not Bahamas, Belize Jamaica, Trinidad and Tobago, and Suriname) depend on LIAT to provide air transportation for people, the services industries and some goods, but they decline to contribute to the cost.
It is quite remarkable that some of the Caribbean countries that refuse to participate financially in LIAT have no hesitancy in providing subsidies to large foreign owned airlines to continue flying into their countries. British Airways, American Airlines and even German airlines have been the beneficiaries of such subsidies.
The Caribbean has also witnessed the financial failure of airlines that have been owned within individual states – either by governments or private sector companies. BWIA, owned by the government of Trinidad and Tobago, collapsed under a mountain of debt and had to be closed-down to rid itself of many of its unsustainable obligations. The Trinidad and Tobago government assumed much of the debts of BWIA and launched Caribbean Airlines which now flies much less routes.
Jamaica, too, saw Air Jamaica seamlessly accumulate huge debt in a transition from government to private sector and back to government ownership, until the International Monetary Fund (IMF) made it clear, as part of its conditions for a loan to the government to prop up the economy, that Air Jamaica had to be sold.
In an arrangement between the governments of Jamaica and Trinidad and Tobago, Caribbean Airlines now owns Air Jamaica. Even though the name “Air Jamaica” will remain, the airline is now effectively owned by Caribbean Airlines and will be merged with it.
It has long been argued that the airlines, owned by individual Caribbean states in pursuit of their ‘symbols of nationhood and sovereignty’ were luxuries they could not afford.
When Holder was writing this book, he could not have envisaged that the Trinidad and Tobago owned, Caribbean Airlines, would have bought out Air Jamaica a few months later. He said: “The move from national ownership and control, to what I refer as community ownership and control, would require a sea change in the thinking of the region, not only among political leaders but also at the level of the people themselves”.
That sea change has begun to happen, swelled by a huge tsunami of necessity that is wrecking weak national capacity and underscoring the urgency of more robust capability from deeper Caribbean economic integration.
It has taken severe economic collapse in Jamaica to cause pride to be swallowed and a single airline to be created for Jamaica and Trinidad and Tobago.
Caribbean Airlines should also buy out LIAT and merge it into the entity that now owns Air Jamaica, and shares in the merged entity should be bought by all CARICOM governments.
In turn, the services of the merged single Caribbean carrier should extend to Belize and the Bahamas in the North and to Suriname in the South creating, at last, the bridge throughout the countries of CARICOM that has long been needed.
In 1992, the West Indian Commission in its report, “Time for Action” called on regional governments to formalize a CARICOM policy on sea and air transportation.
They stressed its importance for tourism, for integrating production and trade and most critically “in terms of helping to foster among West Indian people a sense of community in a West Indian homeland”. The recommendation has laid unattended these last 18 years.
Jean Holder’s book lays out the justification for all this, and much more besides. Surely, the establishment of a single Caribbean airline cannot be a bridge too far. Its necessity should now be painfully obvious.