Submitted by Looking Glass
First to Anonymous. Let me assure you that the demise of BWIA had everything to do with derailing Barbados and practically nothing to do with running a profitable airline, or transforming Piarco Airport into the Region’s hub. The latter wouldn’t happen in your lifetime. Don’t ask me to explain the dynamics at this time, but don’t be surprise if Caribbean Airlines include Barbados in its itinerary down the road. That said your comments are appreciated.
Barbados accounted for more of BWIA’s business—about 80%— than any other country in the region. Given the much heralded Caricom/Single market association why would Trinidad kill the goose with the golden egg? Because the government wishes to establish the island, and more so Tobago, as a major tourist destination in the region. To that end we may even renege on a promise to lend you $1.5 billion
That the Region’s airlines were not profitable however true is not the issue here. We are dealing with Barbados. No law natural or man-made says that what happens in the region should happen in Barbados and vice-versa. BWIA like LIAT enjoyed a monopoly in the region. The problem was not profitability but, among other things, bad management. The pseudonyms But Will It Arrive and Leave Island Any Time were not born by accident.
It is patently untrue to say the last administration put the airport on a “commercial setting and then failed to integrate it into the international transport sector.” Just like the Oval, upgrading the airport had everything to do with the cricket world cup, and other things over which you know not and have no control. Further commercialization—widening of the runway— is yet to be addressed. Look around and see what is happening right in the backyard.
You don’t have to own an airline. Many of the world’s largest airlines lease some of their planes. Getting planes need not be costly. The Mojave Desert is one of two burial grounds in the USA for planes of all descriptions, including some whose only flight was from the factory to the desert resting place. But you don’t have to buy planes. There are firms who will provide planes, crew…the lot as well as established airlines—one with substantial interests there— who will do it for you.
Some of the advantages of having a non-scheduled carrier include: 1) the revenue coming from seat sales is yours 2) you don’t have to serve food, but sell snacks and drinks at least on the North American run 3) you compete effectively by offering cheaper fares than the scheduled airlines 4) low fares will attract more business and visitors. Remember Laker and Wardair? Well look out for Ryan Air.
Normally tour operators, some of whom own or lease aircraft, ‘buy’ or arrange for space in hotels and put together a package. The package may include accommodation, air fare meals and transfers if all inclusive, or breakfast and dinner (MAP). Many of the mayor hotels have external accounts. Assume a seven day package cost $2000.00. The hotel’s share goes directly to their external accounts, the airlines get theirs, travel agents get their cut and the rest goes to the tour operator. It would appear that what we get is what the tourist actually spends during his/her stay. Those who were connected to the industry should know. Years ago it was estimated that only twenty-five cents of every dollar the tourist actually spends remains in the island. It has to be less than that today; which is another reason why tourism returns are overstated.
The demise of Caribbean Airways had little to do with profitability. Having our ‘own’ non-scheduled carrier can indeed be profitable. Revenue so generated is separate and distinct from the money tourists actually spend on the island. Convenient accounting notwithstanding, whether or not an operating loss should be seen as marketing cost is a non-sequitur. Being a commuter airline for Delta makes no sense and raises the issue of identifying and targeting markets. Toronto/Ottawa, New York, and Europe via London can be serviced directly with a locally owned non-scheduled airline. A Delta commuter can’t even airlift Canadian tourists bound for Barbados. The problem is not attracting carriers but attracting tourists.
The hotel industry is competitive. Competition is the prime mover but the competitive process differs significantly within the industry. Our hotels are different in that their product, cost structure, marketing and production methods differ; so too the barriers to new entrants. Look at the hotels along the South and West coasts. This makes it difficult to speak of the industry in aggregate terms or as an entity.
Finally, to those who would attribute tourism problems to the current global financial crisis take note. The US Department of Transport has just cleared the way for Continental Airlines to Join the Star Alliance Group co-founded by Air Canada. The group include Lufthansa, United Airlines, Scandinavian Airlines, Swiss and Air Portugal. Regulators also approved, albeit tentatively, a proposed joint venture by Air Canada, Continental and Lufthansa on some international routes.
Acting as one big unit the airlines plan to offer more choice and better service to Africa India and the Middle East, and share revenue.
The blogmaster invites you to join the discussion.