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PEOPLE AND THINGS: Requiem for REDjet


Peter Wickham

PEOPLE AND THINGS: Requiem for REDjet

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It is unfortunate that this article is being published on the date which is popularly known as April Fool’s Day since the issue in focus this week is anything but a laughing matter and is central to our economic survival.  
Notwithstanding, attention is turned to what appears to be the demise of REDjet, even though that airline has thus far indicated it is only taking a temporary break while it attempts to negotiate a Government “bailout”. This expectation is unlikely to be realised for several reasons, not least of which is the Freundel Stuart administration’s customary “swiftness” regarding critical decisions like these.  
There are also other factors such as the presumption that our Government is not exactly brimming with cash at this time, along with the acceptance that this type of investment doesn’t exactly seem to be a prudent one.
The demise of REDjet is, to my mind, unfortunate although not surprising if one considers the history of regional air travel and the fate of CARIB Express and Caribbean Star, both of which appeared to have had ambitious business plans that anticipated the demise of LIAT.
In the case of REDjet, its foray into this market seemed considerably more noble and it would appear that it initially expected to work alongside LIAT. However, circumstances forced it into competition and the rest is history.
CARIB Express and REDjet are also similar in the way that they both suddenly suspended operations, while expressing the view that their future would be dependent on Government’s financial input. In the case of CARIB Express Prime Minister Owen Arthur listened attentively but was uncomfortable with the business plan, while Prime Minister Stuart has expressed the willingness to “talk” without any guarantee that funds would be made available.
Certainly, if one seeks an audience with an agency to secure funding and that agency agrees to meet, while taking funding off the table, these discussions can only end one way and the 90 employees of the airline are therefore effectively out of work.
It is useful to reflect on the difference in strategies of the three regional carriers that attempted to “fix” the problem of intra-regional travel over the last three decades. It could be argued that all three correctly recognised a critical need in Caribbean travel, along with an obvious deficiency, which is LIAT’s inefficiency.
The initial two presumed they could hasten LIAT’s demise by running an obviously cheaper, if not more efficient service, while REDjet seems to have been trying to create a new market which is novel and noble, but didn’t seem particularly practical.
LIAT could therefore have continued to exist in its scheme if REDjet was successful in capturing “new” travellers and if it was able to gain access to new markets, consistent with its original expansion plans.
In response to an article that spoke about LIAT’s inefficiency some years ago, an industry expert wrote me a detailed note which explained the source of LIAT’s high fares and in so doing made a case for a REDjet-type operation (several years before such a carrier was conceived).
He argued that the price of an airline’s seat is linked to the size of the aircraft along with the distance travelled, and therefore suggested it was improper for me to compare a LIAT flight to St Kitts (on a Dash 8) with a AA flight to New York (on a 757). Although there is an obvious difference regarding the distance, there are also fixed costs associated with travel which can be more effectively shared among the 180 people travelling to New York, than the 50 travelling to St Kitts.  
This argument is compelling and made the REDjet model comprehensible since it was using equipment that could theoretically offer greater economy and lower fares, if it was able to fill a significant proportion of its seats on a regular basis.
If therefore there was either a flaw in the REDjet model, to my mind, it was its belief that the market would have expanded quickly enough and moreover had the capacity to offer large quantities of travellers
to fill its MD80s regularly. Without the benefit of REDjet’s market research, one assumes that the airline’s investors were also persuaded likewise, but the anticipated demand did not emerge.  
This outcome would not have been a surprise to those of us who travel the region frequently and have become accustomed to flying with five or ten other passengers at non-peak days and times. It therefore seemed likely that REDjet could encourage considerable occasional travel on weekends and during school holidays.
However, the realities of work routines are such that during most weeks, REDjet would have been forced to rely on a considerably smaller pool of business travellers and hence fly with loads that would quickly make its operation unprofitable.
The REDjet venture was therefore well-intentioned and courageous, but the failure of the project carries several consequences that go beyond the loss of jobs. I am perhaps most concerned that now LIAT has survived CARIB Express, Caribbean Star and even Bwee Express, there might be an erroneous presumption that LIAT is doing something right which would be a most dangerous assumption.
That airline is anything but a model of efficiency and is (if anything) a model of extortion that we are forced to endure.
Although it is clear that I am speaking into the wind, I would again suggest most humbly that regional transport needs to be treated as one would treat local transport,which is an essential service and therefore properly regulated and subsidized.

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