REDjet blues ignite new subsidy/ownership talk
With less than one-year-old REDjet forced to suspend operations in the region, welcome to deja vu in the chronic scenario of CARICOM governments’ and private entrepreneurs’ recurring failure to deal with the challenges of regional air transportation – including the critical factor of ownership.
REDjet’s dramatic financial crisis has ignited new “talk” about subsidizing and “ownership” of regional airlines but with no official stirrings of significance as yet in two major CARICOM centres – Trinidad and Tobago and Jamaica – both still preoccupied with making a success of their merger between Caribbean Airlines and Air Jamaica.
To hear REDjet’s senior personnel seeking to justify the sudden shutdown of operations on Friday evening, March 16, after a recent boastful (though unsubstantiated) official claim that the airline had “an excellent” financial year in 2011, is to rub salt into the wounds of stranded CARICOM nationals currently being rescued by regional airline LIAT.
Further, to learn from REDjet’s chief executive officer Ian Burns that his company was now “hoping to receive Government subsidies, as do other airlines, to help restart service” would raise more troubling questions about the evident lack of an enlightened air transportation policy in a region of scattered islands and mainland territories divided by the sea and heavily dependent on tourism, trade and services.
While Burns has been speculating on “subsidies”, some who are knowledgeable about the regional/international airline business think that – in the language of cricket – “the pitch is already being rolled” to justify the case for Government’s intervention with subsidy.
The intention, it seems, is for this to be achieved with pressure on governments while drawing attention away from the failed carrier that has been so vigorous in marketing itself as a reliable low-cost enterprise even in the face of recurring mechanical problems with aircraft, sudden changes in flight schedules, and complaints from affected passengers.
One has to wonder what the scenario would have been had LIAT, for example, suddenly shut down flight operations in even one of the regional destinations it has been serving during its 55 years of operations as CARICOM’s oldest airline, compared with the “soft landing” that REDjet has so far received from some CARICOM governments and business leaders.
The reality is that while LIAT continues, warts and all, to provide unprecedented linkages for people in the region – well beyond the boundaries of CARICOM?– it has long ceased to receive any subsidy from governments. And had it not been for the vision and commitment of three of its major shareholders – Barbados, Antigua and Barbuda, and St Vincent and the Grenadines – it may well have gone the way of its short-lived “competitors” on intraregional routes.
Among the litany of woes were, for example, BWEE Express (subsidiary of then BWIA); Air Jamaica; CaribExpress and, finally, its achievement in acquiring Caribbean Star and Caribbean Sun – carriers owned by convicted American tycoon Allen Stanford – long before he was able to fulfil his boast to run LIAT out of business.
But to hear even voices of significance in the public sector warning of “monopolies” in regional air transportation is quite puzzling as LIAT, for one, has to continue coping with competing air carriers, including from North America as well as Caribbean Airlines, the latter enjoying an estimated US$75 million annual fuel subsidy from the Trinidad and Tobago government.
This subsidy is not a recent development and is defended in the national interest while critical oversight on management is on the increase.
Ownership of airlines in a single Caribbean airspace has long been a consideration of successive administrations in CARICOM but to date it continues to be an elusive issue for decision.
As far back as January 1981, a high-level team of Caribbean experts chaired by the late William Demas, then president of the Caribbean Development Bank, had called for existing national companies to get together and create either a Caribbean airline holding company or a regional leasing company.
They provided the various options/alternatives for consideration with emphasis on the major issues in air transportation in respect of the need for an “efficient intraregional service and a rationalized and effective service by the various regionally owned airlines operating extraregionally. . . .”
No development of significance emerged among our governments for almost two decades before a few heads of Eastern Caribbean governments met in Port of Spain with then Prime Minister Patrick Manning to face the tough choices to meet intraregional and extraregional air-transportation needs. But that also proved to be a weekend wonder as there were no relevant changes in the status quo.
The question of the moment is whether any government of our Caribbean Community would risk talking seriously about a subsidy – in whatever form or nature – for failed REDjet while LIAT continues trying to satisfy growing demand for improved services amid escalating costs as the carrier that pays more than most, if not all, to operate from the intraregional destinations it serves.