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IMF: More flights, not more airlines


SHAWN CUMBERBATCH, [email protected]

IMF: More flights, not more airlines

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BEFORE RUSHING OFF to partner with new airlines, and hence having to spend more money on subsidies and incentives to entice them, Barbados and other leading Caribbean destinations should concentrate on expanding flights from the carriers now servicing them.

A group of International Monetary Fund (IMF) economists has concluded that this is the most efficient and cost effective policy to adopt.

While observing that “it is no surprise that more flights, seats, airlines, and departure cities have an important and positive impact on tourism flows”, Sebastian Acevedo, Lu Han, Hye Sun Kim, and Nicole Laframboise concluded that a new flight was better than a new airline servicing the destination.

In their new research Flying To Paradise: The Role Of Airlift In The Caribbean Tourism Industry, which was recently released by the IMF, the authors also calculated that up to 2014, Barbados and St Lucia (15 per cent each) had the lowest vacancy rates of 14 Caribbean destinations serviced by United States airlines. They defined the vacancy rate as “empty seats as a [percentage] of total available seats”.

“The estimations find consistently across the different methods and specifications that ‘the number of flights’ is the most important airlift supply factor determining tourist arrivals. The number of flights is found to have the largest impact on tourist arrivals, 0.3 per cent on impact and one per cent after ten months, but is also the factor with the most persistent significant effects over time and across countries,” the researchers found.

“These findings suggest that tourism authorities across the Caribbean should focus their efforts on improving airlift by seeking to increase the number of flights. While all the other factors show a positive impact on tourism flows, it is the number of flights that is more likely to result in more tourists coming to their shores.

“This does not suggest limiting destinations to only one airline with frequent flights. Variety and diversification are also important and our results support that. However, given the choice to negotiate with an existing airline to increase the frequency of flights, or with a new airline to initiate flights to the islands, our results suggest that countries will be better off adding one more flight from an existing airline.”

They said this finding “is particularly relevant since many Caribbean nations, particularly the smaller ones, provide subsidies or incentives of some kind to entice airlines to their islands”.

“Without jeopardising market concentration, governments may find fiscal savings by negotiating with a smaller pool of airlines with more frequent flights than by seeking to increase the number of airlines and direct connections,” they concluded. (SC)

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