CAL can do more for financial viability

CARIBBEAN Airlines Limited's (CAL) recent announcement that it signed an agreement with US-based Alaska Airlines to expand its cargo network to 16 destinations is certainly a positive step as the airline seeks to sustain its profitability. The new Boeing 737-800 cabin class Caribbean Plus, enhancements to its website, customer service improvements and the addition of Curacao to its route network are all encouraging initiatives.

However, there is more that CAL can do to enhance its revenues such as taking advantage of the marketing opportunities provided in the existing air services agreements and arrangements between Trinidad and Tobago and other countries such as the US, Canada, Brazil and Panama.

CAL has never operated the lucrative Port of Spain/Panama route for which COPA has a monopoly. The same rights given to COPA by TT is available to CAL by Panama, since all air service agreements and arrangements are based on reciprocity. The argument that COPA provides onward connections to other Central and South American destinations has some validity, but CAL’s service quality can give a competitive advantage. The only way to test your competitor’s strength is to challenge them.

Several years ago, when Air Canada ceased to operate the Toronto/Port of Spain route, CAL and its predecessor BWIA had a monopoly on the route for almost seven years until challenged by Westjet and more recently by Air Canada Rouge. JetBlue has challenged CAL on the Port of Spain/Fort Lauderdale route with a dynamic pricing strategy and today has significant market share on that route.

Code sharing is another key marketing opportunity provided in the air service agreements that CAL has not fully exploited. Where there is not enough traffic to justify operating CAL flights to certain destinations, CAL can enter into code share agreements with foreign airlines to provide connectivity on those routes to onward destinations.

For example, CAL can code share with an appropriate US based airline and offer flights between Port of Spain and destinations such as Los Angeles and San Francisco via New York or Miami. This is possible since the US and TT have signed an open skies air service agreement and Trinidad and Tobago is a Category 1 country under the US FAA International Aviation Safety Assessment (IASA) programme.

TT has also signed a blue skies type air service agreement with Canada that provides for third, fourth and fifth freedom rights. Therefore, CAL can operate flights from Port of Spain to Canadian destinations such as Toronto and Montreal with an intermediate stop in New York with full traffic rights.

CAL can further pursue financial viability through strategic alliances, product differentiation, fleet rationalisation, service quality and innovation. In the airline business competition is inevitable. What makes the difference is the corporate will.

(TTUTA's column will return next week.)