Keeping regional airlines in the sky

WHAT is the future of regional travel given the impact of the covid19 pandemic?

It’s time for a new idea, perhaps a new entity, to take flight.

And Caricom must lead the way.

Caribbean Airlines Limited (CAL) and Leeward Islands Air Transport (Liat) have hitherto been the backbone of inter-island travel, but the financial crisis now forces a reckoning with CAL recording almost $100 million in loss in the space of five weeks and Liat all but set for dissolution.

Even before the pandemic, regional air travel has been unsustainable. CAL’s own history has been checkered. Last year, it managed to record a $42 million profit before tax, but that was the first profit in half a decade. It’s failed experiment with Air Jamaica, which shuttered operations in 2015, exemplified the challenges. That project was a true attempt at regional collaboration. Its dismal fate does not augur well.

Indeed, CAL was set up, famously, to replace British West Indian Airways (BWIA); to make that venture more profitable. It seems clear that, more than a decade later, such a dream is at an end if there is no way forward.

For the moment, Jamaica’s reopening of its borders mainly to North America, gives the national carrier a slim window to earn revenue. But the impact of this may not be known until the next quarter. So time will tell.

Liat’s role has been complimentary but it, too, has a turbulent history of financial struggle even before the pandemic. It has faced liquidation long before the announcement last Saturday by Antigua and Barbuda Prime Minister Gaston Browne.

“A decision will have to be made to collapse it and then maybe the countries within the region will have to come together to form a new entity,” Mr Browne predicted. The problems had been worsened by the hurricane in 2017.

Out of the ashes of all of this, Caricom must find a way to forge more lasting connections. Such connections need to be environmentally sustainable and redress some of the distortions of demand and supply of recent decades.

For instance, one of the challenges for regional travel has always been the high fares, so much so that a flight from Port of Spain to Miami was at one stage cheaper than a flight to Kingston. This must be a thing of the past.

Also, if Liat folds will CAL take up the routes? Does it have the capacity? It’s unlikely it can take over the airline as it did with Air Jamaica. In fact, given its losses, CAL, too, may well go the same way as that failed venture.

Caricom has clearly positioned the matter of regional travel at the forefront of its agenda, sensing how it remains key to the transition to a single economy.

With depressed economies, and the long-term risk the virus still poses, leaders must consider the best use of these airline assets while also forging ahead with a bold idea for the future.