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Tag: Ramesh Lutchmedial

How taxes impact air connectivity in the Caribbean

Last week, during a press briefing on the proposed air services by St Maarten-based Windward Islands Airways International NV (Winair) between TT and St Maarten, Winair’s CEO Hans van de Velde explained the airline’s cautious yet confident approach with regard to its TT operations. “We don’t want to make the mistake other airlines have made in the past, wanting to go too fast. So, we will do it steadily. And if success is there, and we think it will be there, we will grow,” said van de Velde.

On February 1, the airline will begin nonstop twice-weekly scheduled service between Trinidad’s Piarco International Airport (POS) and Sint Maarten’s Princess Juliana International Airport (SXM) using its 48-seater ATR 42-500s.

On the issue of low fares for intra-Caribbean travel, van de Velde said, “It’s impossible in this region to operate for low prices, because running an airline here is expensive, and there are a number of reasons. One is that there are very high taxes,” he said. “So, we have an introductory fare of US$200 one way, literally half of it is tax. As an airline, you don’t keep that; that tax goes to the government. So, offering low prices is not very realistic, and we have seen in this region that many airlines went bankrupt. It shows that it’s difficult to run an airline,”

Other airlines have raised the issue of high taxes on airline travel. In April 2018, during the launch of the CaribSKY alliance by LIAT 1974, Air Antilles and Winair, the airlines called the Caribbean governments are being encouraged to revisit the level of taxation on airline tickets for regional travel.

LIAT’s CEO Julie Reifer-Jones said taxation was a “ticklish issue” but a solution had to be found.

She said a recent study showed that intra-regional travel had declined significantly. LIAT, she said, was now moving 750 000 passengers annually in comparison to one million in the past.

“When we tried to get behind the numbers and look at some of the factors impacting that decline, the taxes – and this includes both airport and the taxes directly from the government – are acting as a significant deterrent to travel across the region.

“Because we are connecting passengers across several territories, we are actually picking up taxes from three or four territories every time somebody flies from one destination to the next and we also have the issue of in transit taxes because we’re stopping at St Maarten or we’re stopping in St Vincent or we’re stopping in Barbados,” Reifer-Jones said.

The CEO revealed that while LIAT 1974 had raised its base fare by about three per cent between 2009 and 2016, taxes had increased by about 56 per cent.

“What the passenger sees is not the base fare. They are going to see the total package and their reaction to buying a ticket to travel to Guadeloupe or travel to Dominica is going to be impacted by that total bottom line picture,” she said.

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In September 2022 the International Air Transport Association (IATA) warned Caribbean countries that they are pricing themselves out of the global tourism market.

The caution came at the Caribbean Aviation Day in the Cayman Islands on September 14, 2022. The event was staged under the theme ‘recover, reconnect, revive,’ the event saw government ministers, industry experts, and senior aviation executives come together to discuss key challenges impacting the region and opportunities for growth.

With global passenger air traffic now at 74.6 per cent of pre-covid levels, IATA vice president for the Americas, Peter Cerdá stressed that Caribbean destinations are “running the risk of pricing themselves out of the global travel and tourism market, where passengers have more choice than ever before.”

“A recurring theme is also taxes and charges levied on aviation. Yes, we understand that the provision of adequate infrastructure for aviation comes at a cost, but very often it is difficult to see the correlation between the level of costs and charges, and the actual service provided,” said Cerdá.

He highlighted that while globally taxes and charges make up approximately 15 per cent of the ticket price, in the Caribbean this constitutes 30 per cent of the price on average, with some destinations reaching as high as 50 per cent of the total ticket cost. When compared to destinations like Lima, Peru, Cancun, Mexico, add other relatively close beach destinations whose taxes and fees only represent 23 per cent, the Caribbean is becoming a less attractive destination.

“Today’s passengers have a choice, and as the total cost of vacations increasingly becomes a decision-making factor, governments must be prudent and not price themselves out of the market,” urged Cedá, noting that t the World Travel and Tourism Council (WTTC) forecasted a possible annual 6.7 per cent travel and tourism GDP increase between 2022 and 2023 if the right policies are implemented.

Speaking later at the conference, Barbados’ Tourism Minister Lisa Cummins defended the taxes and charges to her country. “Let us break down where fees and charges go to in-country because the things that we want and the things that we have to be able to provide come with a price tag,” said Cummins. She argued that taxes and charges do not go to the government’s consolidated fund as revenue, but instead go back into providing infrastructure and services in the aviation industry.

“We realised that even if Barbados would, and we have been looking at it, look at the changes that we potentially can make to our tax structure… We don’t have the number of seats that compensates for those losses in revenue,” said Cummins about the trade-off between government revenue and taxes.

The 2025 State of the Tourism Industry Conference (SOTIC) was hosted by the Caribbean Tourism Organization (CTO) in Barbados from September 30 to October 3, 2025, at the Hilton Barbados Resort, centered on “Reimagining Caribbean Tourism: Research, Relevance and the Road Ahead.” The event brought together over 400 regional and international leaders to discuss sustainability, innovation, and industry growth.

The conference discussed the high cost of regional travel which remains a vexing issue for travellers between the Caribbean islands. Among the key factors contributing to these high costs are the taxes imposed by regional governments on airline ticket prices.

The conference noted that intra-Caribbean flights often carry taxes and fees that exceed the base airfare, significantly increasing the cost of tickets for travel between islands. In contrast, Europe and Southeast Asia tend to have lower aviation taxes, especially for regional travel. Budget airlines thrive in those regions due to minimal fees and government support — a phenomenon not commonly seen in the Caribbean.

These taxes have several negative impacts on intra-regional travel as they discourage regional movement, with locals being priced out of flying between islands. In turn, this hurts tourism as visitors face unexpectedly high costs, reducing demand.

The taxes also strain local airlines. Homegrown carriers struggle to compete with subsidized foreign airlines, making it harder for them to survive in the market. Among those homegrown airlines is LIAT Air. The company, which began operations in 2024, faces several challenges, including the need to distance itself from its failed predecessor, LIAT 1974. These problems are only exacerbated by hefty taxes, as highlighted by airline CEO Hafsah Abdulsalam on the opening day of the SOTIC 2025.

In an impassioned response to questions about the challenges contributing to high airfares, Abdulsalam emphasized that both her airline and regional governments must play their part in improving connectivity. Abdulsalam, who also revealed LIAT’s plans to connect the region with South America and Africa in the near future, noted that regional taxes remain a major issue.

“We need to be a lot more efficient, for efficiency reduces costs. Production and reduced costs ultimately reduce the amount we charge for the ticket,” she said.

A 2018 Caribbean Development Bank (CDB) working paper stated that air connectivity growth in the Caribbean has been generally and relatively weak, and limited with one of the primary barriers to connectivity in the Region being high costs such as taxes, airport fees and other charges in air transportation.

The CDB recommended as follows:

A reduction in aviation taxes: The price elasticity of demand to airfares (which include taxes) reflects the travellers’ sensitivity to changes in price – and the taxes in the Caribbean add to this price. This distortion appears to be greater for intra-regional travel.

A reduction in airport charges: Lowering charges may allow airlines to operate in markets which are considered thin and where operating costs are important for viability. This may also be a way for airports to attract services, especially for the extra-regional markets.

These recommendations are still very relevant today.

 

Enhancing traveller experience at Trinidad and Tobago airports

Over 178 countries including the vast majority of Caricom states are now using e-passports as part of an automated border control system involving a combination of technological, operational, and cooperative strategies designed to enhance the facilitation of legitimate inbound and outbound travel.

ICAO Annex 9 – Facilitation prescribes standards that are aimed at streamlining border clearance (customs, immigration, health) for aircraft, passengers, crew, baggage, and cargo, reducing delays while ensuring security and compliance with national laws. It covers procedures from aircraft entry to passenger departure, emphasising the efficient management of passenger data such as passenger name record (PNR) and adapting to new technologies and security threats.

States are increasingly implementing automated data exchange to enhance the security of international travel without slowing down passenger flow at border control check points. The use of advance passenger information systems (APIS) enables the transmission of passenger data (eg, passport details) to the border control agencies of the destination country prior to flight arrival for risk assessment and the identification of potential threats, such as human trafficking or terrorism.

Passengers disembark a flight at the ANR Robinson International Airport in 2018. File photo –

ICAO Annex 9 sets the standards for travel documents to ensure global interoperability. The ICAO has prescribed the new standards for the implementation of Electronic Passports (e-passports) systems. As of January 1, states issuing e-passports must implement password authenticated connection establishment (PACE) to enhance data protection.

PACE is a secure protocol for e-passports and IDs, creating an encrypted link using a password such as a PIN or card access number and amplifying it for secure communication and protecting against skimming an eavesdropping. PACE replaces older methods like basic access control (BAC). With the use of the e-passport chip, PACE allows border control terminals to securely authenticate traveller data establishing a trusted channel for information exchange, ensuring privacy and preventing unauthorized access to sensitive data.

Modern versions of the e-passport that can be extended to a passenger’s mobile device, enabling “seamless travel” with fewer physical touchpoints.

Annex 9 also prescribe the standards for the use of e-gates and e-kiosks that authenticate documents and biometrically verify the identity of the passenger thereby significantly reducing the time taken to comply with border control formalities.

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The Airports Authority of TT (AATT) is a very active member of Airports Council International (ACI).which is the global trade association for the world’s airport authorities. It represents over 2,100 airports in 170 countries.

ACI works with ICAO to advocate new facilitation standards to enhance passenger experience without comprising border control requirements.

In this regard, on December 17th 2017, the AATT awarded a contract to NOVO Technology Incorporation Limited for an automated border control system at both the Piarco and ANR Robinson International Airports in accordance with the requirements of the Airports Authority of Trinidad and Tobago Act (Chapter 49:02) and its Tender Rules.

On July 16, 2018 the then minister of national security, Major General (Ret’d) Edmund Dillon and minister of works and transport Rohan Sinanan commissioned 12 automated border control system kiosks at the Piarco International Airport.

Delivering the feature address at the launch Dillon noted that this automated system will strengthen TT’s border control with the larger and related goal of mitigating the risks of transnational organized crime through increased trans-border intelligence and information sharing.

However, at a post-cabinet press briefing on May 9 2019, Stuart Young, then the new minister of national security, indicated that due to certain ‘red flags”, retired judge Rolston Nelson was appointed to investigate the award of the contract to Novo. Young explained the “red flags” went up when it became apparent that a contract was executed between AATT and the company for installation of the kiosks for Piarco and Tobago’s airports. Young said, “Cabinet had no idea that this was being discussed or being entered into.”

A self check-in kiosk at Piarco International Airport. – Photo by Angelo Marcelle

Justice Nelson’s investigations did not identify any breaches of the AATT’s Act or its tender rules.

The action by the Cabinet to suspend the contract was seen as unjustified and raised questions about executive overreach.

On May 26, 2020, Sinanan in response to a question in the Senate stated that the investigation into the contract for the automated passport kiosks at the Piarco and ANR Robinson airports has found ”serious corporate governance issues” and was being further investigated by the Office of the Attorney General. When pressed by supplemental questions, the minister did not identify the governance issues stating the matter was the subject of ongoing investigations. The minister further informed the Senate that the AATT is “an authority that has the purview to sign and terminate contracts without the guidance of the government.”

This was in sharp contrast to Young’s previous statement on May 9, 2019 that neither the actual contract nor the supplemental ever came before cabinet and the circumstances under which the contracts were granted were strange and merited urgent investigation. “The contract has very onerous terms. We saw massive red flags and need to ask ‘why did you enter this contract and on whose authority did you enter it’,” Young said.

In the meantime, Novo Technology Incorporation Ltd has implemented a full nationwide border control management system for the government of Guyana where passengers can complete the online immigrations forms prior to departure and upon arrival, clear the immigration biometric e-gates at CJIA in under 20 seconds. The system fully integrates with all of Guyana’s land and marine border control checkpoints. Novo also worked with the Guyana Data Management Authority to develop the ICAO compliant technological backbone for the issuance of e-passports to Guyanese citizens.

Guyana is also a member of the ICAO public key directory (PKD) allowing Guyanese travellers with e-passports to access e-gates worldwide and significantly reduce border control processing times.

As TT forges ahead with its revitalisation plans, an automated border control system including the use of e-passports by citizens of TT is yet to be implemented by the Immigration Division. Such a system can strengthen border security and reduce passenger wait-times at ports of entry resulting in enhanced passenger experiences by all visitors.

As a signatory to the Chicago convention, TT has a serious international treaty obligation to comply with all the standards of Annex 9- Facilitation to the Chicago Convention.

 

Tricks and traps of aircraft leasing

Several years ago, a very successful local entrepreneur decided to start up an airline and incorporated a local company for that purpose.

An application was made to the Civil Aviation Authority for an air operators certificate (AOC) which is the approval to engage in commercial air transport operations. This is done in accordance with a five-phase certification process in accordance with the policy guidelines of the International Civil Aviation Organization (ICAO). The prospective operator (“the lessee”) proceed to dry lease a used jet aircraft from a US leasing company (“the lessor”) to conduct the air transport operations.

A dry lease is an agreement in which an airline leases an aircraft without any crew, maintenance, or insurance. The lessee is responsible for providing its own crew, maintenance, and insurance. This type of lease is typically used when an airline needs to expand its fleet for a longer period such as when it is entering a new market or launching a new route. Dry leases are usually long-term agreements, ranging from three to twelve years.

Midway during the certification process, the entrepreneur withdrew the application for the AOC and decided to return the aircraft to the lessor. All aircraft lease agreements specify the “Return Conditions” for the aircraft to the lessor. The lessee has a legal obligation to meet all the return conditions to the satisfaction of the lessor.

In this situation, one of the return conditions was that “the aircraft must qualify for a US 14 CFR Part 121 Certificate.” This required the aircraft to comply with all mandatory modifications and inspections in accordance with a continuous airworthiness maintenance programme (CAMP) ensuring all aircraft remain airworthy through regular, documented inspections and repairs.

By that time, the aircraft had attained the threshold based on calendar time, flying hours and cycles for compliance with the FAA approved mandatory Supplemental Structural Inspection Programme (SSIP). The lessee has to expend millions of dollars to comply with the SSIP. In the process, the lessee had to sell his lucrative business and personal real estate to fund the return conditions.

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In reviewing the lease agreement before execution, the lessee and his attorneys did not understand the meaning of “the aircraft must qualify for a US 14 CFR Part 121 Certificate.”

On another occasion while employed at BWIA with responsibility for aircraft acquisition, I was sent to the Orlando, Florida to take delivery of a used MD83 twinjet aircraft for which a duly executed leased agreement was in place. In doing the acceptance checks, an engine was found to be marginally meeting the performance requirements for full takeoff power. Additionally, there were some minor structural issues. Based on these two conditions, I refused acceptance of the aircraft and insisted that the lessor change the engine and rectify the structural issues.

The lessor’s engineer on site refused to take any corrective action and a standoff ensued and I continued to refuse acceptance. This went for about a week until one of the lessor’s senior attorneys arrived in Orlando and showed me a copy of the full lease agreement which stated that BWIA had agreed to lease the aircraft in an “as is, where is” condition.

I was seeing this for the first time and the BWIA legal department, when contacted confirmed the an “as is, where is” condition.

BWIA was contractually obligated to take delivery of the aircraft.

During the period 1996/1997, BWIA dry leased two Airbus A321-131 aircraft for a seven year period. A new CEO decided that it was the wrong aircraft type and sought to terminate the lease. However, there were no grounds for the termination of the lease. The agreement provided that the lessee (BWIA), with the approval of the lessor, can sublease the aircraft. If the aircraft is subleased at a lower rate than that prescribed in the substantive lease agreement, the lessee is obligated to pay the difference. The two Airbus A321-131 were subsequently subleased to a Turkish carrier, Air Alpha at a lower rate and BWIA had to pay the difference of US$20,000 per month per aircraft.

On December 19, 2011 CAL signed an agreement with lessor AerCap for lease two Boeing 767 -300 ER aircraft for delivery in May 2012 to operate non-stop services between Port of Spain and London Gatwick.

The London route was losing approximately US$20 million per year. Consequently, in July 2015, CAL agreed with AerCap for the early redelivery of the two Boeing 767-300 ER aircraft as part of its discontinuation of the London Gatwick route effective January 31, 2016 and termination of the Boeing 767-300 ER operations. This agreement to early redeliver the aircraft included an early termination penalty of US$135,000 per month on each of the two 767 aircraft from the dates of the early redelivery of February 1, 2016 and March 15, 2016 respectively to the original contractual redelivery date of August 25, 2017.

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In February 2019, signed a lease agreement with Air Lease Corporation for four Boeing 737 MAX 8 aircraft with a 12-year lease term on each aircraft. One aircraft was delivered and the other three are due for delivery. As previously reported, CAL may not need that additional capacity if it increases the average daily utilisation of its Boeing 737 MAX fleet through optimal flight scheduling.

Whenever an airline executes a firm lease agreement with a lessor for an aircraft and pays the required deposits, the lessor places a firm order with the aircraft manufacturer for the aircraft. Once the aircraft has been manufactured and certified, the lessee has a legal obligation to take delivery of the aircraft.

If the lessee no longer has need for the aircraft, the most practical option is to sublease the aircraft to another air operator with the approval of the lessor. The reality is that the lessor has made a large capital investment by the purchase of the aircraft and expects to get a fair return on that investment.

Airline fleet planning is the strategic process of deciding what aircraft to buy/lease, how many, and when to retire them, to match demand, optimize costs, and meet business goals like profitability and sustainability. This is balanced with factors like capacity, range, fuel efficiency, and maintenance, and involves long-term decisions on fleet size and composition. It’s a complex, data-driven process crucial for an airline’s success, impacting everything from route network design to day-to-day operations.

 

Air Transport – 2026 outlook

THE International Air Transport Association’s (IATA) 2026 forecast projects continued growth for the airline industry, with record revenues around $1.053 trillion and a net profit of $41 billion (record high 3.9 per cent margin) despite ongoing supply chain issues – driven by strong passenger demand and record high load factors (83.8 per cent).

Passenger traffic is expected to rise to 5.2 billion, with the Asia-Pacific region leading the growth. A slower growth rate is forecasted for air cargo but it remains resilient due to e-commerce and time-sensitive needs. Industry challenges include delayed new aircraft deliveries flight crew shortages and airport infrastructure.

Total industry revenue is forecasted at US$1.053 trillion (4.5 per cent increase).

“That’s extremely welcome news considering the headwinds that the industry faces – rising costs from bottlenecks in the aerospace supply chain, geopolitical conflict, sluggish global trade, and growing regulatory burdens among them. Airlines have successfully built shock-absorbing resilience into their businesses that is delivering stable profitability,” said Willie Walsh, IATA Director General.

Profit per passenger carried is forecasted at approximately US$7.90 and industry operating profit, at US$72.8 billion.

Passengers carried is expected to increase to 5.2 billion (up 4.4 per cent) with traffic growth (RPK) at 4.9 per cent year-over-year, led by Asia-Pacific (7.3 per cent) and load factors are projected at 83.8 per cent.

Air Cargo Volumes is expected to increase to 71.6 million tonnes (up 2.4 per cent).

The industry continues to be challenged by supply chain issues such as a massive backlog of approximately 17,000 aircraft which has delayed delay fleet renewal, pushing the average aircraft age to over 15 years.

Labour costs are expected to be the largest single expense component at 28 per cent, driven by pilot shortages and wage inflation.

The future looks promising for aircraft manufacturers. Aircraft sales forecasts by Boeing, Airbus and Embraer point to sustained growth through the next decade, driven by recovering passenger traffic, emerging market demand, and fleet replacement needs, with both commercial and business jet sectors expecting increased deliveries and revenue.

However, supply chain issues continue to influence production, especially for newer models like the 737 Max, while fractional ownership and used aircraft markets also show strong demand.

All eyes on CAL

Locally, all eyes would be focused on state-owned Caribbean Airlines Ltd (CAL) to assess the impact of the airline’s new corporate governance structure. CAL has since terminated operations in its loss-making San Juan, Puerto Rico and British Virgin Islands routes.

Caribbean Airlines (CAL) chairman Reyna Kowlessar. 

CAL must better utilise the Return on Invested Capital (ROIC) metric to measure how effectively it can generate profits from all of its capital investments which will guide strategic decisions like fleet investment and operational efficiency, with the goal of exceeding their Weighted Average Cost of Capital (WACC) to create true shareholder value, improving asset utilisation, and managing high capital intensity.

By focusing on ROIC, airlines analyse capital allocation, improve profit margins (eg, ancillary revenue), and boost asset turnover (optimal fleet utilisation) to become more profitable and sustainable, moving beyond traditional metrics like EBITDA.

The airline industry is highly capital-intensive due to the significant investment required for aircraft and other support equipment.

ROIC is a particularly well-suited metric for this industry as it accounts for both operating revenues and the capital needed to generate them and most importantly, whether it is creating or destroying economic value.

A company creates value when its ROIC is greater than its WACC. Historically, many airlines have struggled to consistently achieve an ROIC above their cost of capital, indicating challenges in maintaining efficient capital allocation.

The average airline ROIC is approximately six per cent. The key uses of ROIC by airlines are with respect to:

* Capital Allocation: Decide where to invest capital (new planes, technology, routes) by comparing expected ROIC to the cost of that capital (WACC).

* Value Creation: Determine if the business generates returns above its cost of capital, signaling value creation for shareholders.

* Operational Efficiency: Improve ROIC by increasing profit margins (eg, ancillary fees) and asset turnover (eg, higher aircraft utilisation).

* Performance Benchmarking: Compare performance against competitors and the broader aviation value chain (lessors, MROs, airports).

* Financial Health Assessment: Understand profitability beyond simple net income, as it incorporates both operating performance and the capital base.

CAL can improve its ROIC by:

* Increasing Profitability: Develop new revenue streams (ancillary services) and reduce costs by eliminating wastages.

* Boosting Asset Turnover: Maximise usage of expensive assets like aircraft, potentially through better route planning or fleet utilization. CAL’s fleet utilization for both the ATR 72 and Boeing 737 MAX fleets are too low. Aircraft parked up on the ground do not earn revenue.

* Effectively Manage Capital Structure: Optimise the mix of debt and equity to reduce the WACC.

* Sharpening Capital Discipline: Make smarter investment decisions, ensuring new routes are operated on the basis oof robust market research and analysis.

ROIC is important for airlines because the airline makes massive capital investments in aircraft, making ROIC a crucial measure of how the aircraft generates fair returns.

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The airline industry is high volatile both in revenue and expenditure making ROIC a vital indicator of long-term financial stability and sustainability.

Airlines struggle to create value due to intense competition, high fixed costs (labour, capital), volatile fuel prices, and significant external pressures (geopolitics, economy).

This means they often fail to earn their target WACC despite revenue recovery, leading to thin margins and destruction of shareholder value over cycles, with success depending on strong balance sheets, operational excellence, and strategic capital allocation.

Shareholder will increasingly use ROIC to gauge value creation, pushing airlines to focus on these metrics for better value adding performance.

Assess fleet of MAX 8 aircraft

CAL must also conduct a critical assessment of its fleet size to determine whether it has excess capacity. In February 2019, CAL signed dry leases with Air Lease Corporation for the delivery of four boeing 737 MAX 8 aircraft with a 12-year lease term.

Three Boeing 737 MAX deliveries are outstanding and there are serious doubts about CAL’s need for this additional capacity.

CAL has to develop strategies to deal with the additional competition from St Marteen-based Winair and Turks and Caicos-based InterCaribbean Airways on the intra-regional routes, both of which will soon commence operations into Trinidad and Tobago.

In a nutshell, the primary objective of any airline is to convert capital (aircraft and support systems), labour (employees) and fuel into profits. This objective can only be achieved through effective corporate governance.

 

The history of LIAT

Leeward Islands Air Transport Services Limited (LIAT) had its origin in Montserrat early in 1956 when L.W. Magruder was granted a temporary permit by the Colonial government to operate a non-scheduled service between Antigua and Montserrat.

Magruder entered into a partnership with Frank de Lisle to further develop this service. Mr de Lisle had for some time, seen the need for air links between Montserrat with the neighbouring islands and other main air routes.

Accordingly, de Lisle developed a small airstrip in what seemed almost impossible terrain. A small single engine aircraft was piloted by de Lisle from this airstrip which was virtuality in his backyard.

The need for development of proper airfield facilities in Montserrat was recognised and a new airfield was commissioned. The Administrator of Montserrat recalled BWIA’s undertaking previously given to introduce scheduled services to that island as soon as airfield facilities were available.

As a result of meetings held between the governments concerned, BWIA and Messrs Magruder and de Lisle, it was agreed that a new company Leeward Islands Air Transport Services Limited (LIAT) would be formed with BWIA, Magruder and de Lisle as the principal shareholders, and that BWIA would designate LIAT to operate its routes in the Leeward Islands.

LIAT came formally into existence in October, 1956.

The service between Montserrat and Antigua extended to include St Kitts, Nevis, Anguilla, St Eustatius, St Martin and Barbuda. BWIA also designated LIAT to operate certain other routes until such time as the airfields at these points could be made safe for larger BWIA aircraft.

In this way service was extended to Dominica and St Vincent.

Later on, LIAT operated between Antigua and Barbados via Guadeloupe, Dominica, Martinique and St Lucia. Between’ Antigua, St Kitts and St.Thomas; and between Antigua, St Kitts, St Thomas and San Juan.

LIAT was also appointed to act as General Sales Agent for BWIA and BOAC and to provide sales, traffic, operational and engineering services as well.

It was always the policy of BWIA to do everything in its power to assist in the development of this vital and effective communications link between the Caribbean Islands. In the implementation of this policy, BWIA expended considerable sums of money and performed innumerable services for the benefit of LIAT.

Between 1962 and 1970 LIAT’s debt to BWIA amounted to $5,637,484.

This did not include any charge for management services and administrative expenses which were all rendered free of cost. In addition, BWIA, guaranteed LIAT’s bank overdraft in Antigua and its debt to Hawker Siddley Aviation Company in respect of four AVRO 47S’.

It also leased a Bonanza aircraft to LIAT for about five years without any charge. Despite its willingness to continue to pursue this policy of assistance to LIAT, BWIA recognised in 1971 if it was to provide the islands it served with the ever more efficient service they rightly demanded, LIAT’s need for new equipment and expansion, was beyond the financial capacity of BWIA.

It was in these circumstances that the board of BWIA, reversing what had been its settled policy of keeping LIAT entirely in West Indian hands, decided to dispose of its 75 percent shareholding to Court Line Limited, a reputable British company engaged in shipping and with considerable aviation experience in the field of tourism.

Before arriving at this decision, the board satisfied itself that Court Line possessed the requisite resources and technical ability to provide the necessary equipment and operate the extended services which would be needed if LIAT was to serve the Eastern Caribbean adequately.

The Board further required assurances that Court Line would permit West Indian governments to participate substantially in LIAT’s shareholding if they so wished. BWIA’s then chairman, Sir Ellis Clarke, personally visited all the islands concerned and consulted with respective governments as to their agreement to the Court Line purchase.

It was only after positive response had been received from all governments involved and the terms and conditions which they considered advisable were accepted by Court Line, that the sale of BWIA’s 75 per cent shareholding in LIAT was effected.

Court Line went bankrupt in August 1974, and the governments of 11 Caribbean nations stepped in and acquired the airline.

A new company LIAT (1974) Ltd was formed. The TT government, in furtherance of its endeavour to promote Caribbean integration, took up shares in LIAT (1974) Ltd even though, at that time, the financial outlook for the company was gloomy.

In order to keep the airline flying, the BAC One-Elevens were removed from the LIAT fleet and replaced with a series of smaller types, such as the de Havilland Canada DHC-6 Twin Otter STOL (short take-off and landing) turboprop.

By late 1979, LIAT was operating three aircraft types including the 48-passenger seat Hawker Siddeley HS 748 “Avro” turboprop, as well as the 9-passenger seat Britten-Norman Islander and the 18-passenger seat Britten-Norman Trislander with the latter two aircraft having STOL capability for short runways

On 27 June 2020, the prime minister of Antigua and Barbuda announced that LIAT (1974) Ltd would be liquidated following a series of unsuccessful months due to the pandemic and refusal of other shareholder governments to provide cash bailouts.

LIAT suspended all operations on 24 January 2024, resulting in the lay-off of most of its employees.

With the closure of LIAT (1974) Ltd, a new airline – LIAT 2020 – was incorporated in Antigua and Barbuda in July 2020, in collaboration with private Nigerian airline Air Peace which holds a 70 per cent stake in the company.

The Nigerian shareholders obtained Antigua and Barbuda citizenship under its Citizenship by Investment Programme. In this way, the airline becomes majority owned by Caricom citizens and can be designated under the Caricom Multilateral Air Services Agreement (MASA) . The government of Antigua and Barbuda holds the remaining 30 per cent.

Air Peace was responsible for providing the leased E145 aircraft that are being used by LIAT 2020. Air Peace and the Antigua and Barbuda government invested US$65 million and US$20 million respectively in LIAT 2020.

In May 2020, the FAA assigned the OECS a Category II rating due to safety concerns. To date, the OECS has not been upgraded to FAA IASA Category I. Consequently, newly formed LIAT 2020 which is based in the OECS member State of Antigua and Barbuda cannot operate into the US Virgin Islands and Puerto Rico.

Notwithstanding the formation of LIAT 2020, air connectivity in the Eastern Caribbean continues to be plagued by high airport charges and taxes.

 

What government did to keep BWIA airborne

Part X

In 1967 and 1968 when the TT government had been negotiating with Pressprich and TWA with a view to obtaining capital injections by mid-1968, it had been the expectation of all concerned that the new capital to be brought in by the private sector would be used to provide working capital necessary for medium-range development.

So disastrous were the results of the BWIA’s operations for 1968, that the sum of $8 million received in 1969 was simply swallowed by current debts. In fact, the operating loss sustained by the airline in 1968 despite the efforts of experienced management amounted to $6.9 million.

At no time was it within the contemplation of the parties involved that this sum of $8 million was all the capital that BWIA would need. It had been confidently expected that management would have succeeded in bringing about the turnaround situation that would have made the airline attractive to the type of private investor who was in fair supply in the boom days of 1967-1968, and that the necessary additional capital would come from private sources. The basic proposition continued to be that the “government of TT would not be expected to contribute further capital.”

When it became apparent how substantial the 1968 loss was, a management change was made. W J Mitchell was strongly recommended by government’s partner, Caribbean International, as an airline executive of considerable experience and dynamism, and the appropriate person to reverse the trend and bring about the desired results. He was accordingly appointed as managing director and given a relatively free hand to co-opt such aides as he thought fit to assist in making the airline profitable at long last. The conviction was expressed by Caribbean International that the efforts of Mitchell and his specially selected team would put the airline in a position to acquire the necessary capital and would bring about a new phase of expansion and success.

As events turned out, 1969 proved to be the most disastrous year in the history of BWIA from a financial standpoint. The operating loss sustained was $14.8 million.

The contributing factors to the magnitude of the 1969 loss were many, but certain significant ones should be recognised. First, 1969 marked the addition to the fleet of two long range Boeing 707 aircraft, one of which served to replace a leased Boeing 727 aircraft. This first expansion, which involved a new aircraft type, necessitated extensive pilot and maintenance engineer training as well as other fleet integration costs such as spares and tooling.

BWIA leased a Boeing 707 from Qantas, the Australian airline, in 1969. –

Most noteworthy was that the first 707 was operated for a nine-month period under a rather expensive short-term lease arrangement from the seller, Qantas Airway Ltd, the Australian flag carrier. However, when the aircraft was purchased from Qantas credit was given for a substantial amount of the rent paid.

Second, BWIA incurred costs in connection with the sooner than expected initiation of the route between the Eastern Caribbean and Toronto. In May 1969, as a result of the Air Canada strike and its consequent effect on tourist traffic to and from the Eastern Caribbean, it became necessary for BWIA, if it were to be faithful to its traditional role of being the handmaiden of Eastern Caribbean tourism, to secure the approval of the Canadian authorities for the operation of this service. After the settlement of the strike, BWIA management in conjunction with government exerted vigorous efforts to continue operating this route, whose efforts were successful and resulted in a more stable route arrangement in late summer.

While BWIA management believed that the operation of the Canadian route would be advantageous the airline’s long-term development, it was rather costly to the company over the short term, as is usually the case whenever a new route is initiated. Thus, the service was operated for most of the year at low load factors due to BWIA’s lack of identity in the market.

In addition, the aircraft used in operating the Toronto service was one which would otherwise have been operated at much higher load factors on the well-established New York service. It is estimated that this inauguration and initial operation of the Toronto service cost BWIA in the area of $1.5 million in losses.

The year 1969 witnessed the embarkation of an extensive promotional and advertising campaign to build BWIA’s image, particularly in North America as the “Airline of the Caribbean.” The impact of this programme had a positive effect in subsequent years.

–

The extremely tight money market of 1969 and the general slow down of the US economy were also negative factors. The service charge on long-term debts rose higher and higher. It should be noted that since the expenditure in respect of which the long-term debt was incurred was in US dollars, the loans were also in US dollars, with the resultant increase in burden to BWIA as the borrower and to the government as the guarantor, especially since the TT dollar was devalued in 1967 due the devaluation of the British pound.

While these were some of the special reasons for BWIA’s disastrous loss in 1969, it should be borne in mind that other airlines particularly those operating within the Caribbean, suffered extensive losses as well, for example Caribair and Pan American Airways. The former lost about $10 million, while the latter lost over $50 million, more than half of which was reported to be incurred on its Caribbean and Latin American operations.

Early in 1970 the board of directors of BWIA recognised that changes were necessary if the long awaited turnaround of the airline was to become a reality.

BWIA retained the services of Boyden Associates, a firm of management consultants, and after interviewing several prospective candidates selected Lucian Hunt as the managing director. A new management team headed by Hunt was assembled, and drastic economies were ordered.

The cumulative effect of the losses sustained in 1968 and 1969 and the continuing, though progressively lower, loss in 1970 produced a cash crisis for the airline. The injection of capital was essential if the airline was to be kept alive.

Government called upon Caribbean International to provide the necessary funds, reminding its partner of the basic underlying principle of the joint venture, namely, that “the government of TT would not be expected to contribute further capital.”

 

Government opens Trinidad and Tobago airspace to US military

GOVERNMENT has granted approval for US military flights into and out of the Piarco and ANR Robinson International airports in the coming weeks.

Government also repeated one of several positions it has maintained since the US began its military deployment in August, that these flights are part of the commitment made by Prime Minister Kamla Persad-Bissessar to collaborate with the US to ensure safety and security for Trinidad and Tobago and the rest of the Caribbean.

In a statement on December 15, the Foreign and Caricom Affairs Ministry said it has given approvals for “US military aircraft to transit TT’s airports in the coming weeks. The ministry added, “The US has advised that these movements are logistical in nature, facilitating replenishment and routine personnel rotations.”

In the statement, Foreign and Caricom Affairs Minister Sean Sobers repeated this is part of the ongoing close engagement the ministry maintains with the US Embassy in Port of Spain. He also repeated Persad-Bissessar “has affirmed government’s commitment to co-operation and collaboration in the pursuit of safety and security for TT and the wider region.”

The ministry repeated through government’s collaboration with the US, TT has benefitted from “joint military training exercises, enhanced surveillance capabilities, including the installation of an effective radar system and collaborative efforts that have contributed to the interdiction of millions of dollars worth of illegal narcotics.”

In a WhatsApp comment, former civil aviation authority director general Ramesh Lutchmedial said these arrangements are in perfect order. He added this is because the US and TT enjoy a cordial relationship “in matters of security and safety and trade.”

Former national security minister and police commissioner Gary Griffith saw nothing unusual in this development.

But he observed the limited content in the ministry’s statement could create an opportunity for people who are opposed to the US military deployment in the Southern Caribbean to make negative comments.

Griffith said, “I wish to remind the country that for the last few decades, US has been very instrumental towards the safety and security of not just TT but throughout Caricom.”

The US, he continued, also has a responsibility through the Caribbean Basin Security Initiative, to assist in developing security with Caricom.” Griffith repeated this involves what the US has done for TT for decades.

He said this includes training, technology, assets and joint operations.

While he believes the US is adhering to these responsibilities, Griffith said “because of what is ongoing with them now and Venezuela, there is that perception that the US is trying to use TT as a type of base…a launching pad to assist in any attacks on another country.”

Griffith believed Persad-Bissessar “has been totally clear on this and stated that TT will not be used as a launching pad or a base to assist a country in any type of armed conflict with another country.”

He said, “So that has gone out the window.”

Griffith: TT economy will benefit

Griffith added people need to see the glass as half-full instead of half-empty.

He estimated the current US military force deployed in the southern Caribbean since August to be over 10,000 personnel.

The former TT Regiment captain said this situation meant “eventually what is going to happen, you are going to need re-supply.”

Logistically, Griffith, continued the US will “look at the closest countries who will be their allies to assist them in having re-supply sent.” This re-supply will include mechanical parts for naval vessels, and food and water for the troops on them.

Griffith said he anticipated the US would have made this request to TT.

“This is just the beginning of much more than what the country will see in the very near future once the US remains in the Southern Caribbean.”

Griffith would not be surprised if 1,000 US military personnel took shore leave in TT while the deployment continues. He estimated they could spend approximately US$500 each. “If you keep multiplying that for one year, you could get over TT$1 billion.”

Government, he continued, could consider supplying the US force with local crops.

“This can assist our agriculture industry immensely.”

Griffith described this as “military tourism.”

He said, “There is nothing wrong with this because eventually the US is going to ask for some kind of a base in TT, if it is that they remain here for a very long period.”

Griffith added there is nothing wrong with that. He repeated that Venezuela has issued threats against TT because of its support for the US military deployment. “The longer the US remains in the Southern Caribbean, the safer we will be.”

Browne: Airspace clearance is not routine

Former foreign and caricom affairs minister Dr Amery Browne described the statement as particularly deceptive.

“Never before has our country given blanket permission for foreign military aircraft to use the airports and airspace of TT, for an unspecified period, in the buildup to a regime change war.”

Browne, who is an opposition senator and PNM vice-chairman, said, “Notwithstanding the phrasing of the release, there is nothing routine about this. It has nothing to do with the usual co-operation and friendly collaborations that we have enjoyed with the USA and all of our neighbours for decades.”

He repeated, “Rather, it takes TT a further step down the path of a satellite state that has dismissed Caricom and international law and embraced a might-is-right philosophy.”

Browne said for the last six months and counting, Persad-Bissessar has refused the calls by Opposition Leader and PNM political leader Pennelope Beckles “to address the nation and properly explain what she has done to our neutral, established foreign policy and our standing in the region and the world.”

He repeated Persad-Bissessar “has taken us from the status of being noted as leaders within Caricom in diplomacy and peaceful dialogue, to the current status as complicit facilitators of extrajudicial killings, cross-border tension and belligerence, and the use and threat of use of force to achieve political objectives.”

Government’s permission to approve US military flights into and out of TT for an indefinite period of time comes one week after the release of the US National Security 2025, published in November by the White House, and signed by US President Donald Trump.

Referring to this strategy, Browne said, “Every day, for the discerning observers, there is fresh evidence that the government of TT has gotten completely lost on the geopolitical chessboard.”

“All of this has been occuring whilst the Government of TT has demonstrated open disrespect and disregard for the THA (Tobago House of Assembly) and the views of the people of Tobago on the issue of the placement by US Marines of a G/ATOR military radar system at the site of the new airport terminal in Crown Point.”

Browne said, “This is all part and parcel of an imported political philosophy that is incompatible with our culture, our history, our diversity and our national dignity.”

Commenting on the ministry’s statement and the US National Security Strategy 2025, international relations expert Anthony Bryan said, “TT government supports close relations with the USA in view of the heightened tensions with Venezuela. As a result, the Venezuelan government is constantly reviewing its relations with TT. It’s obvious that we are advancing US policy toward the region.”

Trump asserts Monroe Doctrine

In its national security strategy, the US outlines its plan to “reassert and enforce the Monroe Doctrine to restore American pre-eminence in the Western Hemisphere, and to protect our homeland and our access to key geographies throughout the region.”

TT is part of the hemisphere by its geographical location in the Caribbean.

The US said this is being done after “years of neglect.”

The US adds, “We will deny non-hemispheric competitors the ability to position forces or other threatening capabilities, or to own or control strategically vital assets, in our hemisphere.”

This strategy is defined in the document as the “Trump Corollary” to the Monroe Doctrine.

It is also described as a common-sense and potent restoration of American power and priorities, consistent with American security interests.

The US said its goals for the hemisphere are to enlist and expand.

“We will enlist established friends in the hemisphere to control migration, stop drug flows, and strengthen stability and security on land and sea.”

Within the last two months, members of the 22nd US Marine Expeditionary Unit (MEU) have twice held joint exercises with members of the TT Defence Force (TTDF) and the guided missile destroyer USS Gravely has visited TT.

The US began its military deployment in the Southern Caribbean, outside of Venezuela’s territorial waters, with the Gravely and two other guided missile destroyers – USS Jason Dunham and Sampson.

The US force in the region has since grown to include the nuclear attack submarine USS Newport News, amphibious assault vessels, special forces command vessels, the MEU and the aircraft carrier USS Gerald R Ford and its strike group.

The AN/TPS-80 Ground/Air Task Oriented Radar (G/ATOR) system was established at the ANR Robinson International Airport by US Marines in November. Persad-Bissessar only disclosed the existence of the radar on November 27, when questioned by the media about the presence of US troops in TT.

Outside of the Red House on November 26, Persad-Bissessar said, “They (US Marines) are helping us with something to do at the (ANR Robinson International) airport.”

She added their presence had something to do with a roadway near the airport.”

Subsequently after a laptop distribution ceremony at the Penal Secondary School on November 27, Persad-Bissessar said, “The plan there is the runway and a radar. They will help us to improve our surveillance and intelligence we gather…the narco-traffickers in our waters and outside our waters.”

In August, the US approached Grenada for permission to use the Maurice Bishop International Airport to house military radar that could monitor both commercial and military flights in the southern Caribbean.

Grenadian Prime Minister Dickon Mitchell has said his government is working with an undisclosed deadline from the US but will not be hurried into deciding on such an important issue.

Persad-Bissessar has rejected questions raised by the Opposition PNM about the reasons why the military radar was established in Tobago, repeating claims of alleged ties between the PNM and drug cartels. Opposition Leader and PNM political leader Pennelope Beckles has rejected those claims.

The G/ATOR system is a three-dimensional, medium/long-range multi-role radar designed to detect unmanned aerial systems, cruise missiles, air-breathing targets, rockets, artillery, and mortars.

On December 11 at a CXC awards ceremony in Port of Spain, Persad-Bissessar credited the radar’s reported role in helping police seize $171 million marijuana in an unmanned boat in the Caroni Swamp. In a subsequent Facebook post on December 12, she indicated she held talks with US Embassy officials before the ceremony about “our continued co-operation in the fight against crime.”

In August, Persad-Bissessar said TT was prepared to allow US troops to operate on its territory if Venezuela made any incursion into Guyana and the US made a formal request to government under the SOFA (Status of Forces) agreement that was signed with the US in December 2024 under the former PNM administration.

The SOFA allows bilateral military co-operation between TT and US.Venezuela and Guyana have had an ongoing dispute over the Essequibo border region between them for decades.

Persad-Bissessar has publicly differed with other Caricom leaders such as Barbados Prime Minister Mia Mottley and former St Vincent and the Grenadines prime minister Ralph Gonsalves about the US military deployment in the Caribbean and the Caribbean being regarded as a zone of peace.

TWA's role in keeping BWIA in the skies

PART IX

The agreements of May 24, 1968, did not therefore involve any departure from what had earlier been contemplated, but rather constituted an acceptable method of performing an agreed undertaking. Again, copies of these agreements were immediately supplied to interested West Indian governments. These were the first documents that constituted the valid contractually binding obligations of the TT government or BWIA and were the result of nine months of intense and difficult negotiations.

While discussions were proceeding on the heads of agreement it was decided to reconstitute the board of directors of BWIA. Sir Patrick Hobson resigned from the board at a meeting held on February 5, 1968. In his letter of resignation he pointed out, “it has been evident that the further expansion which will be required to make the airline a viable proposition and the acquisition of additional modern equipment would necessitate BWIA’s association with strong outside financial interests. In addition, managerial and technical assistance were required to reorganise the airline thoroughly.

“It has also been evident that the association I mention above will require changes in BWIA’s corporate structure and it is in order to facilitate these changes that I have tendered my resignation.”

The new board comprised Sir Ellis Clarke, chairman; J M Scoon; Gerald Montes de Oca; Donald J Urgo, directors. One of the first acts of the new board was to enter into an interim 90-day management and technical assistance agreement with TWA. Under the terms of that agreement a three-man TWA advisory team took up residence in Port of Spain, on February 12, 1968. Heading the team was J I Greenwald, and his two assistants were Barney Tumey and Commodore Keith. On February 14 the new board decided that the most effective way to institute the necessary organisational reform was to request that TWA agree to the designation of Greenwald as acting CEO to which TWA agreed. The new board was in this regard following a policy of continuity by seeking to implement the view so clearly expressed by the past chairman that a pressing need was to cure the deficiencies in managerial and technical specialised skills.

–

On May 2, 1968, the board resolved to request that TWA extend to July 1968 the 90-day advisory contract due to expire on May 12 and also to request that TWA continue to make available the services of Greenwald to act as CEO of BWIA during the period of extension pending the filling of this post on a permanent basis. In response to this request TWA agreed to extend its advisory agreement beyond the May 12 termination date for a period of 70 days, or until the US Civil Aeronautics Board (CAB) approved a contemplated three-year management and technical assistance agreement.

This contemplated agreement was in fact entered into between BWIA and TWA on August 21, 1968, and was filed with the CAB for approval. Two other agreements were also entered into between BWIA and TWA. The first one, a ground handling agreement at John F Kennedy Airport in New York, and the other a reciprocal general sales agency agreement, both of which were filed with the CAB, the former of which became effective on November 1, 1968, and the latter which was originally to be effective October 1,1968. Neither the management and technical assistance agreement nor the reciprocal sales agency agreement was ever implemented because of adverse rulings by the CAB to whose jurisdiction TWA was subject. These arrangements were basically regarded as a composite agreement and the inability to carry out one, made it impossible to proceed with the composite arrangement.

In August 1968, at the end of the period of 70 days, Greenwald could no longer act as CEO and the services of Robert Gallaway, a former TWA employee, were engaged on the strong recommendation of Caribbean International Ltd.

Unfortunately, the “closing” contemplated by the agreement and plan of reorganisation of May 24, 1968, did not take place on July 31, 1968, nor eventually after several postponements, at any time thereafter. An agreement dated June 24, 1968 had been entered into between Goldfield Corporation, the shares of which at that time were traded on the American Stock Exchange, Caribbean International Ltd, R W Pressprich and Co International Ltd, and Lorenzo, Carney and Company Inc.

As a result of that agreement the obligations of Caribbean International towards the government and BWIA fell largely to be performed by Goldfield. Goldfield alleged that the conditions attached by the office of foreign direct investment of the Department of Commerce of the US to the authorisations required under the Foreign Direct Investment Regulations were too onerous to permit it, as a business proposition, to make the necessary investment.

–

By December 1968, it became apparent that Caribbean International could not discharge the obligations incumbent upon it as a result of the agreement of May 24, 1968, either by itself or by Goldfield, or by any other agent, nominee, or assignee. Negotiations were conducted by the government with Caribbean International; R W Pressprich and Co International; Lorenzo, Carney and Company Inc; Goldfield Corporation and a number of individuals connected with these several companies. As a result of these negotiations, the government entered into subsequent agreements with Caribbean International, substantially along the lines of the earlier agreements except that the sum payable to BWIA was increased from $6 million to $8 million.

It is pertinent to mention that the obligations with respect to hotel development at Rockly Point, Tobago, were also undertaken in the 1969 agreements as they were in the previous ones. As a result of these agreements, $2 million was paid to BWIA on January 31, 1969, and the further sum of $6 million on June 23, 1969. Before carrying out these agreements, the government repurchased from British Overseas Airways Corporation the 10 per cent shareholding in BWIA it had sold to it in November 1961. The price in both transactions being the same, namely, $250,000.

 

Collapse of BWIA’s deal with Canada

PART VIII

IN May, 1967 there was very little solid ground on which to repose the hope that within a reasonable time, or at all, the vital consideration deemed by Canada to be essential to its cooperation with BWIA would be attained.

Nevertheless, the Trinidad and Tobago government chose the path of optimism and continued to cherish the hope that where it had failed Canada might succeed; that the long and cordial association and the fund of goodwill built up between the Canadian government and the governments of the Commonwealth Caribbean might prevail against their reluctance to join TT in having BWIA as the regional air carrier.

Eventually, by late August, the TT government and BWIA became resigned to the sad conclusion that not even the attraction of an association with Canada could overcome the unwillingness of some Caribbean governments to participate in BWIA.

It therefore became necessary for TT to communicate with the Canadian government its sincere disappointment that a basic requisite of Canada’s proposals continue to remain unachieved. If there had existed the slightest hope of overcoming the difficulty posed by that basic requisite, no discussions with anyone else would have been initiated or pursued.

In the course of several letters exchanged between the prime ministers of TT and Canada, the difficulty was referred to with consummate diplomatic tact by the Canadian PM: “In a matter as complex as this (contingent upon the reactions of several governments) it is, I think, understandable that these reactions have not been forthcoming quickly, or in a clear-cut fashion. What information we have received has not in fact been uniformly encouraging. Under the circumstances it is difficult for us to go any further with respect to immediate financial commitments.”

–

Before the collapse of the Canadian proposal, as a result of the unwillingness of other governments to participate in BWIA, a joint approach was made to BWIA and to the TT government by R W Pressprich & Co International Ltd – a New York investment banking company – and Trans World Airlines (TWA) – one of the world’s major airlines – by letters dated July 20, 1967.

The gist of their proposals for the expansion, re-organisation, and re-financing of BWIA was that a multi-national Caribbean air carrier jointly owned by the governments of TT, Barbados, Guyana, and Jamaica and by an investor group can be provided by TWA with the necessary technical expertise and managerial skills.

The investor group would have voting rights of 40 per cent, with those governments having 60 per cent of the voting rights, but the investor group’s participation in the profit should be 60 per cent while that of the governments should be 40 per cent.

Pressprich and TWA representatives were informed that a proposal from the government of Canada and Air Canada was being considered and that, in any event, the basic objectives of an airline jointly owned by a consortium of the governments of TT, Barbados, Guyana, and Jamaica, and by an investor group might well prove to be an insurmountable obstacle to further discussions, having regard to the reluctance of some governments to participate in any such consortium.

It did not take these representatives a great deal of time to recognise the accuracy of what must have seemed to them originally to be the gloomy forebodings of the TT government and BWIA. The result was that a little more than a month later, an August 29 letter was received from R W Pressprich amending their previous proposal and enabling negotiations to advance.

The key to further progress was the willingness of Pressprich “to make the proposed investment in BWIA as currently existing, prior to receiving definitive commitments from other Caribbean nations which might eventually join such consortium.”

The attraction of the proposal to the TT government was the assertion that it “would not be expected to contribute further capital, although it would be expected to continue its guarantees on existing debt and providing appropriate economic incentives, whilst receiving an agreeable percentage of the shares of the new company in return for its current ownership of BWIA.”

Also of special interest the government was the proposal for the erection of a Hilton hotel at Rocky Point, Tobago. The inextricable association between airline seats and hotel beds was fully recognised, and the prospects for hotel development with the TWA connection and a Hilton hotel for Tobago were undeniably attractive.

During September and October negotiations with Pressprich continued and a memorandum of points, dated October 24, 1967, relating to the re-organisation of BWIA was submitted by Pressprich. After protracted discussions a modified memorandum was accepted by the government by letter of December 5, 1967, as a basis of discussions intended to lead to a heads of agreement and ultimately to a definitive agreement.

–

R W Pressprich & Co International Ltd formed Caribbean International Ltd as the vehicle by which it would implement it undertakings to the government and BWIA. It has always been recognised that Pressprich would not necessarily be the private investor participating in BWIA, and that its obligations would be fully discharged if it produced a consortium of private capital in the form of a separate independent company.

In a September 15, 1967 letter to the chairman of BWIA, TWA set out the role it contemplated to play in BWIA. TWA proposed to conduct a study on all of BWIA’s operations under the general direction of R J Fordham, senior director, Associated Airlines, and under the specific full-time leadership of J I Greenwald, director, project development, Associated Airlines.

TWA further stated that the assessment of its possible future role whether in the areas of assistance or investment will be dependent upon both the results of the study and the other actions undertaken by BWIA to ensure its future economic viability.

After agreement by the government and BWIA, TWA commenced the study.

The heads of agreement based on the memorandum of points accepted by government on December 9, 1967, was signed in early 1968, and copies were immediately made available to other West Indian governments. Eventually, after considerable further bargaining and negotiations, agreements, to which the TT government, BWIA, and Caribbean International Ltd were parties, were signed on May 24,1968.

 

How Canada helped BWIA to take flight

RAMESH LUTCHMEDIAL

PART VII

By 1967, the total amount advanced by the Trinidad and Tobago government to BWIA to enable it to continue its operations between 1962 and 1967 amounted to $15,255,816.

Moreover, by this time expansion of the inadequate jet fleet was essential and major financing was inevitable. But the lack of finance was not the only deficiency from which BWIA was suffering. In a memorandum of November 10, 1966, the then chairman of BWIA set forth the position with candor and accuracy.

“In addition to future finance, BWIA requires assistance immediately in the form of top management, engineering, planning and accounting talent. The airline business is a specialized one and with the possible exception of accounting, the talent which the airline requires immediately is not available in TT or in the West Indies. BWIA is woefully short of pilots and the anticipated intake of citizens of TT and other West Indians at the commencing level will not by any means meet the requirements of the airline for experienced pilots to bring the establishment up to strength and to provide for the future.”

The conclusion drawn by the then chairman was, “it would seem therefore that a partner in BWIA in the form of an airline with great financial strength and with the ability to render the assistance BWIA requires in its management and staffing problems should be sought immediately.”

Acting in accordance with the considered opinion of the then chairman, the government made every effort to identify suitable, parties who might be interested in some association with BWIA. It was against this background that the cabinet gave urgent consideration to a proposal received on May 23, 1967, from the high commissioner of Canada to TT in the following terms:-

“The government of Canada has considered a report on the situation of British West Indian Airways by a group of senior Air Canada management personnel and has identified a possible basis for establishing a comprehensive corporate association between the two airlines which would contribute to the solution of BWIA’s problems and to the development of civil aviation in the Commonwealth Caribbean area. The government of Canada foresees the possibility that BWIA, in view of its routes pattern and traffic potential, could, under the conditions outlined below, ultimately achieve viable and possibly even profitable operations as a result of such an association.

A BWIA aircraft at Piarco airport. –

Among the considerations which seemed to the government of Canada and Air Canada to be essential to this association, the most significant are the following:-

(a) BWIA should become the regional carrier for the Commonwealth Caribbean, that is to say, the governments of Jamaica, Barbados and Guyana, as well as TT, would designate BWIA as their national carrier;

(b) Canada would be permitted to acquire up to 49 per cent of BWIA shares, with the remainder to be divided on an agreed basis among the other participants (which at a later stage might include the non-independent associated states);

(c) The government of Canada, with Air Canada, would appoint a majority of the BWIA board of directors and Air Canada would provide key management personnel;

(d) Participation in profits, and responsibility for losses, would be pro rata to the shares of ownership;

(e) The four Commonwealth Caribbean governments would negotiate, as a consortium, air agreements with Canada, the US, and other countries.

“If the foregoing is acceptable in principle to the government of TT, Canada would propose as a next step that a joint approach be made by the TT and Canadian governments to the US government in order to ensure that the latter would have no objection to BWIA, as a regional carrier with substantial Canadian financial and managerial participation, continuing to enjoy its existing US traffic rights, as well as any such rights which it might acquire in the future. It would seem essential to secure such an assurance in view of the importance of these rights to the airline.

“Subsequently, as a third step, approaches might be made simultaneously to the governments of Jamaica, Barbados, and Guyana. It is understood that certain debt obligations of BWIA become payable on June 30, 1967. In order for the government of Canada to give further consideration to financial arrangements to meet this immediate obligation, should the foregoing plan commend itself to the government of TT, it would seem necessary to have the agreement in principle of the TT government to the plan at the earliest possible date; a satisfactory outcome to the suggested approach to the US, and if possible, the agreement in principle of Jamaica, Barbados and Guyana as well.

–

“The provision of additional financial resources to make the plan along the foregoing lines a success would depend upon final agreement being reached with all the participating governments on the detailed aspects of the reconstitution of BWIA and a multilateral air agreement between Canada and the Commonwealth Caribbean countries concerned.”

It will be noted that first and foremost among the “most significant” considerations which to the government of Canada and to Air Canada seemed “essential” to their proposition was that “BWIA should become the regional carrier for the Commonwealth Caribbean, that is to say, the governments of Jamaica, Barbados, and Guyana, as well as TT, would designate BWIA as their national carrier.”

It was precisely this consideration that the TT government, unduly optimistic as events turned out, had in mind in 1961 when it salvaged BWIA and held it in trust for all the countries, none yet being independent, of the region.

The government gave the clearest manifestation of its attitude and intention when in November 1961, the very month in which the formal handing over ceremony by British Overseas Airways Corporation took place, it dispatched a delegation to the heads of government of several West Indian territories including Jamaica, Barbados, and Antigua, seeking their agreement to participate in BWIA and to enable it to become the regional air carrier. These early initial efforts were followed by many subsequent efforts to persuade the West Indian territories generally to join in BWIA as a regional air carrier.

 

Lutchmedial: FAA warning on flights over Venezuela airspace, a pre-caution

FORMER civil aviation director general Ramesh Lutchmedial says the decision by the US Federal Aviation Administration (FAA) to warn US airlines about a “potentially hazardous situation” when flying over Venezuela is a normal precaution when it comes to potential conflict situations.

But Lutchmedial, a Newsday columnist, said the decision does not imply that some form of military conflict in Venezuela could be imminent.

In a notice on November 21, the FAA spoke about what it called the “worsening security situation and heightened military activity in or around Venezuela.”

The FAA added that threats arising from this situation could pose risks for aircraft at all altituThe notice requires US airlines to provide the FAA with at least 72 hours’ advance notice of planned flights, but stopped short of prohibiting flights over Venezuela.uela.

On November 22, Lutchmedial said the FAA has the best aerial navigation and intelligence system in the world to assess situations such as this. He described the notice as a precautionary measure to US airlines, which will be “transiting over Venezuelan sovereign airspace.”

Lutchmedial said these airlines are allowed to do this through the International Air Transit Agreement (IATA).

Over 170 nations are signatories to this agreement, including the US, Venezuela and TT.

“It is a normal practice, for example, where there are areas of what we call ‘hostile airspace’ where everybody knows what’s happening between Venezuela and the US.”

Lutchmedial cited Afghanistan, Ukraine and Syria as examples of countries where no-fly zones have been established based on hostilities there.

He said, “The global aviation industry tends to piggyback on what the Americans are doing because of the advanced technologies and intelligence.”

Asked if TT should be concerned about the FAA notice and whether it implied US military action against Venezuela was imminent, Lutchmedial said to interpret it as this could be speculative.

“I tend to say things that I have evidence to support what I am saying.”

Lutchmedial repeated that the notice is just an advisory for US airlines to be cautious and inform the FAA about their intended flight paths.

He said this allows the FAA to advise the airlines whether those paths are safe or not.

Should the airlines observe anything unusual, Lutchmedial said they can use the FAA’s hotline to report their observations.

“At this stage, it is precautionary, but should the situation escalate, then areas would be designated no-fly zones.”

Lutchmedial said the rationale behind the creation of the IATA came about because of the existence of landlocked countries in the world and the need to allow airlines to transit safely from the sovereign airspace of one nation to another.

He highlighted airlines wanting to fly from Bolivia to Miami in the US as an example of this.

Lutchemedial said airlines whose countries are IATA signatories can easily fly through their respective airspaces without any problems. He added that there is a daily flight from Turkey to Venezuela, which passes through Barbadian airspace.

“They can do that because Barbados, Turkey and Venezuela have all signed the air transit agreement that allows airlines to do that.”

The FAA said it will continue to monitor the risk environment for US civil aviation operating in the region.

The notice comes against the background of ongoing US-Venezuela tensions in the southern Caribbean. A total of 83 people were killed in 21 US strikes targeting suspected narco-traffickers since September 2.

The US military deployment began in August with the arrival of guided missile destroyers USS Gravely, Sampson and Jason Dunham. They were later joined by the 22nd US Marine Expeditionary Unit (MEU) and additional naval and air assets.

The Gravely and Marines from the 22nd MEU visited TT between October 26-30, and the marines were here for another week between November 16-21, for what was described as a joint training exercise with members of the TT Defence Force. The MEU were a key unit involved in the 1983 US military invasion of Grenada, code named Operation Urgent Fury.

The aircraft carrier USS Gerald R Ford and its strike group have recently joined US forces in the region.

The Gerald Ford’s strike group includes nine embarked squadrons of Carrier Air Wing Eight, Destroyer Squadron Two’s Arleigh Burke-class guided-missile destroyers USS Bainbridge and USS Mahan, and the integrated air and missile defence command ship USS Winston S Churchill.

Prime Minister Kamla Persad-Bissessar has publicly supported the deployment and US military strikes on alleged drug vessels in the Caribbean. Persad-Bissessar has also supported the Trump administration’s position that the deployment of troops is part of an anti-narcotics exercise.

On November 18, she said TT will not be used as a launch pad for any attack on Venezuela.

The struggles to establish a regional air carrier

PART IV

The Dr Eric Williams government was determined to keep BWIA airborne to save the jobs of over 700 employees and to maintain air linkages within the Caribbean countries and the eastern seaboard of the United States with onward services to London.

Premier Williams, in a statement to House of Representatives on March 23, 1962, spoke of the government’s consideration of acquiring BWIA in response to the retrenchment proposed by the British Overseas Airways Corporation (BOAC).

“Mindful of the imminence of the austerity plan proposed by BOAC and of its effect both on the air services in the area and on the number of people who would shortly be retrenched, the minister of industry, commerce, tourism and external communications therefore intervened on behalf of the TT government and requested the BOAC representatives on the board of BWIA to provide the TT government with certain information relating to the airline in order that the TT government could consider whether it should acquire the airline.”

He also requested and was granted a deferment of the BOAC austerity plan for three months.

By letter dated June, 16, 1961, BOAC provided the information requested indicating that on the basis of the net assets of the airline as at March 31, 1961, the company placed on the airline a value of £1,034,036, or BWI$5,445,726 (The British West Indies dollar was the local currency of British Guiana and the Eastern Caribbean territories from 1949 to 1965).

However, in order to negotiate with BWIA, it was necessary that independent technical advice be obtained.

On August 18, 1961, Williams wrote to the secretary general of the International Civil Aviation Organisation (ICAO) seeking the services of C S Sundaram, who had served on the Tymms Commission.

On August 23, the secretary general confirmed that Sundaram’s services would be made available to the TT government.

On August 31 1961, proposals were received from the federal government for the establishment of a national airline of the West Indies which envisaged among other things the purchase and liquidation of BWIA, and the formation of a West Indies National Airlines Co Ltd whose shareholding would be offered as follows: the West Indies and federal government – 51 per cent; West Indies nationals (including employees) – three per cent; BOAC 20 per cent; Trans Canada Airlines (if that company can be persuaded to participate) – five per cent; Jamaica government – 7.5 per cent; TT government – 7.5 per cent; Barbados government – three per cent; Windward and Leeward Islands governments – three per cent.

The full-scale requirements for the establishment of the West Indian National Airlines were estimated by the federal government as $64,440,000, of which the TT government would contribute a total of $18,456,088.

The federal government proposed that a meeting with unit governments should be held at federal house on October 2, 1961, to discuss these proposals.

On September 19, 1961, the Jamaica referendum took place with its consequences to the Federation of the West Indies which are now history.

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Suffice it to say that as a result, the position of the federal government now appeared to be insecure and participation by the TT government in a massive venture of the type proposed seemed inadvisable.

However, the problem of maintaining existing air services in the area and of averting the threatened large-scale retrenchment of staff continued to be imminent, and on the basis of the report submitted by Sundaram on September 27, 1961, the TT government decided on October, 3, 1961, to accept responsibility for the continuance of the airline and to acquire the entire shareholding of BWIA.

This responsibility fell to TT largely because the airline was based in Trinidad, and serious consideration had to be given to the 700 employees whose services would have had to be terminated. It must be stressed that this decision was not taken in competition with federal government plans, but as an unavoidable answer to the urgent problem outlined above.

The decision of the TT government was as follows:

(a) BWIA should be purchased as a going concern;

(b) In its negotiations with BOAC, the assurance should be sought that that company would continue to make satisfactory pooling arrangements with BWIA after acquisition of the airline by the TT government;

(c) The TT government should seek a review of the terms of the agreement between BOAC and BWIA for the charter of Viscount aircraft, Britannia, and jet aircraft;

(d) BOAC should be offered 20 per cent of the equity capital of the airline;

(e) In the event that BOAC was unwilling to take 20 per cent of the equity capital of the airline, a similar offer should be made to another reputable airline company;

(f) Representatives of the TT government should meet representatives of BOAC on the following day to commence negotiations for the proposed purchase;

(g) This government should notify the UK government, the federal government, and the governments of the unit territories of the West Indies as well as of British Guiana and British Honduras, of its intention to acquire BWIA;

(h) When given the above notifications, this government should seek the assurance;

(i) From all the above governments, it is stated that the licences held by BWIA would continue to be valid after the acquisition of the airline by the TT government;

(j) From the UK government, that BWIA would continue to be a designated carrier after the acquisition of the airline by this government.

The decisions at (g) and (h) were implemented the same day, October 3, 1961.

Four days later, on October 7, 1961, a reply was received from the federal government offering its services in a co-ordination capacity in dealing with any problems that might arise affecting the continuation of direction services to any of the other unit territories, on securing of route rights, etc, as well as in any other that might be required.

In the meantime, using as a basis the report submitted by Sundaram, this government had entered into negotiations with representatives of BOAC on October 4, 1961. These negotiations were completed on October 7, 1961, BOAC having agreed to acquisition from November 1, 1961, the price being $2.5 million.

This was less than half the value originally placed on the airline by the company (BOAC).

 

The struggles to establish a regional air carrier

PART TWO

In 1955, the board decided that BWIA had to acquire larger aircraft to expand its route network and selected the UK-manufactured Vickers Viscount 700 series aircraft, which was the world’s first turboprop-powered airliner to enter commercial service.

To finance the purchase of four Vickers Viscount aircraft with spares, 75 four per cent redeemable debentures were issued at $100,000 each to a total value of $7,500,000.

Fifty-five were redeemed, leaving a balance of 20, valued at $2,000,000.

Viscount operations commenced in January 1956, on the route between Trinidad and Bermuda.

Direct connections were made to New York by a Viscount service operated over this sector under charter to BOAC.

In December 1956, BWIA commenced Viscount operations between Miami and Jamaica, subsequently extending through San Juan to Trinidad.

Effective December 1960, Viscount aircraft were withdrawn from the Trinidad-New York services and replaced by Britannia B 312 aircraft chartered from BOAC.

These services were flown by BOAC on a chartered basis, with BWIA having financial interests.

Chartering the Britannia B 312 aircraft freed up the Viscount aircraft to provide Guyana with an all-Viscount operation and to step up the frequencies on the Trinidad-Miami services.

In June 1961, the Britannia B312 aircraft operating the once-weekly service, Trinidad-New York-London, was replaced by a BOAC Boeing 707-420 aircraft in BWIA colours.

The government of TT acquired BWIA from BOAC in November 1961.

The circumstances that led to the acquisition were fully outlined in a statement by Dr Eric Williams on March 23, 1962.

The following is a quote from Hansard: “In view of statements which have been appearing from time to time in the press and other places about the action of the Trinidad government in acquiring the British West Indian Airways at a cost of $2.5 million, the following historical summary is set out for the information of the public.

“On May 6, 1961, notification was received by the federal government that Her Majesty’s government could no longer afford to meet the operational losses incurred by BWIA through its parent company, BOAC, a nationalised undertaking of the United Kingdom government. The loss forecast for 1961-62 was estimated at £741,000. Her Majesty’s government had therefore directed BOAC to carry out a drastic reorganisation of the BWIA programme to restrict their anticipated loss under £200,000.”

BOAC had therefore proposed a drastic curtailment of BWIA operations and a retrenchment of 700 employees.

The federal government protested strongly against these proposals.

In a savingram dated May 11, 1961, it was pointed out, inter alia that:

(i) It was the declared policy of the federal government to acquire a controlling interest in BWIA and BOAC was aware of this.

(ii) BOAC had agreed to draw up in association with BWIA, a long-term overall operational plan to enable the federal government to consider financial implications; no such plan had yet been submitted to the federal government.

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(iii) With a view to expediting finalisation, the federal government in March 1961 addressed a questionnaire to BOAC and BWIA about future plans and proposed operations by the airline but no reply had been received.

(iv) The federal government had proposed in April 1961 the setting up of a “working party” to examine the internal structure of BWIA in the interest both of the airlines and the federal government; although this proposal had been accepted in principle by BOAC, no positive proposals had yet been made to the federal government.

(v) If BOAC had co-operated by providing the material as promised, the serious position could have been well on the way to being overcome.

(vi) Proposals outlined, on the basis of the Tymms Commission Report, would appear to mean the demise of the airline.

(vii) BWIA had never been given the opportunity to improve its services or its organisation to meet the needs of the West Indies, since BOAC had repeatedly imposed operational plans on them only to vary them shortly after to meet the convenience of BOAC’s own plans.

The federal government therefore requested a postponement of the reorganisation programme pending the report of the working party mentioned earlier.

In reply, the secretary of state indicated that if the federal government required time to consider a plan for acquisition of majority holdings in BWIA and to remit the question to a working party, two courses only seemed possible:

(a) The reorganisation should be initiated forthwith, or,

(b) The reorganisation might be deferred if the federal government undertook to reimburse any loss in excess of its stipulated maximum of £200,000.

The federal government stated that it would welcome any views that any territorial government might wish to express on the general condition affecting BWIA and on a course of action which the federal government might usefully pursue.

At a meeting on May 27, 1961, between the federal government and representatives of unit territories, summoned to discuss the United Kingdom/United States Bilateral Air Services Agreement, the Federal Minister of Communications and Works raised the question of the imminent retrenchment and reduction of operations of BWIA stating that BOAC quoted price for BWIA was $10 million and asked representatives what could be done by unit governments in this context. None of the representatives were able to give any commitment on behalf of their governments.

Two days later, on May 29, 1961, representatives of the BWIA administration and of the Caribbean Air Transport Trade Union (CATTU) met the Trinidad Minister of Industry, Commerce, Tourism and External Communications, and placed their problems before him. The minister promised to hold himself available to meet the board of directors of BWIA on the following day.

On May 30, before attending the meeting of the BWIA board of directors, the minister spoke to the Federal Minister of Communications and Works and informed him, as the situation stood, the federal government could do nothing.

To be continued in Part III

 

The struggles to establish a regional air carrier

PART ONE

The government left no stone unturned to achieve the financial viability of British West Indian Airways (BWIA) and to have it designated as the regional carrier. Since its acquisition, the government pumped billions of taxpayers’ dollars into BWIA and later its successor Caribbean Airlines Ltd (CAL) to keep the airline nose up.

With the outbreak of World War II, air services by extra-regional airlines such as Pan American World Airways (Panama), Royal Dutch Airlines (KLM) and British Overseas Airways Corporation (BOAC) were suspended.

The British colonies in the West Indies were virtually cut off from each other and the rest of the world as shipping lanes became vulnerable to attacks by German submarines.

The UK Air Ministry suggested that an airline be established with its base in TT to serve the Caribbean region.

Lady Young, the wife of Governor Sir Hubert Young, invited New Zealand-born Lowell Yerex, the founder of Transportes Aeros Centro Americanoes (TACA), to start up an airline in TT.

In 1941, the agreement between Yerex and TT was, with the approval of the respective governors and the Colonial Office, extended to include the Leeward and Windward islands. These agreements were valid for ten years.

In return for providing air services between the British territories in the Caribbean, the agreement protected Yerex from foreign competition on such routes.

The government of Barbados declined to participate on the grounds that it was against the establishment of such a monopoly.

Negotiations with Yerex concluded in May 1943 with the formation of British West Indian Airways (1943) Ltd (BWIA) as a public limited liability company.

Yerex acquired two Lockheed Model 18 Lodestar aircraft and began daily services from TT to Barbados.

Lockheed Loadstar aircraft –

The original allocation of the $1 million nominal share capital was 60 per cent to Yerex, 20 per cent to TT, and 20 per cent to the West Indian public. After the formation of BWIA, additional shares to the value of $502,700 were issued.

In October 1943, Yerex contracted to sell 40 per cent of his BWIA holding to American interests in TACA.

This would have resulted in a revised shareholding of 40 per cent for TACA, 20 per cent for Yerex and 40 per cent for the British West Indies, placing Yerex in a controlling position to move either in favour of American interests or West Indian according to the dictates of the moment.

It was decided that the controlling interest in the company must remain British.

At that time, BWIA needed further capital, and the board approved the issue of additional shares to TT valued at $200,000.

This resulted in a revised share allocation of 43 per cent to TT, 40.5 per cent to Yerex and TACA and 16.5 per cent to other West Indian governments and private investors.

Also in 1943, BWIA extended its route network throughout the islands of the Eastern Caribbean.

BWIA was further contracted by the United States Army Engineer Department to operate services between Miami and Trinidad.

BWIA also began airmail services between the islands at a rate of five cents per half-ounce letter.

In 1944, BWIA extended its route network to Dominica, Jamaica and Belize, thereby establishing an airlink between the eastern and western Caribbean regions.

In 1945, BWIA extended services to Georgetown, Guyana, following the construction of the airport at Atkinson Field, Timehri.

On September 30, 1947, British South American Airways Corporation (BSAA) acquired the interests of BWIA.

On June 24, 1948, BSAA restructured BWIA as a private limited company for the purposes of expanding the operations already commenced.

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The new company did not commence operations in its own name until July 1, 1948.

In the interim, operations were carried out in the name of British International Airways Ltd (BIAL), a subsidiary of BSAA.

The share capital of the restructured BWIA was $3 million, of which $2.5 million was issued and $1,500,300 paid up.

The new company, British West Indian Airways Ltd (BWIA), took over from its predecessor, the unexpired portion of an agreement made on January 24, 1994, between BWIA (1943) Ltd and the governments of TT, Leeward and Windward Islands.

The new company was given the exclusive rights to:

(1) To operate services between the various islands, with the services operated by Panama between Trinidad and Antigua not being regarded as an infringement of that right.

(2) To carry all terminal mail between the various islands at the rate of $3 per pound and to carry transit mail, when required, at a rate of $1,000 per pound except terminal and transit mail to Barbados and between TT at the rate of $1,500 per month.

(3) A quarterly subsidy was to be paid to the company equivalent to the amount paid by them in respect of customs duties, rents, rates and taxes, and landing fees.

(4) Passenger fares were to be based on a maximum of 12 cents per mile, and goods were to be charged for at the rate of one per cent of the one-way passenger fare per pound.

(5) Landing fields and aerodrome facilities were to be provided by the governments concerned at their expense.

(6) The lease of a suitable site at Piarco Airport, Trinidad, was to be granted to the company.

(7) The company was to use aircraft and equipment exclusively of British manufacture, provided that until suitable aircraft and equipment of British manufacture were available, aircraft and equipment of US manufacture could be used.

The Airways Corporations Act, 1949, brought about the merger of BOAC and BSAA with effect from July 30.

This resulted in a reorganisation of the board of the company with an increase in local representation.

BOAC also acquired British Caribbean Airways Ltd, a Jamaican-based airline operating from Jamaica to Miami and Nassau, and merged its operations with those of BWIA.

Navigation and engineering schools were also established in 1949 in Trinidad to improve the technical and operational standards.

The balance of issued capital was fully paid up in 1950 to the total of $2,500,000 in 1953, following the demise of Caribbean International Airways, a local airline based in the Cayman Islands.

BWIA took over the operation of their services between Jamaica and the Cayman Islands.

This became part of the BWIA’s Miami to Jamaica route.

To be continued in Part II

The formidable aviatrix Margaret Rose Mary Young

Margaret Rose Mary Young (Lady Young), the wife of Sir Hubert Winthrop Young, the governor of TT (1938-1942) was a formidable aviatrix who altered the course of aviation in the English-speaking Caribbean.

Sir Hubert Young, a former military officer turned diplomat, was the governor of northern Rhodesia – a British protectorate in southern Africa that is now the independent country of Zambia – from 1935 to 1938, prior to his posting in TT.

He arrived in northern Rhodesia at an important time, facilitating the shift of the colonial administration from Livingstone to the new capital of Lusaka.

On February 28, 1935 at about 08.10 am, Lady Young took off from Livingstone in her two-seater aircraft, a de Havilland DH 60G Gypsy Moth, to join her husband in Lusaka.

Having not fully recovered from a recent bout of malaria, Lady Young was accompanied by a senior government medical officer, Dr TRF Kerby.

She was to cover a distance of 291 miles from Livingstone and was estimated to arrive in Lusaka at about 11.00 am that morning.

The Gypsy Moth had a maximum speed of 89 knots, a cruising speed of 74 knots and range of 320 miles.

It was an overcast morning and visibility was very poor. However, Lady Young was renowned as an expert pilot and there were no fears for her safety.

After taking off from Livingstone, she encountered areas of high turbulence.

In spite of the poor visibility, she used her compass to keep her little aircraft on course. Sometime later, she saw a large river below which she took to be the Kafue river. She thought Lusaka could not be far away. She passed over the river, but instead of the sprawling buildings of the new capital, she saw what she recognised as the Kariba Gorge. She was far off course and had petrol reserves for about twenty minutes flying time.

It appeared that the turbulence had loosened the locking screw of the aircraft compass, which became inaccurate.

She desperately tried to locate a suitable landing site.

In an extremely forbidding terrain, the only landing area possible was what appeared to be a patch of maize.

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As she braced for impact, Lady Young realised that it was in fact a patch of 14 foot high kaffir corn.

The stalks entwined themselves around the undercarriage and the aircraft toppled over coming to a rest upside down.

She managed to scramble out of the wreck, but Dr Kerby was trapped in his harness, covered in petrol.

He managed to free himself, and to their great relief, they found each other still alive.

The only injury was a cut on Lady Young’s nose.

The time was about 11.40 am when she had landed in the Gokwe district of southern Rhodesia.

Meanwhile in Lusaka, shortly before 11.00 am, Sir Hubert Young and a welcoming party of friends and officials gathered at the Lusaka airport eagerly scanning the sky for a glimpse of the little aircraft. When there was no aircraft sighting by 11.15 am, they exchanged apprehensive glances.

Soon afterwards, they realised that something serious may have occurred, and took immediate steps to organise search parties.

Messages were telegraphed and telephoned along her route. Two aircrafts and numerous police and railway personnel joined in the search.

Patrols by rail-trolley and road were sent out, and a medical centre was set up at Monze, Zambia with a fully-equipped hospital train.

At about 9.30 am, a report was received that the aircraft had been seen near Choma, in northern Rhodesia, slightly to the west of the normal course.

Other reports of sightings were received, but could not be substantiated.

The search continued throughout the night, using flares and torches, but to no avail.

By early next morning, 200 men of the Northern Rhodesia Regiment together with six white officers, 200 policemen and 170 railway men joined the operation which now had about 600 men on the ground in addition to many civilian volunteers.

An operations base was established in Choma, under control of the governor.

At the high point of the search, there were 19 aircraft involved in the search, including six Westland Wapiti single-engine biplanes dispatched by the South African Air Force.

The area from Livingstone to Broken Hill (now Kabwe) was carefully mapped, and thoroughly swept by very low-flying aircraft.

Ground patrols operated throughout the day and at night using flares.

It was the most extensive search ever mounted in northern Rhodesia.

Lady Young and Dr Kerby were found by local villagers who carried her on a litter (carrier) through dense jungle for 90 miles to their village. Dr Kirby walked alongside.

Lady Young wrote a note on the back of an envelope stating that she was alive and gave to a foot messenger to take to “any white man.”

Soon after 5 pm on March 4, the messenger arrived at the Native Commissioner’s camp at Gokwe, Rhodesia bearing the dramatic message from Lady Young.

Commissioner F Marr immediately set about transmitting the information by Morse Code.

At 5.15 pm he made contact with RA Jubb, the Government Meteorological Officer in Bulawayo, and it was promptly passed on to the relevant officials in southern and northern Rhodesia. Within hours, word spread that Lady Young had been found.

Sir Hubert Young went on to become Colonial Governor of TT.

When World war II broke out in September 1939, Lady Young, a known strategic thinker, knew that shipping lanes between the Caribbean and Europe would be disrupted. She decided to establish airlinks between TT and the United States.

She invited Lowell Yerex, a New Zealand-born aviator, to start up an airline in TT.

He went on to found British West Indian Airways (BWIA) in TT in 1940 which became the first airline in the British West Indies.

BWIA played a pivotal role in the development of the airline industry in the English speaking Caribbean.

 

Why CAL grounded Montego Bay, Kingston to Ft Lauderdale routes

In a media release on September 23, Caribbean Airlines Limited (CAL) announced that effective November 2, it will discontinue flights between Fort Lauderdale, Florida and Montego Bay and Kingston in Jamaica as part of its ongoing network optimisation programme which would include a continuous evaluation of routes for the sustainability and efficiency of the airline across its entire network.

In January 2019, CAL discontinued its non-stop Montego Bay to Fort Lauderdale route and consolidated its South Florida service through Kingston.

CAL resumed operating flights from Kingston to Fort Lauderdale since December 2024, and Montego Bay to Fort Lauderdale since March 2025 using a leased all-economy class Boeing 737-800NG with 189 seats.

CAL said that the decision to restart the service was based on customer feedback and targeted the 300,000 plus Jamaicans living in Fort Lauderdale and the surrounding areas.

Flights on both routes operated with less than breakeven load factors which begs the question about any robust market research that was done to justify the resumption of the two routes.

According to aviationdb.net (Aviation Database) as reported in the Jamaica Observer of September 24, the Kingston to Fort Lauderdale route had 5,859 available seats in May, but only 1,892 passengers utilised the service. That translated to a 32 per cent seat utilisation rate with 31 departures. Spirit Airlines had an 80 per cent seat utilisation rate with 6,899 seats available and 31 departures for the month. JetBlue Airways had an 88 per cent seat utilisation rate with 10,454 seats and 68 departures.

The Fort Lauderdale to Kingston route had a 29 per cent seat utilisation rate or 1,675 passengers in May for CAL with 5,859 seats. Spirit Airlines had a 69 per cent seat utilisation rate while JetBlue’s rate was 86 per cent for the same route.

The Montego Bay to Fort Lauderdale route for CAL had a 39 per cent seat utilisation rate in May over 31 departures with 2,271 passengers relative to 5,859 seats. Southwest Airlines had a 58 per cent seat utilisation rate with 510 passengers compared to 875 seats and five departures for the month. JetBlue had a 75 per cent rate with 9,966 seats over 66 departures while Spirit Airlines had a 77 per cent rate with 7,025 seats over 31 departures in May 2025.

The Fort Lauderdale to Montego Bay route for CAL had a 40 per cent seat utilisation rate over 31 departures with 2,361 passengers. Spirit Airlines had a 77 per cent rate over 31 departures with 5,377 passengers while JetBlue Airways had a 79 per cent rate over 65 departures with 9,804 passengers. Southwest Airlines had an 81 per cent rate over five departures with 709 passengers in May.

CAL’s attempts to attract passengers with promotions such as discounted mileage redemptions and reduced fares failed miserably to achieve higher load factors.

Chief commercial officer, Martin Aeberli said. “Caribbean Airlines remains steadfast in its mission to connect people and communities across the region and beyond. We will continue to serve Jamaica and the diaspora through other gateways within our network.”

Despite Aeberli’s optimism, CAL is not the Jamaican diaspora airline of choice as they see CAL as “not we airline” which is symptomatic of the unacknowledged deep sociopolitical divide between TT and Jamaica. The Jamaican diaspora prefer to travel with other competing airlines.

With the proposed cessation of Air Jamaica (AJ) operations, the governments of Jamaica, TT and CAL on May 26, 2011, signed an agreement that allowed CAL to operate seven return routes from Jamaica to North American destinations: Atlanta, Boston, Chicago, Toronto, New York (JFK) Miami and Fort Lauderdale.

The agreement allowed CAL to use the “AJ” brand which was valued at US$28.5 million and when converted into equity, gave Jamaica a 16 per cent shareholding in CAL. Under the agreement CAL would assume the responsibility for any losses on the seven routes. CAL rehired hundreds of former AJ employees such as pilots, flight attendants, maintenance personnel and ground handling personnel.

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This entire arrangement between the governments of Jamaica and TT over CAL and Air Jamaica has been misrepresented by the media and other key stakeholders. There was never a merger of CAL and AJ or a takeover of AJ by CAL by sale or otherwise.

Instead of making hundreds of million of dollars on these routes as forecasted, CAL lost hundreds of millions because of poor load factors on most of the routes.

In 2012, CAL operating loss was TT$629,942,000. Effective April 2013, CAL dropped three loss-making routes and reduced the frequency on the other routes.

In May 2013, Jamaica’s minister of transport and works informed the Parliament that CAL had cut the number flights in and out of Jamaica, a move with which the government of Jamaica disagrees as the number of flights were way below that originally agreed with CAL.

Subsequently, a Jamaican delegation led by the minister met with a TT delegation to resolve the impasse. CAL justified its decision by pointing out that the Jamaican diaspora travelled with other airlines causing the routes to become unprofitable.

Surprisingly, the minister stated that the Jamaican diaspora was upset with CAL for not hiring enough Jamaican citizens at the line stations.

This was vehemently debunked by CAL which provided statistics to show that Jamaican citizens comprised a significant portion of its work force at the lines stations. CAL further stated its corporate VP-human resource with responsibility for staff recruitment was a former AJ employee.

A second meeting was held in Jamaica at which CAL held its ground and the matter eventually fizzled out.

The approximately one billion TT dollars injected into CAL by the People’s Partnership government was converted into equity and the resulting share dilution reduced the Jamaica government’s shareholding in CAL to 11 per cent.

It is important to note that even though CAL still employs hundreds of Jamaicans, during CAL’s financial turbulence from 2011 to this day, the Jamaican government has not put a single dollar into CAL’s coffers, a burden that is carried by the TT taxpayers.

During the tenure of the last government, the almost one billion dollars injected into CAL were never converted into equity.

And finally, why is CAL’s logo a scissors tail hummingbird which is the national bird of Jamaica, instead of the scarlet ibis?

 

Boosting air connectivity through collaboration

The air transport industry is strategically important because it is a vital economic engine, fostering growth in global trade, tourism and employment, while providing essential connectivity for national and international integration and social cohesion.

It enables high-speed access, connects peripheral regions and supports diverse economic activities.

Airlines are the primary facilitators and service providers of the air transport industry, fulfilling crucial roles in global connectivity, economic development and the rapid movement of people and goods.

They achieve this by operating aircraft fleets, managing flight schedules and services, and generating revenue through the sale of passenger tickets and cargo space.

Airlines serve as vital catalysts for trade and travel, connecting economies and societies.

Airlines ensure the safety and comfort of passengers throughout the entire journey from check-in, boarding, in-flight services and baggage retrieval upon arrival at the destination.

They also provide cargo services, which is vital for global trade, by transporting goods via dedicated cargo aircraft or in the belly of passenger aircraft.

Global economy: Primary driver of air transportation

Strong GDP growth, a rising middle class and increased urbanisation expand the potential passenger base, particularly in emerging markets like North America, Europe and the Asia-Pacific.

Global economic factors significantly impact aircraft manufacturing by influencing airline demand, production costs and overall industry health.

Strong economies boost demand for new aircraft as airlines and businesses expand, while recessions reduce demand, leading to deferred orders and slower fleet renewal. Economic factors like inflation, interest rates and fuel prices increase production and financing costs, affecting both manufacturer profitability and aircraft affordability. Additionally, supply chain disruptions, often linked to economic or geopolitical instability, can delay production, further impacting the industry.

Industry collaboration

The collaboration between airlines and aircraft manufacturers in deciding the fleet requirements for airlines is a very complex process that synthesises macroeconomic and geopolitical factors based on market intelligence.

It builds comprehensive, long-term projections on airline future aircraft needs.

As the primary operators of aircraft, airlines have a deep understanding of their commercial needs.

During the development phase of a new aircraft, airlines can provide technical feedback to manufacturers on aspects like range, fuel economy, maintainability, seating configuration and passenger comfort.

Manufacturers then use this input to develop new aircraft models or variants that meet these specific airline demands, fostering a partnership that shapes the future of aviation.

Airlines’ fleet strategies and their assessments of future market trends provide vital information for manufacturers to develop aircraft that will be competitive.

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Aircraft manufacturers like Airbus and Boeing integrate these airline requirements into the design of their aircraft.

This involves a careful balancing of competing factors, such as payload capacity, operating costs, range and noise levels.

This collaboration can lead to the development of new aircraft models tailored to specific airline needs or the creation of variants of existing aircraft with updated features.

In some cases, airlines and manufacturers can form joint development programmes where they work together to define the specifications for a completely new aircraft type.

This close relationship ensures that the aircraft manufactured are not only technologically advanced but also commercially viable and meet the specific operational needs of the airlines that will acquire and operate them. The result is a continuous evolution of aircraft design, driven by the collaboration between manufacturers and their airline customers.

In the early 60s, the four-engine Boeing 747 was conceived as a joint venture between Boeing and Pan American Airways (Pan Am).

Juan Trippe, president of Pan Am and one of Boeing’s most important airline customers, asked for a new jet airliner two and a half times the size of the Boeing 707, with a 30 per cent lower cost per available seat mile and the capability to offer mass air travel on international routes.

The result was the world’s first twin-aisle wide-body Boeing 747 dubbed the “jumbo jet.”

In April 1966, Pan Am, as the launch customer, ordered 25 Boeing 747-100 aircraft for US$525 million.

Boeing delivered 1,573 B 747 to airlines all over the world.

The three-engine DC-10 was the second wide-body aircraft type to be introduced and was built by Mc Donald Douglas based on an initial proposal from American Airlines for a twin-engine wide-body aircraft smaller than the Boeing 747, yet capable of flying similar long-range routes from airports with shorter runways. It entered commercial service with American Airlines in 1971.

The Airbus A300 is Airbus’ first production aircraft and the world’s first twin-engine, double-aisle wide-body airliner.

It was developed by European aircraft manufacturer Airbus Industrie GIE, as a competitor to the US-manufactured B747 and the DC-10.

In 1974, the first A300 entered service with launch customer Air France, flying from Paris to London. A total of 561 A300 and its variants were built.

The Airbus A380, nicknamed “superjumbo,” is a very large wide-body airliner, developed and manufactured by Airbus.

It is the world’s largest passenger airliner with the only full-length double-deck.

The first A380 was delivered to Singapore Airlines and entered service in 2007

Airbus delivered 251 Airbus A380 aircraft with the largest operator Emirates, followed by Singapore Airlines, Lufthansa, Qantas and British Airways.

In 2015, Boeing determined the market was large enough to launch the New Midsize Aircraft (NMA).

In 2017, multiple airlines expressed interest in a composite, seven-abreast twin-aisle with an elliptical cross-section culturally referred to as the Boeing 797.

In June 2022, Boeing indicated that it would not pursue development of the NMA for “at least a couple of years,” until significant progress has been made on the next generation of engines and new digital development tools are sufficiently mature.

The average age of the global fleet is constantly changing. Manufacturers forecast the replacement cycle for older, less fuel-efficient aircraft with newer, more advanced models.

Jet fuel is a major operating cost for airlines. Manufacturers factor in price forecasts when designing new aircraft, as fuel efficiency is a significant selling point for airlines seeking to control costs and improve profitability.

They also consider advancements like electric and hybrid propulsion that could affect future demand.

 

Airborne assets can help secure Trinidad and Tobago’s porous borders

Trinidad and Tobago has long struggled with porous borders, a crucial vulnerability exacerbated by its strategic location approximately seven miles from Venezuela. This vulnerability facilitates a wide range of transnational criminal activities, including illegal immigration, human trafficking and the smuggling of weapons and drugs.

Border protection is a complex, multi-layered effort that integrates technology, policy and inter-agency co-operation to manage and secure TT’s maritime and shoreline areas.

Surveillance and detection systems using modern technology is critical for comprehensive coastal surveillance, providing real-time situational awareness and the ability to detect threats across territorial airspace and waters.

Billions of taxpayers’ dollars were invested in air assets and aerial surveillance systems to enhance border security with very little return.

On September 18, 2008, during the TT Air Guard’s fourth anniversary commissioning, national security minister Martin Joseph announced the acquisition of four AgustaWestland (now Leonardo) AW139 helicopters, at a cost of $ 2.2 billion.

The minister stated that the role of the helicopters, to be operated by the Air Guard, would include surveillance and reconnaissance support, border protection, firefighting, maritime search and rescue and air interdiction.

TTCAA’s radar installation at Morne Catherine Chaguaramas. –

To fulfil their stated mission, the AW139 helicopters were configured with state-of-the-art advanced avionics packages, including a radar system coupled with a forward-looking infrared (FLIR) system for detecting maritime targets and transmitting real-time video feeds to the land-based command centres for strategic and tactical decision-making.

On April 28, 2011, two of the four AW 139 helicopters arrived at the Air Guard base at Piarco International Airport.

AgustaWestland and TT executed a five-year agreement to provide flight operations, maintenance and training support in accordance with civil aviation regulations at a monthly cost of approximately US$3.4 million.

On June 29, 2017, Prime Minister Dr Keith Rowley announced that cabinet, having considered a proposal to engage another provider for AW139 operations and maintenance support services, decided that TT could not afford to spend $200 million a year to maintain the four helicopters and grounded the AW139 fleet.

At that time, state-owned National Helicopters Services Ltd (NHSL) was acquiring AW139 helicopters.

The Air Guard AW139 helicopters could have been easily integrated into the NHSL fleet, resulting in tremendous savings in operations and maintenance costs.

In May 2019, in responding to media questions about the Air Guard, then Minister of National Security Stuart Young announced that an integrated Air Unit is expected to be introduced in the country’s national security apparatus soon.

Young stated, “I intend to go to cabinet very shortly to ask for the approval of helicopters for an air unit that will be manned predominantly by the Air Guard.”

Young added that the assets will be available to various arms of the national security apparatus.

The assets will be based in Cumuto, but they will be assets that all three arms of national security can tap into.

In May 2021, during the passing out parade ceremony of recruits at the Tetron Barracks, the Minister of National Security announced that the government is seeking to reintegrate one of the AW139 helicopters into service to the Coast Guard, as well as any other aerial requirements, “in support of the business of national security.” This never happened.

Equally important is the prevention of penetration of TT’s sovereign airspace by unauthorised aircraft and unmanned aerial vehicles (UAVs) that may be engaged in illicit activities.

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In 2007, the TT Civil Aviation Authority (TTCAA) developed specifications for a secondary surveillance radar (SSR) system for air navigation purposes.

The radar package included a primary surveillance radar (PSR) system at a cost of approximately $54 million, with adequate range for the surveillance of TT’s sovereign airspace.

Once the aircraft is airborne, the SSR continuously interrogates the ATC transponder, which replies to each interrogation signal by transmitting encoded data such as the aircraft type, flight number, heading, speed and position. This information is displayed on the air traffic controller’s radar screen.

However, aircraft engaged in illegal activities can switch off the transponder which makes the aircraft invisible to SSR.

On the other hand, a PSR system, independent of pilot’s actions, can detect all moving airborne objects and display the “targets” on the radar screen.

In 2006, an Israeli-made 360-degree ELM-2226 Advance Coastal Surveillance Radar (ACSR) system was purchased and which is perhaps the best coastal radar system in the world.

In 2018, the system was upgraded at an estimated cost of TT $ 50.5 million.

The radar can automatically detect and track more than 900 targets under adverse sea conditions.

The ELM-2226 has a detection range of 20 nautical miles for rubber boats, 60 nautical miles for patrol craft and up to the radar horizon for large ships.

A main objective was to integrate both the coastal radar data and the airborne PSR data for display on a single screen at the national security command centre. The integration software can differentiate maritime targets from airborne targets using different colours displaying craft type, location, heading, speed and altitude. In this way, the command centre can have real-time “sight” of all aircraft and maritime vessels in TT’s sovereign territory.

The equipment for providing the PSR data to the Coast Guard command centre was never installed for reasons best known to the Coast Guard.

The integration software was never developed due to no agreed-upon configuration for the display format of the radar data.

In 2016, the TTCAA met with the Minister of National Security and the Chief of Defence Staff and offered to provide the technical resources for the installation of the data link and fund the provision of the integration software. The TTCAA offer was declined.

The data link equipment is presently stored in boxes at the TTCAA facilities.

In the meantime, the four AW139 helicopters, winching equipment and the bambi buckets are presently lying idle and deteriorating at the Air Guard Piarco base with depreciating values.

In these times of scarce financial resources, the way forward is to enter into negotiations with Leonardo for the return all four AW139 helicopters.

Two of the four AW139 helicopters should be completely overhauled and returned in full operational configuration.

One AW139 helicopter can be based at Cedros for rapid response operations.

The airborne PSR system requires a software upgrade before integration with the ELM-2226 ACSR coastal radar system.

 

The aircraft manufacturing oligopoly

An oligopoly is a market in which pricing control lies in the hands of a few sellers.

Firms in oligopolistic markets, as a result of their significant marketing power, can influence prices through manipulation of the supply function.

These firms are mutually interdependent, as any action by one firm is expected to affect others in the market and evoke a consequential action.

The commercial jet aircraft manufacturing industry is a global oligopoly, evolving into a duopoly dominated by Boeing and Airbus, a structure characterised by high barriers to entry, immense development costs and a strong interdependence between the few major players.

This situation results from the high capital investment, technological complexity and significant economies of scale required to produce large passenger jets, leading to a limited number of competitors capable of serving the global market.

The key players in the duopoly are Airbus and Boeing.

Airbus is a European multinational corporation that offers a wide range of commercial aircraft, including the best-selling A320 family for narrow-body routes and the A350 for long-haul routes.

Boeing is a major American aerospace company with a substantial global market share.

Its well-known commercial airliners include the 737, 777, and 787 Dreamliner.

Other competitors, such as Canadian Bombardier and Brazilian Embraer, while not directly challenging the large jet duopoly, compete in more niche markets such as regional jets and turboprops.

The key characteristics of the aircraft manufacturing oligopoly are:

·High barriers to entry: The cost and technical expertise needed to enter the commercial aircraft market are enormous, preventing new companies from easily challenging established players.

Developing a new commercial jet aircraft is extremely expensive, with costs ranging from $5 billion to over $20 billion.

The return on this massive investment can take decades.

·Strict certification regulations: Aircraft manufacturers must meet the stringent safety and environmental standards of regulatory bodies like the Federal Aviation Administration (FAA) and European Union Aviation Safety Agency (EASA).

The certification process is long, rigorous, and expensive.

·Dominance of a few firms: The market for large passenger aircraft is essentially a duopoly, with Boeing (American) and Airbus (European consortium) being the dominant firms.

·Strategic dependence: Airlines become heavily dependent on either Boeing or Airbus for long-term fleet planning, maintenance and operational compatibility, making them vulnerable if either manufacturer faces major problems such as supply chain disruptions, regulatory compliance or labour issues

·Interdependence: Boeing and Airbus operate in a highly interdependent market, meaning that the strategic decisions of one firm significantly impact the other.

·Economies of scale: Both companies benefit from economies of scale, a factor crucial for producing aircraft at a competitive cost due to their complex and long production processes.

·Technological innovation: The industry thrives on continuous innovation, with each firm pushing technological boundaries to maintain a competitive edge and meet evolving airline demands.

To maintain their market share, firms invest heavily in research and development to create new aircraft models and technologies.

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Designing and producing safe, fuel-efficient aircraft requires cutting-edge expertise in aerodynamics, propulsion, avionics and materials.

Innovation is ever-evolving, and new players must achieve comparable or superior technology to compete.

·Strategic relationships: Success in this oligopoly depends on strong strategic relationships with major airlines and governments worldwide, which are essential for securing large orders, arranging financing and influencing market direction.

·Market power: The limited number of manufacturers gives Boeing and Airbus significant market power, influencing pricing and supply.

The dominant players often avoid price wars, leading to a degree of price stability in the market.

·Limited competition: The duopolistic nature limits direct competition, leading to a stable, albeit intense, rivalry between the two giants rather than a broad competitive landscape.

While firms may compete on price, much of the competition is non-price, focusing on innovation, product features and after-sales support.

·Impact on airlines: The oligopolistic pricing power of aircraft manufacturers places pressure on airlines, which operate in a highly competitive environment where they must balance high operating costs with passenger demand.

·Reduced efficiency and vulnerability: A duopoly can lead to inefficiencies and complacency.

When one dominant player faces a major setback, such as the Boeing 737 MAX groundings, the entire industry becomes more vulnerable to disruption.

The positive effects of oligopoly is in innovation and technology as the rivalry between Boeing and Airbus forces both companies to continuously invest in research and development, leading to more fuel-efficient, faster and technologically advanced aircraft that benefit airlines and passengers.

Also, Boeing and Airbus are manufacturing families of aircraft with common cockpit designs and components, which reduces pilot training and maintenance costs for airlines. An example is the Airbus A320 family consisting of the A318, A319, A320 and A321 aircraft.

Both Airbus and Boeing compete in the same market to meet the fleet demands of airlines.

The Airbus A320neo is the competitor aircraft to the Boeing 737 MAX.

The Airbus A350 “Trash Panda” is the competitor aircraft to the Boeing 787 Dreamliner. The common nickname emanated from the unique cockpit window paint scheme which features a black outline that resembles the mask of a raccoon.

Airlines want aircraft that are fuel-efficient, cost-effective to operate, and match the demand on their routes, with a preference for newer, modern designs that provide the best value and lower operating expenses.

Key factors influencing aircraft choice include the size of the aircraft required for passenger demand, cabin comfort, operational efficiency, lowest seat mile cost and ease of maintenance.

The operational efficiency of a standardised fleet is a critical success factor, particularly for “low cost” airlines that prefer to operate a single type of aircraft to simplify operations, reduce maintenance costs, and improve efficiencies in training, crewing and ground operations.

Examples of low cost airlines that operate standardised fleets include US Southwest Airlines that operates the Boeing 737 aircraft, Irish Ryanair that operates the Boeing 737 aircraft, Malaysian AirAsia that operates the Airbus A320 family of aircraft, US JetBlue that operates the Airbus A320 aircraft, UK EasyJet that operates an Airbus A320 family of aircraft and Indian IndiGo airlines that operates a mixed fleet of the Airbus A320 family of aircraft and the ATR 72- 600 aircraft.

In 2024, Airbus secured 826 new orders and delivered 766 commercial aircraft.

Likewise, in 2024, Boeing secured 569 new orders and delivered 348 commercial aircraft.

 

Caribbean Airlines needs a turnaround flight plan

On August 11, Prime Minister Kamla Persad Bissessar issued an ultimatum to the management of state-owned Caribbean Airlines Ltd (CAL) to “sort out the mess” in two years maximum or find a new job. PM Persad Bissessar must be commended for rein in what appears to be a runaway horse.

I worked at BWIA for over 31 years, half of which was spent in managerial positions, the last being director of flight safety.

As the DGCA, I became BWIA/CAL regulator for over 16 years. Therefore, I am quite knowledgeable about the air transport industry’s operations and regulatory dimensions.

I witnessed many attempts by previous governments, boards and management to position CAL and its predecessor BWIA to navigate a profitable flight path.

Numerous strategic business plans were developed, all of which failed to attain the cruising altitude for continued financial viability.

Consequently, billions of taxpayers’ dollars are spent to keep CAL nose-up.

The airline industry is highly capital-intensive, complex, hypercompetitive and dynamic.

This requires continuous innovation and process re-engineering in all areas of operations for CAL to be on course for financial success.

In its journey towards self-sufficiency, CAL needs a realistic turnaround flight plan that identifies critical waypoints such as a differentiated airline product with strong marketing and branding, strategies for enhancing revenues, optimal fleet utilisation, competitive pricing, robust cost management, operational efficiencies using automation technologies, performance reliability, safety and accountability at all levels.

Aircraft on the ground do not earn revenue. CAL must increase the average daily utilisation of its aircraft fleet.

If there is perennial excess capacity, the fleet size should be reduced, resulting in savings on lease costs.

CAL should enhance customer experience by providing excellent customer service from seat reservation, airport check-in, in-flight service and a seamless on-time journey.

This will differentiate CAL from its competitors, building customer loyalty.

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In 1994, another BWIA union colleague and I travelled to Washington, DC, to meet with Edward Acker, the CEO of Atlantic Coast Airlines (ACA), to discuss the privatisation of BWIA, which Acker was leading.

We met at ACA’s offices and held discussions with Acker about his plans to turn around BWIA.

Acker got up and walked to a marker board and drew two lines: a red line representing BWIA’s expenditures and below it, a black line representing BWIA’s revenues.

Acker said using the two core business strategies of reducing costs and increasing revenues, the red line will drop below the black line signifying profitability.

Surprisingly, Acker said he could not understand how BWIA was managed without information. When pressed to explain, Acker showed us a report on the previous day’s performance of ACA which he receives every morning at 9.00 am.

The report presented, on a route-by-route basis, the actual load factors, the breakeven load factors and the variance.

ACA marketing and sales executives had to report on the causes for the underperforming routes and the proposed remedial action.

Acker underscored that an airline’s performance cannot be managed, unless it can be measured.

Now, 31 years later, with today’s powerful airline accounting software, CAL’s IT department, using ACMI costs, variable costs and passenger revenue data, can provide real-time performance metrics for each route. The commercial and marketing departments can then analyse the routes’ performance and determine the causes for underperforming routes and initiate remedial actions.

CAL is rapidly losing market share to JetBlue on the POS/JFK route and to American Airlines on the POS/MIA route.

Is there any analysis of this market share loss to determine the strategies for regaining market share?

Mindful of price sensitivity, CAL’s commercial department in consultation with the marketing and sales department, must set competitive fares.

If not, CAL will continue to lose market share.

Through innovative revenue management and dynamic pricing, CAL can optimise the revenue per available seat mile (RASM) on all its routes.

Likewise, cost reduction measures will reduce the cost per available seat mile (CASM).

Recently, CAL added new destinations such as Puerto Rico, Martinique, Guadeloupe and Tortola to its route network.

Were these new destinations added on the basis of robust market research and analysis to determine the routes’ viability?

Likewise, has CAL done any market research on potential routes such as Bogota, Panama and Houston?

CAL needs to confront growing intra-regional competition.

Antigua and Barbuda-based LIAT Air is backed by Nigerian investors. It is expanding its Caribbean route network, obtaining route rights under the Caricom MASA.

However, the greater threat can come from a looming Guyanese-based airline that will operate flights to Panama, Toronto, New York, Fort Lauderdale and Houston.

There is an “open skies” BASA between the US and Guyana. Under the CASSOS agreement, Guyana can easily become an FAA IASA Category One country.

Due to the large Guyanese diaspora in North America, and its nascent oil industry, Guyana is fast becoming a lucrative air transport market.

CAL’s most valued asset and the drivers of success is its human resource capital.

A people-centric organisational culture seems lacking at CAL.

Its HR functions must be overhauled to promote an organisational culture that engenders trust, equity, shared values, teamwork and increased productivity.

The top management of most successful airlines discusses the airline’s draft strategic business plan with all employees at face-to-face meetings before presentation for board approval.

This fosters employee engagement and a buy-in to the business plan, boosting morale and goal-driven productivity.

There is disquiet at town hall meetings between employees and CAL’s senior-level team.

Employee questions are filtered, goading uneasiness among the employees that can be intimidating.

Giving employees a “welcome home” polo shirt is not engaging.

Management must ensure maximum employee engagement based on candour and two-way information sharing about CAL’s strategic goals, objectives and performance.

When in crisis, an airline’s senior-level team led by the CEO must be most visible, literally “walking the floor 24/7” discussing the operating results with employees in face-to-face meetings and encouraging employees’ suggestions for improved performance.

Clearly, CAL’s critical success strategies are not working. The root causes must be identified.

Meaningful management and employee teamwork is required to craft and implement an achievable and sustainable turnaround plan in quick time.

Failing this, Kamla 2.0 may stick to her ultimatum and end the largesse.