Peter Davies thinks he has a solution for the continuing financial woes of Caribbean carriers.
The chief executive of Caribbean Airlines, which in January succeeded BWIA West Indies Airways as the flag carrier for Trinidad and Tobago, would like to see one airline for the entire region. And he used Airline Business’ Network 2007 route planning event to air for the first time his bold plan to lead an initiative to establish one carrier for the entire region.
“There should be one airline,” he told airlines and airports attending the opening session today of Network 2007 in the Tampa Bay region of Florida.Davies believes bringing all the Caribbean carriers together may be the only solution if long-term profitability is to be achieved following several years of stiff losses. He claims all the major carriers in the Caribbean are now losing money, including Air Jamaica, Caribbean Airlines, Liat and Caribbean Star.
BWIA, which Davies shut down at the beginning of this year in favour of Caribbean Airlines, was unprofitable in all but two years of its 66-year history. And Davies says Caribbean Airlines will be unprofitable in 2007.
Liat and Caribbean Star are already well down the path to a full merger aimed at reversing their recent string of stiff losses. Their operations merged at the beginning of last month under the Liat name and they plan to complete their merger within the next few months. Davies has already approached the carriers about joining their merger. He envisions Antigua-based Liat, which only operates turboprops, feeding Trinidad-based Caribbean Airlines, which will only operate Boeing 737-800s and focus on connecting several Caribbean islands with North America.
Davies acknowledges persuading Air Jamaica to agree to a merger may be more difficult because it is now pursuing an aggressive strategy to create a hub for the entire Caribbean and Latin American region. He adds he “understands” why Air Jamaica wants to continue promoting Jamaica and one potential solution is to convert the carrier into a Caribbean Airlines franchise. Franchising, Davies says, will result in a significant reduction in back office costs which he says are too high at all carriers in the region.
But it’s not all about capacity cuts, which is good news for the airports attending this year’s Network event. Davies has cut several routes, including his carrier’s entire long-haul operations, but says the company now “is leaner and is in a better position to attack the market”. He promises Caribbean Airlines will begin to look at expansion again “in the next couple of months” including potential new routes to the USA.
But Davies warns Caribbean carriers are still “burdened by bureaucracy”. The Caribbean, he says needs to “wake up” and realise an unregulated market where the airlines are free to stimulate demand is critical for the region’s future prosperity.