According to a joke that circulates in the Caribbean, St Peter allows newly departed souls a chance to live again if they are able to pose a question for which he does not have an answer. The only person to be returned to earth so far is a Trinidanian who asked: 'When will there be unity in the Caribbean?'
The question of unity continues to vex heads of state, politicians and business managers across the region. There is much talk of unity and many business partnerships have been forged, but few have stayed intact. Islanders tend to be intensely proud of their own islands, each believing his landscapes, culture and schools to be the best. This understandable pride tends to wreak havoc on inter-island cooperative ventures.
Last June's launch of Montego Bay Airport in Jamaica as a hub for the entire Caribbean region therefore attracted much interest, as well as a heavy dose of scepticism. The launch was timed to coincide with a meeting of the heads of the Caricom economic community. Sitting on the distinguished guests' platform were the prime ministers and government leaders of almost every island in the region. P J Patterson, prime minister of Jamaica and chairman of Caricom, made unity a key theme in his opening speech. 'Although we are on Jamaican soil, this has positive vibrations for the entire region,' he said. 'I repeat an earlier call for us as Caribbean governments to increasingly see ourselves more as partners in the field of tourism than as competitors, because there is so much more which we can accomplish by working together. Air transportation provides the very best example of an area in which we must pool our resources for the common good.'
Patriot extraordinaire
This call for a unified approach to air transport, with Montego Bay at its centre, was music to the ears of one man in particular - Gordon 'Butch' Stewart, chairman of Air Jamaica. Creation of the Mo'Bay hub has been for the most part possible due to the efforts of Stewart, a prominent and lively Jamaican businessman, once dubbed by the country's main newspaper as a 'Jamaican patriot extraordinaire.' Stewart took the helm of Air Jamaica, becoming a major shareholder, in 1994 when the airline was privatised. He has made no secret of one of the chief attractions the airline held for him - its potential to feed more customers into his successful hotel resorts business.
Stewart has built up the Sandals resorts empire practically from scratch and its luxury hotels are now dotted across the Caribbean. Cleverly, Stewart studied the winning formula of the cruise ships - provide everything in a one-price-pays-for-all package - and created a landlubbers' version. Holidaymakers at Sandals arrive at the check-in lounge, where they are greeted with champagne, safe in the knowledge that they have already paid for their accommodations, tips, meals, sunbeds, entertainment and even alcohol. Minibars are stocked with full bottles of champagne and spirits at no extra charge. 'Give people more than they want, and give it to them with a smile,' Stewart is fond of saying.
Not everyone smiles at the mention of Sandals, however. Despite Stewart's contention that his resorts are a boon to tourism in general, some local hoteliers and restaurant owners point out that the all-inclusive philosophy of Sandals discourages its customers from spending money elsewhere. Many do not even leave the resort.
Stewart's own smile has become more stoical since he ventured into the airline business in 1994, reportedly putting up $14 million for a 47 per cent share of Air Jamaica.The airline is thought to have lost some $40 million a year in the period leading up to privatisation and its financial woes have since been compounded. Some believe the losses in 1997 alone will total around $70 million. Stewart admits only that the airline lost 'an awful lot of money' in 1997.
Aircraft stranded
In fairness to Stewart, most of the problems have been outside his control. He hints that the Jamaican government might not have been entirely straightforward in its description of the airline's financial state. More seriously, in 1994, after an audit of the Civil Aviation Authority's safety oversight procedures, the US Federal Aviation Administration downgraded Jamaica to Category 2 status, effectively preventing Air Jamaica from expanding services to the US. While the airline itself had a good safety record, operational restrictions were also slapped on. These would regularly leave aircraft stranded at US airports, prohibited from taking off until the weather improved.
At a cost of many millions of dollars, the airline was forced to find hundreds of hotel rooms at short notice and to charter US aircraft to compensate for the new aircraft it could not add to its fleet. Stewart, a newcomer to the airline industry, was bewildered by the tangle of red tape that existed, both at the Jamaican CAA and in Washington DC, which prevented him from getting answers to even the simplest of questions. It was, he says, a bureaucratic nightmare that could have spelled the end of the airline. Category 2 also made it more difficult for Stewart to put together aircraft financing deals and was a hurdle in the way of any partnership deal with a US airline.
Late in 1997, Jamaica was finally upgraded to Category 1. 'Now we can plan, which is the thing that really killed us - not being able to plan,' says Stewart. 'We can settle the airline down and get the cost base in much better shape.' Somewhat optimistically, perhaps, Stewart believes the airline might break even by the end of 1998. 'I think we can turn the corner, or almost, in 1998,' he says.
A key pillar for this optimism is the Mo'Bay hub, which now brings in flights from nine US gateways by 10.30am to connect with flights to Antigua, Barbados, Grand Cayman, Nassau and St Lucia. Turks & Caicos was dropped last year - Stewart says it needs more lead time to be developed as a daily destination, but he expects to resurrect the route in mid-1998. Connections are also available to Anguilla, Nevis, Grenada, St Barts, St Kitts and Tobago. Before, points out Stewart, it was only possible to visit some of these islands by flying back into the US and out again,usually on a US carrier.
In choosing a hub base, Stewart also had the option of Jamaica's other major airport at Kingston, a bigger business centre and the final destination for most local traffic. However, Stewart felt there was more potential at Mo'Bay, which is the more popular destination with tourists and, perhaps not coincidentally, a short drive away from several of the Jamaican Sandals' resorts.
'The hub is going really well; it is working,' says Stewart. By the end of January, Stewart plans to have started a second daily flight to Fort Lauderdale in Florida and, by June, a fifth weekly flight to London. The hub is enabling Stewart to increase utilisation of his 12 aircraft from just over seven hours to around nine hours a day, a contributing factor to costs that have been '-coming down quite nicely recently'. But he admits that more needs to be done. Load factors have to be improved, costs still have to come down and the airline has to promote itself and the hub. Stewart says the airline also needs to add another two aircraft to its current fleet of four Airbus A310s, four A320s and two McDonnell Douglas MD-83s.
Air Jamaica has also been able to follow through on a marketing letter of intent signed with Delta Air Lines at the hub launch ceremony. Stewart says the arrangement will commence in February and that reciprocal bookings are already taking place.
Telling point
But the promises that were brandished last June of Mo'Bay becoming the focus of Caribbean aviation unity have largely come to nothing. The prime minister of Barbados, for instance, publicly stated his hope that his government would take a financial stake in Air Jamaica and make it the island's official airline. Enthusiasm for such a venture seems to have faded in the following months - on both sides. 'I think it is longer-term thinking,' says Stewart. 'The public of Jamaica don't mind sharing things with the region, but they won't appreciate ownership. In the end, the shareholders have to make that decision.'
The most telling point, however, lies in what has happened between Air Jamaica and the Caribbean's other major carrier, BWIA International Airways. Last June there was talk of building on existing cooperative maintenance agreements. In April, the two airlines signed a memorandum of understanding to pursue cooperative efforts, primarily in technical and operational areas such as maintenance, ground handling and cargo operations. But the airlines also agreed to look at possible collaboration over management information systems, systems support and telecommunications as well as to review their respective fleet utilisation. It was envisioned that other Caribbean regional airlines, including Air Aruba, Bahamasair, Cayman Air and Liat, would ultimately join the collaborative effort.
Now, Stewart admits that all these talks are on ice and that no progress has been made since mid-1997. BWIA's chief executive officer, Gilles Filiatreault, is more blunt. 'In terms of cooperation, we have taken a step back,' he says. 'We are providing Air Jamaica with pilots and they are doing our maintenance in Miami while BWIA does their maintenance in the east Caribbean. But there is much more that could be done. I don't know why but there is just a natural resistance within the islands to such things.'
Filiatreault, a French Canadian with 30 years' experience in airline management, joined Trinidad-based BWIA in 1996, and believes he is on track to fulfil his mission of steering the airline through the rocky times it has seen since privatisation in February 1995. In 1996, BWIA suffered a net loss of $27 million on turnover of $212 million. Filiatreault estimates the 1997 net loss will be just under $10 million and is aiming for a 1998 profit of around $10 million. Load factors in July and August were a record 77 and 80 per cent respectively.
The turnaround is more remarkable given that, like Air Jamaica, BWIA was also ensnared in an FAA Category 2 trap until late 1997, when the Trinidad & Tobago CAA was returned to Category 1 status. Perhaps because of his long history with the industry - including a management post at Air Canada and the CEO position at Liat - Filiatreault is more sanguine about the 'bureaucratic nightmare', but he makes a wry comment: 'I would hate to believe that the FAA is being used for commercial purposes. But when you are told "we look upon you as a Category 1 airline, but your country is Category 2", then something funny is going on.'
Free of those particular shackles, Filiatreault is putting together expansion plans for the US. 'We need to expand to make money,' he says, but adds that the main gateways in the US will remain Miami and New York. Filiatreault stopped services last year to Frankfurt and Zurich to cut costs and respond to the weakness of the German economy. Some $10 million annual savings have also been realised by getting rid of two A321s that were too big for the airline's needs. This leaves BWIA with a fleet of four Lockheed L1011s and five MD-83s. Filiatreault expects to make a decision on a new widebody over the next two years.
A natural add-on
Having 'got back to basics' and shed itself of a strategic alliance with American Airlines, Filiatreault has his eye back on the alliance game for 1998. 'We are a natural add-on for many airlines,' he says. Filiatreault anticipates announcing an agreement with a major European airline early in the year, and perhaps with a US airline later on. 'Every sector of industry is going to globalisation, not just the airlines,' he says. 'So we have no choice other than to find the right partner who will treat you as a friend and not as a subordinate. The corporate philosophy has to be visible and before you join in you have to join that philosophy - because once you are in you have to live with it. It goes beyond the operational and technical - it is about respect. The characters at the top have to be of the same mindsets.'
While Filiatreault is not naming names, the like-minded characters who most easily fit his definition probably reside at Air France and Continental Airlines. He believes that any alliance that BWIA steps into might also attract other Caribbean airlines. In particular, he earmarks Bahamasair, which is targeting complete privatisation by 1999.
As part of an overall programme to get back to BWIA's core market, which has a high ethnic content, Filiatreault would like to expand the airline's network within the Caribbean and offer its services to those islands that do not have a flag carrier. But he admits that the long-held indifference that individual islands reserve for each other will not make this an easy task. 'American is threatening to withdraw from some islands and some are prepared to bend over backwards to keep them. But BWIA has been there for over 60 years and yet there is no loyalty for them. They had something good in their own backyard, but didn't appreciate it. Now American has 65 per cent of all the supply, so all their eggs are in that one basket.'
When the American pilots brought the airline to the brink of a strike early in 1997, there were many in the Caribbean who were shaken by the enormity of what such action could do to their tourist industry. It was this realisation, some think, that prompted last year's burst of interest in a unified approach towards air transport. But enthusiasm died and old inter-island resentments resurfaced as soon as the threat of strike became a distant memory.
Filiatreault believes that a unified approach remains the only long-term guarantee of a future for the Caribbean's airlines. But unlike Stewart he is highly sceptical of whether this is achievable. 'I believe it has to be done but it is out of our hands. We need a strong driver to make it happen - a very strong business or political or financial leader. There is a lot of cleaning up to be done because each carrier brings a lot of baggage with it.'
Ultimately, says Filiatreault, the political leaders of the Caribbean have to sit down and develop a policy for their airline industry. 'We in the industry need to know where we stand. Are we important to the region? If yes, then how are you prepared to support us?' he asks.
Overnight answer
Without that, Filiatreault finds it hard to put much faith in the idea of Mo'Bay becoming the overnight answer to the problem of unity. 'There are four areas in which airlines can cooperate - operational, technical, commercial and financial. The first two can be done overnight, but commercial cooperation needs a lot of trust and right now there is a lot of mistrust for all sorts of reasons,' he says.
Ironically, the differing reasons given by Stewart and Filiatreault as to why their collaboration negotiations came to a halt highlight that problem. Stewart says it is because BWIA, experiencing a number of management changes, had 'other priorities.' Filiatreault says it was because Air Jamaica, tied up with the Delta negotiations, had 'other priorities.' Filiatreault adds pointedly:'Air Jamaica signed up with Delta without any discussion with us. It was presented to us as a fait accompli.'
Stewart, for good measure, remains optimistic that the players will come to his backyard. 'It is incumbent that the regular carriers find reasons to cooperate and save money,' he says. 'BWIA will see things our way.' But will St Peter?
Source: Airline Business
