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Aviation History
2003
2003 - 0809.PDF
Caribbean carriers from San Juan may operate for 14h a day, whereas a flightcrew working for Liat or Caribbean Star is permitted only to operate nine and a half hours a day. "This effec tively means that a US carrier can employ 47% fewer pilots to achieve the same amount of work," says Gravel. "For an OECS airline that employs 90 pilots, the savings incurred by reducing the number of pilots by one-third would equate to $32 million over 10 years." The millionaire owner of Liat's biggest rival, Caribbean Star, has managed to strate gically bypass Category 2 restrictions. Allen Stanford founded Caribbean Sun and based it in Category 1-rated Puerto Rico. He envisages Caribbean Sun connecting with Caribbean Star to provide one-stops throughout the region, posing competition to American Eagle. Meanwhile, Stanford is moving Caribbean Star's Antigua headquar ters to St Kitts, where there are more relaxed "route rights and a host of economic bene fits", says Caribbean Star chief executive Paul Moreira. Stanford's organisation also plans to redevelop St Kitts Robert L Bradshaw Airport and create a fixed-base operation to handle private jets. Lack of co-operation At least part of the long-running crisis in the Caribbean air transport industry is due to a lack of co-operation, experts say. Caribbean carriers are generally owned in part or wholly by the indigenous island states and each country is proud and pro tective of its own airline. In Miami, some small Caribbean airlines operate limited daily services to the islands, but refuse to even share the same booths at the airport. "Instead of sharing costs, they try to kill each other," says Carlos Davila, the director of transport for the Association of Caribbean States (ACS), a political body that helps guide policy about trade, tourism and transport throughout the region. Caribbean nations have never signed a multilateral aviation accord that would give the airlines broad blanket rights to fly between each island, fly across territories without landing, make stops for non-traffic purposes and operate with third, fourth and fifth freedom rights. Davila hopes the fall- off in bookings will force ACS members to agree in principle to a multilateral aviation accord this summer. "We need to do it. With the crisis in Iraq, the tourism sector is going to suffer, especially with a decrease in the number of bookings," he says. Even with unanimous ACS member agreement, however, such an accord cannot be put into effect until one-third of individual island govern ments ratify it. Although airline officials have long paid lip service to plans for airline co-operation, BWIA, like the most significant teaming to date has many in the been that of Liat and its minority stake- region, is holder BWIA, a partnership that has been seeking limited at best. With both companies in more capital need of fresh financial assistance from the as it tries to government, Caribbean Community lead- stave off US ers have begun a dedicated push for a more competitors formal tie-up between the two airlines. John Gilmore, the founding member of the Air Jamaica Acquisition Group that negotiated the purchase of Air Jamaica from the Jamaican government, says Air Jamaica, BWIA and Liat "need to be merged into a single organisation for scheduling and planning. I would assume that Cayman Airways and Bahamasair would probably participate as well, since they are relatively small and they both lose money. Every bailout [the Caribbean governments give], they always say 'it's the last one'. They have to come up with a solution." But Caribbean airline executives are sceptical about a merger. "Regional integra tion will never work because West Indians can never work together. Each one will want to be the boss," says Gravel. "How can they help each other if they are both bankrupt? Liat and BWIA have been cut- American ting each other's throats for years." Eagle flies Air Jamaica chief executive Chris Zacca high in the adds: "We are not interested in a merger. Caribbean, We would be much more interested in but faces functional co-operation, including sched- competition ules and codesharing as well as accounting from local and some technical co-operation and pur- carriers chasing." A Trinidad & Tobago-funded study into the feasibility of a merger is due to be released in May. Whether Liat will be able to stay afloat to see such a merger come to fruition remains to be seen. For 46 years, the regional has been the backbone of the transport system between the islands of the eastern Caribbean, operating Bomb ardier Dash 8 turboprops. But the eco nomic downturn, coupled with competi tion from rival Caribbean Star, has left Liat in need of $37 million in investment over the next year. Even though Liat has initi ated cost cuts across the board, without new funds, says chief executive Garry Cullen, the carrier faces aircraft reposses sion and will have difficulty in paying its debts to Bombardier, GE Capital Aviation Services and Pratt & Whitney. Privatisation plea The former prime minister of Saint Vincent and the Grenadines, Sir James Mitchell, says governments must stop bail ing out cash-strapped Caribbean carriers and seek to privatise them. "The Caribbean governments are just pouring money into the [region's] airlines without demanding serious restructuring," he says. Like BWIA and Liat, Air Jamaica is also turning to the government for assistance. The carrier needs up to a $30 million gov ernment loan guarantee, but the govern ment is likely to demand a debt for equity swap in the deal. Air Jamaica will remain majority owned by private shareholders, says Zacca. He says the carrier, which has pulled down a chunk of its US-Caribbean schedule and initiated layoffs, is confident that after the war, the carrier will recover. "I feel strongly that when our yields come back, without fleet rationalisation, and with other cost-cutting measures that we have been working towards over the last few years, we would be in excellent position to be profitable," says Zacca. The company hopes to eventually expand its codeshare with Delta, and launch services to new US destinations, once a newly signed USA-Jamaica open skies agreement goes into effect in the next few months. • 42 8-14 APRIL 2003 FLIGHT INTERNATIONAL www.fliqhtinternational.com
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