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Governments call in regional airlines

Bert Wilkinson | 2/20/2014, 11:12 a.m.

Worried about the health of air carriers operating in the Caribbean trade bloc, regional governments have called in the chief executives of major airlines. The executives have been ordered to come up with ways to cut operating costs, improve the level of service to the region and the lifeline tourist industry, officials said this week.

Executives from Trinidad-based Caribbean Airlines, which also owns Air Jamaica, Bahamas Air and Suriname Airways, as well as regional commuter service LIAT with headquarters in Antigua, met with the leadership of the Guyana-based bloc secretariat late last week to discuss the issue, including concern over relatively high air fares in the region.

Combined, the main carriers are carrying annual losses of more than $100 million with the largest, Caribbean Airlines, losing $70 million in 2012 and set to be in the red again for 2013. Bahamas Air, which services many of the family islands in the northern Caribbean archipelago, reported losing $11 million in 2012, and like Caribbean Airlines and LIAT, it depends on heavy subsidies from governments to remain afloat.

“The leaders at their meeting in Trinidad last July had discussed the need to cut operating costs of the major airlines in the community. All were represented at the meeting,” said spokesman Leonard Robertson. “Transportation was one of the key agenda items at that summit.”

The emergency meeting was held just days after the Barbados-based Caribbean Tourism Organization reported that just over 25 million people visited its 30-plus member destinations in 2013—a 1.8 increase in stayover tourists over 2012. The stayover visitors spent a whopping $28 billion—a 2.3 percent hike over the previous year.

But while incoming tourists benefit from reduced airfares from mega carriers like JetBlue, American and Delta flying into the region, those residing in the Caribbean are complaining bitterly about skyrocketing fares. Officials said the meeting discussed the age-old but never-addressed issue of buying fuel, spare parts and airplane components in bulk from a single supplier to benefit from the economies of scale, but it is unclear if a decision was made in this regard.

Of those operating in the region, LIAT—which is owned by the governments of Barbados and the Eastern Caribbean and is a lifeline to islands like Dominica and St. Vincent with their limited runways accommodating commuter planes only—remains a bugbear to authorities. Several of the airlines recently signed a $65 million loan agreement with the Caribbean Development Bank to help replace its aging Dash-8 fleet with French-made ATR planes. In all, LIAT needs to raise $100 million for its refleeting exercise, while Suriname and Bahamas Air continue to struggle with debt and remain dependent on governments for annual subsivdies from national budgets.