Flight Plan for One Caribbean Airline

Flight Plan for One Caribbean Airline
By Vernon Khelawan (T & T Newsday)

Now Caribbean Airlines seems to have flown out of the recent severe ground turbulence caused by a political “turf war” between the line minister Jack Warner and CAL chairman George M Nicholas III, the chief pilot (chairman) and his management team can now focus on the carrier’s growth and development strategies.

Given the recent announcements by both Nicholas and Warner that all systems are go in the cockpit, it would seem the airline’s flight plan has been established despite the fact part(s) of that plan is forecast to cost a lot of money.

Probably what can be described as the most significant decision is the plan to transform the airline into the long talked about regional airline, by beginning discussions with Bahamasair and later Cayman Airways and then after that island-hopping LIAT.

Such a move will certainly mortally wound the long-serving, struggling intra-island carrier, hitting where it would obviously hurt the most — the bottom line.

The entire Caribbean knows that the three island governments which now own LIAT — Barbados, Antigua/Barbuda and St Vincent and the Grenadines — are themselves suffering serious economic problems.

Pouring money into the cash-strapped airline to keep it flying, does pose a problem for them. Most of their aircraft are closing in on two decades and maintenance is becoming more and more difficult. As recently as last week LIAT closed its Port-of-Spain ticket office, obviously a cost-cutting measure, forcing customers to purchase their tickets either at the Piarco office, a travel agent or on-line.

There is more trouble in store for LIAT since chairman Nicholas insists with the arrival of the new ATRs, Caribbean Airlines would be heightening its presence in the southern Caribbean, biting deeply into what is now a significant part of LIAT’s customer base.

While no CAL executive, former or current, dared to be upfront on the carrier’s performance, Nicholas admitted in Kingston recently that the losses on the Air Jamaica operations had been cut in half dropping to US$2.5 million a month.

This of course meant CAL was losing somewhere in the vicinity of US$5 million a month on its Air Jamaica operations and which, according to chairman Nicholas, will continue to lose money for the next three years, but which does not seem to be any big thing.

He, however, hit an optimistic note during last week’s signing ceremony for the acquisition of nine new ATR turbo prop aircraft, when he said the Jamaica operations actually turned a profit in December and attributed that to an increase of some 7000 passengers on the various routes, but no forecast was given for January 2011 and onwards.

In spite of this piece of welcome optimism, the question which remains uppermost in the public’s mind is where is the money for all this coming from? Whether Caribbean Airlines’ fast dwindling equity can assist remains questionable and there has been some talk about funds from international agencies. This means therefore, that these ambitious plans will require significantly more funding than CAL has access to at present.

Plans for the leased B-777s to be used specifically for the London services, is to have three of these large planes — two based in Port-of-Spain and one in Kingston — for three flights per week out of PoS and four out of Kingston.

The current lease cost per aircraft runs in the vicinity of US$875,000 per month each and as of now the period of the leases have not been disclosed. Since the triple seven aircraft will be new to the fleet, additional money has to be allocated for crew training (pilots and cabin), and of course that bottom line saviour — the fuel hedge. What’s more, the chairman has also hinted that CAL may go the way of Boeing’s Dreamliner the B-787 for the transatlantic services by 2014.

In all of this however, is the fact CAL has gone ahead with the purchase of nine state-of- the-art turbo prop aircraft from Avions de Transport Regional (ATR) a Franco-Italian manufacturer based in southern France at a cost of US$200 million. The first of these airplanes is expected to be delivered next October.

But with all this talk about aircraft purchases, aircraft leasing, a renewed fuel hedge and moving towards a regional airline, or as minister Warner has put it — “one airline; One vision; One Caribbean” — the question must be asked.

Where is Finance Minister Dookeran in all of this? Caribbean Airlines is 84 per cent owned by Trinidad and Tobago.

Based on those plans and objectives, it would seem sooner rather than later CAL will approach the minister for money either by way of equity or sovereign guarantees of long term debt.

With all the problems he now faces — Clico; wage negotiations and $7 billion deficit, he might be hard pressed to assist.