Caught in the crossdraught: Expect turbulence

© Alan Barry Ginn, 2015

Clearly, a close inter-dependence exists between air transport and tourist flows such that traffic and visitor numbers are strongly linked. This is especially the case for island destinations, as is the situation in the eastern Caribbean, the focus of this essay.

In the Caribbean, countries expend an enormous amount to promote tourism to their islands. It is equally clear that much effort is also expended to support the airlines and air transport services that actually deliver the tourists. At the same time, intra-regional air transport is vital to the economic and social development of Caribbean countries at a local level even without considering the value of tourism in this equation.

So, while tourism is important, air transport supports other intra-regional needs as well1. In Caribbean countries, already hard-pressed financially and possessing very small populations to extract from2, valuable resources are being gobbled up supporting intra-regional air transport. While most will agree that this is an important goal, there is very little agreement on how to improve matters, both to create more efficient services and to avoid wasting a lot of money.

Similarly, there is a strong inter-relationship between Caribbean air transport and Caribbean integration. One cannot think about one without the other. Within this context, Caribbean politicians discuss bringing their countries closer together. These same politicians also discuss developing an air transport system that serves Caribbean needs and Caribbean people, but the plans never quite gel. In fact, these discussions have been going on for decades and the solution to the problems of Caribbean intra-regional air transport are as elusive as ever.

The opportunities for bringing Caribbean countries closer together through closer air linkages have slipped away countless times along with ways to improve services. Why the apparent disconnect? This speaks to deeper issues within the Caribbean and between Caribbean peoples but the question may revolve around, in part, who benefits from this persistent failure to reach agreement? A persistent theme common to all of the studies has been the way individual countries, leaders and many politicians jealously guard their own narrow interests despite accumulating evidence that trade liberalisation stimulates growth, in general3. This inability to be willing to step into a wider regional negotiating realm stands as the single biggest barrier to both Caribbean economic progress and social development4.

There have been a number of regional airlines over the years: BWIA — now CAL — and LIAT being at the centre of this debate. So, to be able to answer the question of who benefits, one would need to consider the passengers and businesses using these regional services and also the employees, the management and Boards of Directors and finally, the government masters — ministers and other high-level bureaucrats. But, one thing is for sure, it is not the passengers or employees who benefit from long-term, chronic mis-management nor, for that matter, middle-level managers.

As if to exacerbate an already perilous situation, Caribbean governments are much more strongly motivated to find and create linkages outside the region than intra-regionally. This is due, in part, to the pre-occupation with tourism as the main attraction and economic driver. Take, for example, the cruise industry which brings more visitors to the eastern Caribbean than any other single source. "At the moment, international tourist arrivals in the OECS are dominated by cruise visitors, which are between 2.5 and 3 times more numerous than stay-over visitors. ... This difference has important economic implications, as cruise ship visitors do not offer the same revenue opportunities as stay-over resort visitors do".5

The outcome is, more and more foreign visitors with few options for intra-regional mobility. For stay-over visitors curious about day tour options to nearby locations, the choices are limited and expensive. At the same time, little attention is paid to intra-regional tourism, such as visiting friends and relatives (VFR), occupational needs, educational needs and cultural needs within, by and for local people.

Another pre-occupation which does not make sense is the concept of distance put forward by many authors in presenting problems with Caribbean inter-connectedness. In the age of air transport, distance is not the key barrier to travel; as long as the price remains affordable, the key barrier is time. When one considers travel between destination, it is the time it takes which is top of mind for most travellers. Importantly, the time to travel must include any ground transportation and the time it takes to pass through customs and immigration, ticket queues, and so on. Distance is a factor, however, in calculating fuel cost and this is included in ticket or shipping pricing. Interestingly, distance is not considered to factor in when thinking about feeder markets in Europe or North America.

Caribbean governments are mandating intra-regional air transport services to be profitable and commercially viable on a continuing basis. Support for intra-regional air transport is essential year-round. But is made more difficult in the low tourist season, and therefore costly, because of the high variation of seasonal tourism traffic. The difficulty is how to factor this in when doing a cost-benefit analysis on local routes or indeed determining whether certain routes are going to operate continuously. The people need the service all the time, particularly in times of local emergencies, regardless of how many tourists are showing up. Subsidizing certain routes, whether on a seasonal basis or simply because the route supports local economic and social development needs to be carefully considered.

All countries that benefit, in some way, from air transport services need to contribute financially and logistically to the maintenance of the service. All countries need to provide and maintain infrastructure that makes air transport and tourism possible – as well as efficient. Countries need to look for viable customs and tax regimes that capture revenue from air transport and tourism without becoming too heavy a burden for the airline or the traveller. Countries need to look for ways to improve operational efficiencies and also to reduce the logistical overhead for the airline and passengers, particularly for customs and immigration services. So, while it is possible to get it wrong by taking action, it is never possible to get it right by taking no action.

Unfortunately, Caribbean politicians – and governments – see their own progress through the lens of narrow political or local needs without considering any benefit from developing intra-regional linkages. This has meant a large proportion of each country's expenditure and effort have been duplicated, unnecessarily. The hope is, this will change as CARICOM integration becomes more and more talked about. The Treaty of Chaguaramas mandates development of co-operative regional transportation (Article 138) but this seems to be conveniently overlooked at times. Ultimately, the hope is, that stakeholders will see – and do – what needs to be done to promote regional needs. Caribbean countries really need to stand together in ways that enable them to better compete in a more competitive world context where tourists and passengers have plenty of options as to places to travel to and ways to get there.

One of the biggest impediments to making any progress in finding solutions is this: The conversation is guided largely by the same group of people, with the same bundle of motives, talking about the same range of issues, using the same set of arguments. Coupled to this, the shareholders countries really set themselves in competition with one another and will not yield to progress that might give a rival the upper hand. Yet they are, in effect, business partners. Again, no-one has an explanation for this disconnect. Thirdly, some countries are not making a financial commitment proportional to the benefit derived. While financial losses are hard to endure, and to explain, continuous investment in air transport is needed so that a range of economic benefits may be delivered. What is needed is to reframe – and bring new voices to – the conversation, or risk sinking further into an increasingly dense quagmire.

As one reads the various news reports about LIAT, the impact of political meddling quickly becomes apparent. Despite efforts to try to maintain long-term viability along with very large financial inputs, LIAT founders, due in large part to political interference. The risk to LIAT is failure and, in fact, the current structure will never deliver any consistent level of reliable service – but it is a service nonetheless and a necessary one. Everyone can see this and yet, the political masters are unable to resist stamping their name on it. Central to this are the politicians who operate in secret. They want their constituents to be intelligent enough to vote for them but not so smart as to understand the intracacies of governing. This is an abuse of power as well as a double standard. Politics and government are not the same thing.

What is apparent in all of this are the wider implications of failure in terms of the impact on regional cohesiveness. If LIAT fails, in a single stroke the eastern Caribbean region suffers a potential knock-out blow that risks setting it on a path to self destruction. While local concerns are important, there is a growing realization that no single Caribbean country is going to succeed in development if its neighbours have failed. Local politicians need to see their island nations within the wider regional context. This requires leadership and statesmanship, qualities which seem to be as hard to find as airline profits. This requires them to rise above their insular world to a vantage point that allows them to see better what the limitations of insularity are. But will this happen?

These problems pose barriers to developing solution which, in turn, makes the air transport providers task much more difficult. Passengers blame the airline employees or the ground handlers or the customs agents but it is not their fault. The fault lies squarely with the masters who – simply – can't get it together and yet they won't yield any power, even when its not theirs to own. They don't see themselves as bearing any accountability for the problems and fend off any responsibility for finding enduring solutions.

The owner governments are fully committed to CAL and LIAT, financially and politically whether they admit it or not. And, maintaining the status quo may not be the worst outcome. Unless and until a better way is found, at least air transport services are being provided, albeit less than ideal. One can hope for an improvement, and eventually, it will come. It is not obvious, with the possible failure of LIAT, whether any company is willing to step into the void that this failure will create. So, it is very possible that a failure will leave many workers, and employers, in the lurch and although the present service lacks reliability, this is certainly a worse outcome.

Looking at regional airlines as businesses is problematic in another sense. Governments are required to supply all types of infrastructure: roads, port facilities, airports, bus services, trains, etc and the need to make a profit usually doesn't enter in anywhere. So why this mantle is placed on an airline is questionable – especially in the Caribbean context where load factors on many routes will never deliver a profit. Worldwide, it is a fact that plenty of airlines have a hard time consistently making a profit. To make it worth their while, most airlines ask for, and get, local subsidies or payments to deliver services to unprofitable destinations. Otherwise, the service would not exist.

What this amounts to is a subsidy. So, what is the difference when that subsidy is paid to the airline to support local services? This has more to do with the way the argument is framed than the argument itself. Local people pay the cost but are not seen as the main benefactors, when – clearly – they are. In spite of this obvious subvention, the primary benefit goes somewhere else. The forces of good governance and egocentric politics are the turbulence from different engines – with the real conditions on the ground being buffeted somewhere in between.

To re-iterate: the quality of Caribbean air transport is vital to the success of the whole region.

1. See: A Study on the Essential Services and Tourism Development Route Scheme (ICAO)

2. The combined population of the 10 member countries is 1,049,374, including recently joined Martinique (February, 2015).

3. See: Economic Impact of Air Service Liberalisation, InterVISTAS Consulting Inc, 2015, pg 7.

4. See, for example, Caribbean Air Transport Study, WorldBank, 2006, pg 3-1 and 4-1. Many other distinguished Caribbean academics have also lamented this lack of willingness to move towards economic integration, the main argument being: "loss of sovereignty" (Girvan, Lewis, Ramphal)

5. Air Transport in the OECS: Flying Solo? by Heinrich C. Bofinger and Florencia Millan Placci, WorldBank, 2013


High transportation, shipping costs, transit times and visa/immigration barriers are common impediments in all small island countries.

Need to improve local, intra-country as well as regional services public transportation

Think about transportation services as public services. This will necessitate setting aside the "profitability at any cost" principle (at least for some routes).
- Think about how air transport services can contribute to developing niche markets.
- Think about economic/social benefits beyond direct benefits.
- SMEs need a reliable transport context so they can build their businesses.
- An efficient/reliable transportation system promotes use.
- Airplanes are buses with wings, are also used for shipping services but at a relatively high price.

More than one study has recognized that high cost customs and tariff barriers significantly impinge on regional trade. (See GOPA Study)

Puerto Rico as a hub means having to pass US customs so there would need to be terminal connections which don't require entering the US if it is to work as a hub for European or Canadian travellers.

Surveys, interviews, questionnaires of stakeholders to gather data.

It strikes me that small island states are not unlike small towns or cities in North America connected by sometimes long stretches of highway necessitating costly and time consuming travel to get from one to another. The towns are separated by miles of lakes, trees and rocks instead of miles of Caribbean Sea.

(Article written in 2015 but it would appear that not a lot has changed)