As the airline industry continues to be the top news headlines almost every day, it is hard not to comment and analyze this new reality which the Caribbean is confronted with. As many Caribbean economies are tourist-dependent economies, the capacity cuts announced by major US airlines have a big impact on many islands with a vulnerable economic structure, which in majority depend on the flow of tourism for its survival.
On the one side airlines are somewhat to blame for indeed having a faulty business model as my friend Jim at Caribbean Islands Realty states. Many analysts agree with above statement. However, I must add that current levels of oil prices, which peaked so rapidly, caught many industry experts by surprise. Airlines are finding themselves with their backs against the wall. Another point of criticism is the fact that some major airlines still use old aircrafts which are very inefficient on jet fuel and expensive to maintain as well. An operational nightmare and not cost effective at all.
In the same breath as above criticism I would like to add some mea culpa as well. In terms of having a faulty business model, many islands in the Caribbean indeed have a faulty ‘business model’. We depend way too much on a single source of income. The services industry is the biggest industry worldwide and there are billions to be made in this industry, however, never put all your eggs in one basket. Naturally, many tiny islands, such as Aruba, are limited in fomenting other labor UN-intensive projects. Other islands have agriculture and manufacturing but are neglecting these industries in favor of tourism. Don’t! Diversify your economies.
By far the island that seems to be receiving the biggest blow of the cancellations is the one which functions as a major hub for many airlines: San Juan, Puerto Rico. Not all bad however. All these cuts open up opportunities for other airlines. Not all airlines are cutting capacity. Spirit Airlines has announced it will add some flight from North America to some Caribbean islands in the coming months. Spirit Airlines has recently started flying from Fort Lauderdale to Aruba for example. jetBlue and AirTran have also announced similar plans to expand service to the Caribbean.
Recently the prime ministers of Trinidad and Tobago and St. Vincent and the Grenadines suggested the creation of a joint airline in the Caribbean. This airline that I dubbed ‘Super Caribbean Airlines’ is a noble idea and perhaps even desirable, but I must respectfully disagree with both prime ministers.
Not that I wouldn’t want super regional airline, but I can’t help to think about these monster airlines from North America having difficulty coping with the rise of fuel prices, what can we expect from a smaller joint airlines in the Caribbean? American carriers generate a lot of volume in terms of traffic; it seems difficult to do something similar with a local carrier in the Caribbean.
Another additional problem is the internal competition between the islands. At the end of the day all the Caribbean islands are all competitors of one another. There is also politics involved and lack of legislation would prevent inter-island connections. It seems difficult to create such an airline.
Aviation magazine Flightglobal published a few days back an interesting article covering this topic: ‘Caribbean mourns US capacity cuts’. Flightglobal quotes an expert suggesting the creation of strategic hubs in Puerto Rico, Barbados, Jamaica and Aruba from where inter-island connections would start. Interesting theory.