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THE STAR BUSINESSWEEK
JUNE 23, 2018
WWW.STLUCIASTAR.COM
ATTRACTING AIRLIFT: HOW CAN CARIBBEAN ISLANDS INCREASE AIRLIFT? BY CATHERINE MORRIS, STAR BUSINESSWEEK CORRESPONDENT
The STAR Businessweek BY CHRISTIAN WAYNE – EDITOR AT LARGE
Let me begin by thanking the readers who reached out to us over the past few weeks - your letters, emails, and calls - in response to our stories on Guyana’s future oil prospects in Holding Georgetown Over the Barrel and our recent 2-part series on #GreenTech that illustrated the intriguing work budding agricultural technology entrepreneurs in Barbados and Saint Lucia have embarked upon. Keep writing us at starbusinessweek@stluciastar.com for a chance to have your letter published in our Letters to the Editor section. The 2018 FIFA World Cup is in full-throttle with hundreds of thousands of fans from around the world descending on Russia to witness their team vie for a chance at football glory and victory bragging rights for the next 4 years. Of course, there’s also the economic side of the FIFA World Cup and the equally fierce competition amongst national governments for rights to host the Cup in 2026. For more on World Cup 2026, check out our cover story An American World Cup - A Caribbean Opportunity? The cost of inter-regional air travel in the Caribbean has been a problem for as long as I and many of our readers can remember but with Barbados announcing a new airport tax just on the heels of the Saint Lucian airport tax increase, the issue of over-priced Caribbean travel is again a hot-button issue. For more, read Attracting Airlift: How can Caribbean islands increase airlift? beginning here on page 2
The STAR Businessweek Nothing Personal. It’s Just Business. Stay connected with us at: Web: www.stluciastar.com Social: www.facebook.com/stluciastar Email: starbusinessweek@stluciastar.com
Most Caribbean countries offer their carriers incentives such as rebates, discounts on airport fees, revenue guarantees or promotional funding
A
ir traffic is vital to island economies but getting (and keeping) carriers interested requires careful coordination and negotiation. Air travel has come a long way since the Wright brothers first took to the sky in 1903. That pioneering first flight lasted 12 seconds. Today the longest route in the world is a staggering 17.5 hours, from Auckland to Doha, and will soon be surpassed by the 19-hour journey from Singapore to Newark, New Jersey, set to launch in October. With long-range jets taking over the skies, distance is no longer a hurdle to growth for the Caribbean tourism industry. Provided they can stomach the long flight time, passengers will be able to travel non-stop from all over the world for a taste of Caribbean sunshine. As these new markets, new routes and new customers become a reality, industry and governments must build new relationships with airlines and cement longstanding partnerships, as well as address longstanding barriers to growth within the sector.
CO-ORDINATION AND COMMUNICATION
Caribbean aviation and tourism stakeholders came together this month for the Caribavia meet-up, held in The Bahamas. The three-day event tackled one of the region’s most pressing problems - how to increase airlift.
Vice President of ICF Aviation Consulting Jared Harckham, who spoke at the conference, said destinations need to address a number of factors when pitching an airline but the most crucial element is to present a united front. “If a destination wants to pursue new service, the best way to do that is with stakeholders coming together and talking to the airlines with one voice.” When it comes to discussions with airlines, almost everyone has a stake in the outcome. From government and tourism agencies to hotel associations, airports and chambers of commerce. These participants have to band together and sell the destination based on accurate, comprehensive and detailed market research, according to Harckham. “It needs to be a co-ordinated effort. It is important to come to the airlines with a clearly defined opportunity. The most important thing is to have a well-thoughtout, well-structured, business case. The more information, the better. It saves the airline time, it captures their attention and they will take you more seriously as a destination.” Above all, an airline wants to know that a destination will be profitable . . . and can sustain that profitability. To convey this, destinations need to communicate effectively with carriers, speaking their language to close the deal. When assessing the merits of a route or hub, airlines examine a number of factors including whether they have the right fleet to fly that route, if it fits with their
existing network and whether it coincides with their brand strategy. This type of route forecasting is a science, according to Harckham, and also encompasses trade links, migration flows, tourism attractions and infrastructure. “Airlines want sustainable opportunities.”
SWEETENING THE DEAL
The Caribbean is a disparate region with certain similiarities. With every destination relying on the sun, sand and sea model, competition for carriers is extremely fierce. As the fight to secure more routes and stand out from the crowd increases, so too does the relative bargaining power of airlines. It is now extremely common for destinations to pitch something above and beyond a comprehensive business plan. Most Caribbean countries offer their carriers incentives such as rebates, discounts on airport fees, revenue guarantees or promotional funding. While some argue that incentives are a step too far - failing to lower costs for the consumer and forcing destinations to take on too much financial risk - Harckham believes that they are a necessary evil, and have become so commonplace that they are now industry practice. “Airlines tend to expect something to be put on the table, whether as a good faith gesture or enough to guarantee that they will make money. It is a negotiation.” Harckham urges destinations to weigh up how far they are willing to go and to consider the ultimate pay-off in the longterm. “It is worth getting it right on air service development. It is really important to understand the value of the service and what you are willing to spend to get that. The benefits are more flights, more revenue for the airport and more economic impact for the community. One flight can be worth tens of millions of dollars. It is usually a good investment.”
REAPING THE REWARDS
Air transport stimulates economic growth, increases employment, improves competitiveness and raises incomes. The direct and indirect benefits are far-reaching and long-term. In a report released at its AGM last month, the Caribbean Development Bank (CDB) said the air transport industry could contribute US$4.4bn to the regional GDP, provided certain steps were taken. These include full liberalisation of the Caribbean airspace, reduction in airport charges and aviation taxes, and improvements to infrastructure and regulations. Continued on page 5
