Submitted by Looking Glass
First congrats to Joseph “Reds” Perreira. “Living My Dreams” is indeed a beautiful cover drive that belies the WISU experience.
According to the CEO the World Bank 2006 Report on air travel in the Caribbeanidentified the “need for competition and private capital to bring the region’s aviation capacity in line with other regions in the world.” Really Mr.CEO? Since when does competition facilitate standards? I suggest you send a copy of the report to the BU. Capacity has nothing to do with world standards. Where in the world does Redjet’s advertised fictional “poor man” fares apply? Until Redjet the region had been serviced by LIAT, BWIA (Caribbean Airlines) and other international carriers in ‘line with world standards’ without foreign “private capital” and with hardly a rumour about cheap flights. Foreign investment and benevolence do not go hand in hand. Exactly how much did it costBarbados to entertain Redjet?
Correct me if wrong: I believe Redjet is ‘connected’ to a travel agency in Barbadosthat is owned by Trinidadians. Ask who the shareholders are. The fleet consists of two 150 seat MD planes acquired (Leased) for two years at around US$10,000.00 per month. The planes, about fit for the scrap heap, do not meet certain standards and might not be allowed intoNorth America or theUK. There is no concrete evidence that Redjet will indeed be allowed to service the region. So will the owners of LIAT support the kind of competition that will push the airline into the red or out of business? Only a fool will do that.
A regional monopoly LIAT has enough aircraft to service the region adequately but not every island every day. There is not and has never been enough inter-regional travel demand to make the airline profitable at low “poor man” fares. And Redjet cannot do it with just two planes. Ever increasing operational cost, low levels of actual demand and daily visits to each island make high fares inevitable. LIAT’s itinerary needs to be reformed and rescheduled to ensure connectivity between the islands. Then the airline will be better positioned to offer lower but not “poor man” fares. The airline “structural and other limitations” is a reflection not only on management but more importantly on its major shareholder.
What Barbados needs is an airline to service its major tourism markets not one to service the region or to enhance inter-island tourism. The volume of tourist traffic from the islands needed to enhance the industry is simply not there. Sometime ago the suggestion to set up an airline preferably in collaboration with Virgin Air to service North America, the UK and Europe fell largely on death ears. I was told it was too costly. Apparently it is far cheaper and better to invest in an airline to compete with our own in a market in which there is minimal demand for our tourism. Why invest in an airline to capture 200 tourists a month when the same amount of money or a little more invested elsewhere would capture 4000 per month?
Non-scheduled airlines just do not fly into a country of their choosing. They are ‘invited’ in and come at a price (or subsidy) which in our case would be around US$6 million. Let us be generous and estimate salaries of the two pilots and the three cabin crew at US $4000.0 and $1000.0 per month each and factor in other basic costs, it would require low fares of at least US$100.0 per passenger and full occupancy per trip just to break even. Servicing just three countries and or the region would require at least 50% occupancy per trip and higher fares just to break-even which is doubtful. Profitability could require substantial subsidy.
We are told that Redjet plans to increase its fleet from 2 to 15 aircraft by the third year of its operation and would bring tremendous benefits toBarbadosand the region (20 was promised toJamaica). Failure of collapse would be a “direct reflection on the government and in particular the minister.” (Advocate6/8/2011) That observation suggests both sides of fence know and understand little about the business at hand.
The airline cannot afford to buy or lease proper jet planes. To rent 15 of the same planes at the above prices will cost at least US$75,000.0 per month. To service each island on a daily basis will require at least six pilots and nine cabin crew. Other basic expenses like insurance and staff accommodation will add to the monthly operational cost. General maintenance apart some aircraft components have a very limited lifespan and need to be replaced at regular intervals. At the above prices it will cost more than US$100,000.0 per month just to put the 15 planes in service. The level of disposable income and demand in the region is not very conducive to price elasticity. With daily service to all of the islands and “poor man fares” break-even would require more than 70% occupancy rate per trip to which is unlikely, higher fares and or a substantial increase in subsidy to be profitable.
We belabour the presumed benefits to tourism. How often do planes arrive inBarbadoswith a load of 40 or more visitors not from theUKorNorth Americabut directly from the islands? If that were the case many of the hotels and guest houses would not be up for sale. As previously notedTrinidadhas entered the tourist business (The Fat Lady Moves On),St. Vincentis doing likewise andSt Luciais now a cheaper destination thanBarbadoswhich is about the most expensive destination in the region. Apart from sun sand and sea which they all have and more what do really have to attract tourist from the islands beyond business travel?
The first direct flight took 149 souls toGuyanaand returned with less than 20 souls. That the vast majority of the 149 had been brought to our shores by the last regime to do the work locals were indisposed to do raises the question of economic viability
The old people say little children and fools have no right with sharp edged tools. According to the Tourism Minister the best thing that could happen to LIAT (whose model in not sustainable) is the coming of Redjet. Among other things it would generate more tourist business, employment and investment more players “involved in the aviation industry is a wonderful thing” (Advocate6/8/2011). Do we have an aviation industry? For him entertaining competition that will push LIAT into the red or out of business is a good thing. This from one who reportedly contracted with a mid-western American agency to marketBarbados. Comic books make more sense. He is the first government minister anywhere in the democratic world to accept membership on the board of a foreign company while still in office. It is foolish to expect him to be truthful and or objective. Taxpayers pay the price.
Do we really own 51% of Redjet as reported? (Advocate6/15/2011). Am I to understand we own more of the company than the two gentlemen who started it and the other shareholders, and if so why was “subsidy” given in the first place? Perhaps it is an error in reporting. If so review and inform the public. Save me the trouble of correction.
To those who believe the airline will fly them anywhere for the advertised $9.99 check out Cheap Flights with subtitles.