?Is the merger a good or a bad thing? I propose that this question is best answered by analysis of the key issues, rather than speculation.
For those interested in this topic, the best column, so far, has to be the one by William Lucie-Smith, a couple of weeks ago. Before I proceed, I thought I should disclose that I am in no way connected to CAL or AJ, but have previously held relatively senior positions with CAL, British Airways and Thomas Cook. So I am somewhat familiar with the travel industry, including aviation–particularly in Western Europe and the Americas. There are five airline myths that I would like to address first. Myth No 1: The aviation industry is at the mercy of normal market forces. It is not. In my opinion, there is no airline in the "West" that does not enjoy some measure of state support or protection. Governments influence airline behaviour through a dizzying array of legislation, taxes and subsidies.
Whether it is a law in the USA mandating that an airline be 75 per cent-owned and controlled by US citizens (ask Virgin America) to operate, to landing rights, landing fees, traffic rights, restricted competition on routes, preferential slots, preferential terminals, seat guarantees, tax concessions, etc. Myth No 2: The governments suddenly want to merge airlines. Again, this is wrong. As far back as April, 1969, the Hon Kamaluddin Mohammed, the then-Minister of West Indian Affairs, spoke about efforts "being made to have BWIA designated the regional air carrier, with participation by the other regional governments." The Caricom and Caribbean Tourism Organisation (CTO) reports done on this are probably too numerous to mention. Myth No 3: State-owned airlines, almost by definition, cannot be run efficiently and profitably.
Obviously wrong, considering the historical performance of Aer Lingus (Ireland), Emirates (Dubai) and Singapore Airlines. Of course, I qualify this with my response to Myth No 1. Regardless, CAL's on-time performance and customer satisfaction levels since its launch speak to it heading in the right direction. Myth No 4: There is no local/regional talent, and we need foreigners to do everything. LIAT's Dr Jean Holder wrote that there was no shortage of talent, but suggested that the reason behind the apparent lack of implementation of consultant recommendations lay in regional political realities. Myth No 5: Barbados doesn't have a national carrier; why should we? Dr Holder suggests that prior to 2007, BWIA operated "in many ways as the national carrier of Barbados, and under the Community of Interest Principle of 1983, also as that of other Caribbean countries."
Since 2007 (when BWIA closed), I suspect that Barbados has increased its "incentives" (see Myth No 1) to encourage increased capacity from North American and European carriers. Now, regarding the merger, I have no clue what the details are, beyond the speculation in the press, but there are three reasons why I think it should be seriously considered.�Reason No 1: The press has reported or speculated that to consummate the deal, there would be no need for a cash injection from CAL, and the AJ debt burden would remain with the Jamaican Government. Reason No 2: The three biggest costs for any airline are its fleet, including fuel, staff and distribution costs.
This deal, as reported, may provide the opportunity for rationalising two of these three costs.
Fleet costs would go down, once they harmonise equipment; ie they decide to use one type of aircraft which impacts positively on maintenance costs, and allows for better cross-utilisation of crews. Distribution costs would decrease if they manage and sell all inventory from a single global distribution system. A lower cost base should benefit both shareholders (less state support needed) and consumers (both regional and international).
Reason No 3: Not only does this deal take us one step closer to thinking regionally, but it creates a mechanism for facilitating greater regional integration and development. This, of course, leads us to the biggest potential sticking point. The biggest potential obstacle to realising the full range of benefits from the reported merger would be the absence, as far as I am aware, of a single Caricom/Cariforum level aviation policy.
Such a policy would not only address technical issues and their implications for airline operation, but it would also define the role that air transportation plays in our regional socio-economic and political development.�This is the context within which I see the proposed merger. My name is Derren Joseph, and I love my country. As always, I end by saying that despite our challenges, we are so blessed to live in this beautiful land. Let us continue to have the audacity of hope in our country, as we move towards Vision 2020.