Aviation: A Stepping Stone to Caribbean Tourism Expansion… or Not

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Aviation: A Stepping Stone to Caribbean Tourism Expansion… or Not

Unread post by bimjim » Mon Jul 22, 2019

https://www.eturbonews.com/258589/aviat ... on-or-not/

Aviation: A Stepping Stone to Caribbean Tourism Expansion… or Not
Dr. Elinor Garely
eTNJuly 22, 2019

Unless you live in a Caribbean country, there is no way to reach the islands without using air and/or water transportation. No one has yet found the funding or engineering skill-set to build roads, rails or tunnels as connectors to the region; therefore, the development and sustainability of the region is dependent upon an air and/or water – based network. As hard as it might be to believe, there is no comprehensive agreement that rules and regulates airspace in the region.

Agree to Agree: Benefits to Accrue

CARICOM (Caribbean Community governments) drafted a multilateral air services agreement over 10 years ago and in 2012 the Caribbean Tourism Organization (CTO) appointed an aviation task force to:

Promote facilitating air transport services within and between the Caribbean and international communities.

At the time, the task force was chaired by Ambassador Brian Challenger and the proposal was waiting for the CARICOM Secretariat and officials to take the final step toward adoption and implementation. When approved, the agreement (is supposed to) provide a level playing field for carriers operating in the region. Without the agreement, carriers outside the region have more benefits than carriers in the area.

The proposed agreement also addresses the internal movement of airlines – for example, a carrier from St. Lucia would be able to pick up passengers in Trinidad and fly them to Tobago. At this time, it cannot happen for it is a right restricted to a Trinidad carrier.
In addition, Challenger’s committee was working with IATA (International Air Transport Association) to commission a study to review the changes that would result by reducing taxes on airline tickets.
The committee also evaluated restrictions imposed on travel and travelers because of multiple security checks within the OECS.

Passengers Last

CTO Aviation Task Force (AFT) continues to find that passenger and baggage security screening programs are inefficient and some regional airports are of “poor quality.” The Task Force also determined that the customer is not the focus of airport management systems. Other issues impacting on the customer experience includes the absence of code share and interline agreements and limits on the acceptance of Open Skies policies.

Expense Rather Than Investment

The CTO Aviation Task Force finds that regulatory issues and entry requirements for new airlines are negatively impacting on the costs related to intra-regional travel. Adding to the problem is the poor collaboration among regional airlines and the absence of single airspace and/or open skies agreements. Between the focus on protectionism and increasing levels of government taxes and fees combined with high operating costs, the barriers to intra-regional travel continue to escalate.

Combine the small size of the intra-regional airlines and the high cost of maintaining the regional aviation industry plus the use of outdated equipment on some routes and it is easy to see why the challenge for establishing a 21st aviation industry in the region is challenging.

Economic Impact

The CTO ATF also observes that governments and industry leaders have not adequately accessed neighboring non-traditional markets and there is weak integration of aviation into the tourism industry. In addition, poor marketing and limited regional travel opportunities create additional barriers. The outcome of restrictions: airlines struggle to stay in business, frequently delaying or defaulting on payments to airport authorities.


For Better or Worse

In a recent study by Kareem Yarde and Cristina Jonsson (Journal of Air Transport Management, 53, 2016) it was determined that “improvements to the regulatory aviation environment in CARICOM would aid improvements in intra-regional tourism.”

The research determined that pre-existing constraining factors “must be addressed” and “the effectiveness of the existing regional multilateral agreement is hindered by political interference, not only in the overall context of aviation bureaucracy, but also in the business operations of the regional carriers.”

Identified as a major policy maker in the aviation industry, IATA has asked governments and other Caribbean aviation stakeholders to work together as this market segment provides connectivity to the region; without the services of this industry, the region cannot be sustainable as it transports approximately 50 percent of all tourism to the region. Furthermore, when a disaster strikes (think hurricanes) it is vital for survival and rebuilding.

Employment

Aviation is a global employer with US civil aviation generating US$2.4 trillion and accounts for 58 million jobs. According to Peter Cerda, IATA’s Regional Vice President, The Americas, in the Caribbean region 1.6 million people work in aviation, producing $35.9 billion GDP (2016).

The FAA works with the Caribbean aviation partners to enhance safety and efficiency and through the Caribbean initiative the agency helps to improve Caribbean air traffic flow through local training and certification.

The US is a critical neighbor in the US airspace:
- More than 7 million passengers fly from the US to the Caribbean each year, accounting for nearly 17 percent of all US outbound passengers.
- The region is expected to grow by 5-6 percent over the next 2 decades, second only to the Middle East.
- The region includes 10 air traffic service providers managed by separate sovereign nations. Half a million aircraft cross one of the six flight regions adjacent to the US.
- Varying tropical weather patterns and the complexity of a multitude of airports contribute to air traffic schedule uncertainty and delays within the region.

The aviation industry is a complex bureaucratic morass that includes The Caribbean Initiative:

FAA
ICAO
Civil Air Navigation Services Organization (CANSO)
American and Caribbean Air Transport Association (ALTA)
Airports Council International (ACI)
Latin American-Caribbean, American Association of Airport Executives (AAAE)
International Air Transport Association (IATA)
Caribbean Partners

With all these bureaucracies with fingers in the pot – it is no wonder that harmony throughout the Caribbean aviation industry is difficult to achieve.

Aviation. The Cash Cow

Too many governments in the region are blinded by the integrated role of aviation in the total economy and see the industry primarily (if not exclusively) as a luxury for the rich and therefore easily targeted for increased taxation. Sadly, the taxes and fees are not invested in increasing efficiency or enlarging airport/airline capacity or airway infrastructure…the funds are put into the treasury, according to Peter Cerda of IATA.

In one Caribbean state, roughly 70 percent of the average one-way fare is composed of taxes and fees. At least 10 other Caribbean markets taxes and fees account for 30 percent of the ticket price. For a family of four traveling to Barbados from Europe or North America, the tax can add over $280 to the costs. The tax also impacts on air travelers within the Caribbean region, adding at least $35 to each ticket, an onerous increase in short haul markets where traffic is already on life support. Imposing heavy fees and taxes on aviation and air travel negatively impacts on tourism and business travel – the base for the economies in many of the nations.


High Cost of Doing Business

The aviation industry is not easy to enter and expensive to maintain. Restrictive air service agreements reduce the number of routes airlines can operate and restrain trade. Ambassador and Secretary General of the Caribbean Community, Irwin LaRocque has stated, “There is no doubt that safe, efficient and cost-effective transportation within this region is of critical importance to our regional integration process. Given the geographic spread of our Member States, such a transportation system is essential to fulfill the goal of free movement of people and goods. It is equally important to fostering the spirit of community among our people. It would also facilitate the growth of tourism that is so crucial to the economics of our Member States.”

Addressing Caribbean Aviation Challenges: 4th Annual Caribbean Aviation Meetup (CaribAvia)

CaribAvia Meetup was recently held in St. Maarten and attendees were welcomed to the island by the Minister of Tourism and Economic Affairs, Transport and Telecommunications, the Honorable Stuart Johnson.

Johnson called for a reduction in the use of fossil fuels in order to reduce pollution. He also encouraged connectivity from island to island. Looking to the future, Johnson is working for approval of US clearance in St. Maartin, establishing the country as a regional aviation hub.

The conference was designed and coordinated by Cdr. Bud Slabbaert, Chair/Initiator Caribbean Aviation Meetup.

Seth Miller (PaxEx.Aero) stated that the conference focused on the question…” whether external factors could benefit the islands in a way that offsets the risk of potential damage to their local operators. Few countries want to see their home airlines pushed out of business, but the business case for small, single-island operations is hard to justify.”

Miller continued, “Curacao recently suffered the loss of InselAir, leaving the island struggling to stay connected to the rest of the world. Giselle Hollander, Director of Traffic and Transport for the island….(is) trying to make sure its two small airlines can survive and thrive while also quickly restoring connectivity….(and) is keen to ‘work cooperatively on this front rather than fighting…It is not effective to work on our own policy if it doesn’t work within the region.’”

Proximity

Vincent Vanderpool-Wallace, Principal Partner of the Bedford Baker Group, Nassau, Bahamas, suggested that intra-island tourism could increase and help sustain the tourism industry by lowering airfares, making them affordable to Caribbean residents.

While on the surface this appears to be a realistic approach to stabilizing tourism as the Caribbean region, with a population of 44,415,014 (as of June 25, 2019), is equivalent to 0.58 percent of the total world population, with an average age of 30.6 years.

The reality is that except (perhaps) for the Bahamas, the richest country in the Caribbean community with a gross national income per capita of $21,280 (World Bank Development Report, 2014) and Trinidad and Tobago with a per-capita income of $17,002 (2019), his suggestion may not be pragmatic.

Other countries in the region are not as fortunate as Trinidad and Tobago. Antigua’s GDP is $12,640; Suriname $8,480; Grenada $7,110; St. Lucia $6,530; Dominica $6,460; St. Vincent and the Grenadines $6,380; Jamaica $5,140; Belize $4,180 and Guyana $3,410.

While these numbers may reflect GDP, they are not reflective of Discretionary Income with the Dominican Republic reporting $491.37 and Saint Lucia declaring $421.11 in discretionary funds.

As of June 20, 2019, a flight from St. Maartin (SXM) to St. Vincent (SVD) will take 20 hours, 20 minutes at a cost of $983.00- $1,093.00. Exactly what (and where) are the sources and resources for an uptick in discretionary income from the Caribbean residents that can be directed to airline tickets and a holiday in a neighboring island (at current ticket prices and complex travel connections)?

Economic Expansion

In order to afford airfare, the majority of the region will have to increase economic opportunities and sustain growth in excess of 6 percent. There is little clear statistical evidence to suggest that most countries in the region will achieve this growth rate, let alone sustain it.

Cost of Doing Business

Another challenge to intra-Caribbean island aviation is the high cost of operating. Many of the region’s airports are expensive to operate and pass along high fees and charges to passengers. In addition, restrictive air service agreements in many countries frequently reduce the number of routes airlines can operate.

According to Peter Cerda, IATA’s Regional Vice President, The Americas, the region can increase the benefits that aviation delivers but it can only occur in partnership with governments that recognize that the true value of aviation is in the connectivity it delivers and opportunities it creates, and not in the fees and taxes that can be extracted from it.

Lessons To Be Learned

Aviation: A Stepping Stone to Caribbean Tourism Expansion… or Not

AT the CaribAvia MeetUp, Robert Ceravolo, CEO, Tropic Ocean Airways (Florida), recommended the standardization of regional airlines plus the availability of aviation training opportunities with a focus on careers and not jobs. In addition, he suggested public/private partnerships with seaplanes that will enable guests to quickly reach high-end resorts.

Dr. Sean Gallagan, Associate Dean of Transportation Programs, Broward College (Florida) focused on the need for half-million new technically skilled jobs by 2036. Gallagan suggested introducing high school and college students to career opportunities in the Caribbean aviation industry through summer camp experiences and developing public/private partnerships as a way to fund these programs.

Paula Kraft, the Founding Partner, DaVinci Inflight Training Institute, recommended job/career training in the area of inflight food service. There is a need to build awareness of food allergens and high-risk foods (i.e., meat, seafood, poultry, dairy products, raw and heat-treated foods such as rice and cooked vegetables). Many employees are unaware of the dangers associated with purchasing supplies and serving under-cooked or inadequately prepared foods and unfamiliar with the consequences of using contaminated equipment, and poor personal hygiene. In addition, in-flight personnel training should include Service Protocols in order to provide professional assistance to clients.

Open or Closed Skies

CaribAvia organizer, Cdr. Bud Slabbaert questions the reality of Open Skies and recommends not using the term when discussing Caribbean airspace as it, “…immediately activates defense mechanisms as it comes across as eliminating regulations and government interference.”

In practice, Open Skies agreements are bilateral air service arrangements negotiated between countries, involving passengers and cargo services. All parties to the conversation must agree to agree to opening their markets. At the moment, Slabbaert finds that the need to get 20+ countries to agree is almost impossible; perhaps the reason that nothing happens and “…another Summit of Honorables is not going to change it.”

Hope Springs Eternal

Slabbaert is hopeful! He suggests the use of incentives, rewarding countries and airlines that promise (and adhere) to the concept of Open Skies be issued a certificate and Seal of Approval on an annual basis. He also recommends a focus on inter-island tourism with the countries making efforts to seek solutions that might actually be attractive to the traveler. Certainly, adding taxes on airline tickets, hotels, and every other parts of the tourism experience is not a reward for visitors who decide to wend their way to the, “Caribbean Friendly Skies.”

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