Cut CAL to the bone
By Raffique Shah
May 19, 2013
If anyone can produce proof that there was a time when this country's state-owned national airline, in whatever incarnation, made a real profit over a sustained period, meaning at least one year, I would surrender my sanity and vote in the next election. I feel safely insulated from having to do something so unpalatable because I know that in the post-Independence history of BWIA, now CAL, taxpayers who may have never travelled on an aircraft have paid dearly to keep the airline afloat. In the process, they have funded generations of joy riders who are stricken with a stratospheric strain of "gas brains", and affliction I call "plane brains".
It is not that the airline has never had astute entrepreneurs at its helm: in the recent past, Conrad Aleong and Arthur Lok Jack come to mind. Nor can anyone accuse it of mediocrity among its professional staff—pilots, engineers and so on. Indeed, the airline's safety record speaks volumes for its quality staff, although some of its managers were mediocre and its customer services less than flattering.
From a commercial perspective, airlines are not the most profitable enterprises, be they government owned or private entities. IATA data speak of an average global profit margin of one per cent. Over the past 30 years or so, the "body count" of airlines that have failed is high and includes some of the biggest names in the business ever. The success stories are few, mostly those that control routes or gateways to economically hyperactive countries and regions, the current list dominated by Mid-East and Far East carriers.
CAL (I include BWIA in using this acronym) controls neither. It never did. True, many countries in the Caribbean are among the top tourist destinations in the world, attracting millions of visitors every year. But CAL does not service The Bahamas, Cuba and the Dominican Republic, the three biggest tourist destinations in the region.
As for our highly touted strategic location as the gateway to booming South America, that is a cruel joke. The number of weekly flights from Piarco to Caracas or any city in Brazil must make for comic relief. I shall not dwell on politically driven dreams of flying to India and parts of Africa: write these off to alcohol-induced stupor.
Contrary to what several of its politically appointed chairmen have boasted from time to time about profits, it's an illusion, a case of creative accounting, fiddling with figures or worse. In other words, these chairmen may take us for fools.
The airline business is by nature not particularly profitable, especially when much of the global economy is under stress (fewer people travel) and when fuel prices are high. Some no-frills, low-budget carriers are successful (Virgin, Southwest), as are the expanding Middle-East fleets (Emirates, Qatar), which, I suspect, benefit from generous fuel subsidies. The Arabs can afford to splurge, and adventurers like Richard Branson are astute…and lucky. We enjoy none of these luxuries.
Our resources are not limitless. We therefore have to make harsh decisions, and none more so than what we do with the national airline.
Maybe we can start by handing back Air Jamaica to the Jamaicans, tell our brethren in Kingston thanks, but no thanks—don't even bother to repay what we have already lost in that disastrous misadventure. Then, don't just tinker with what is left by saddling a new board with an age-old problem: we must have the courage to cut CAL to the bone and rebuild from scratch.
In his column last Monday, my colleague Michael Harris offered some radical but worthy options. Fly to Miami and/or Caracas to access Latin America. Stay with New York to open up the rest of the world. Fly to Barbados to get direct access to the UK and Europe. End the international side of CAL's operations, flying to faraway places, Michael suggests, and I agree. Barbados offers scores of weekly flights to Europe and many more to North America, a virtual gateway to the world thirty minutes away from us. Trinidad will never attract that volume of international flights.
The only other focus for CAL, besides the Tobago air bridge, will be to rationalise Caribbean inter-islands travel with LIAT, possibly reduce fares and encourage multi-destination tourism.
End of story, and quite possibly the end of our perennial headaches underwriting a national airline that serves the interests of a few at the expense of many.
It's not that the CAL-drain began when the PP assumed office in 2010. It was always there, as were the freeloaders, who are more a nuisance factor—displacing paying passengers—than the main cause of the airline's financial woes. Harris argues that even if the scaled-down operations require some State support, we need the airline for several reasons. As a twin-island-state, we must have access to the rest of the world, and we cannot rely on private operators who would shut down the damn thing if it remains unprofitable.
The suggested pruning of the airline's operations, without sacrificing people's ability to access any destination in the world, will result in significant savings. CAL can cut back on its fleet, selling off older aircraft and ending the lease arrangements for others. In the process, it will significantly reduce the fuel subsidy. There will be a reduction, too, in staffing requirements (it can continue offering its quality engineering services to other airlines), but such exercises have affected more strategically valuable industries and services.
And CAL's withdrawal from certain routes will likely attract other operators to fill the breach, bringing in much-needed revenue to Piarco Airport.
Some of these ideas may be practical and could possibly save us hundreds of millions of dollars. But do they make political sense? Hardly. Like URP, corruption, runaway crime and general lawlessness, we seem destined to be forever saddled with a loss-making, debt-ridden national airline until we summon the courage to collectively say, "Amen!"
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