By IPS Correspondents
PORT OF SPAIN, Nov 18 2003 (IPS)

The plan was to have a single airline flying the skies of the Caribbean by January 2004, but bedevilled by financial problems, the project has all but ground to a halt.

“Progress is slower than anticipated,” Trinidad and Tobago Trade Minister Kenneth Valley told IPS, adding that it would not be pragmatic to establish a single airline while the two main carriers involved in the project are still in the red.

More than one year ago, the financial problems facing Trinidad-based flyer BWIA were seen providing the impetus to create a single regional carrier that would include smaller Antigua-based Leeward Islands Air Transport (LIAT), another loss-making enterprise.

But BWIA has not been able to reverse its financial situation and the government here has already warned that it is seriously considering stopping further financial assistance to the firm.

Various voices have spoken up to support or criticise government support for the airline industry, a debate that is much more than a business decision here as the industry is vital to the growth of Caribbean tourism, a major contributor to the region’s socio-economic development.

According to the Caribbean Tourism Organisation (CTO), the travel industry injects about 20 billion U.S. dollars annually into the region and creates one in every four jobs.

“These figures strengthen the argument that tourism is indeed a driving force for job creation. And, with job creation comes social harmony,” he added.

The CTO’s latest figures show that just over 11.5 million visitors travelled to the region during the first nine months of this year, while overall visitor growth is expected to be around 6.5 per cent in 2003.

“The tourism sector’s performance this year represents a continuing process of recovery after the global fall off in travel due to the 9/11 tragedy, the wars in Afghanistan and Iraq and the AARS scare,” the CTO said.

That recovery has been boosted by the decision of U.S.-based Continental Airlines to start flying into Trinidad from Dec. 13.

Many smaller airlines operate in the region. The smaller Eastern Caribbean islands, unable to sustain their own national carriers, have designated BWIA as their carrier.

Valley said government and BWIA are considering various options to give the airline a lift. One is to get the flyer’s other shareholders to pump more money into the company, or “for them (shareholders) to look at disposing of their shares at a nominal price” to government.

Port of Spain already controls 49 per cent of BWIA stocks, and has provided more than 10 million dollars out of a promised 19.3 million dollars to fuel the airline’s recovery.

Last year BWIA lost 34.4 million dollars and the haemorrhaging continues this year.

Trade unions here are urging the government, which in 1995 privatised BWIA, to consider acquiring the airline fully.

The best option is for the crippled flyer to revert to state ownership, Christopher Abraham, president of the Aviation Communication and Allied Workers Union (ACAWU), told IPS, reacting to media reports that British Airways had made an offer to take over the airline.

“Government should capitalise on the situation and not wait much longer. I think new ownership is the best thing for BWIA. The airline needs the government at this point in time,” Abraham said.

“If the private sector is not willing to get involved, then government has to get involved,” said Abraham, whose union represents 1,000 BWIA employees.

Regional aviation analyst John Gilmore says he supports British Airways intervention.

Gilmore, a founding member of the Air Jamaica Acquisition Group that negotiated the purchase of Air Jamaica from the Jamaican government in 1994, says he supports the bid in principle, with one condition.

“I would think if British Airways were to come in with an interest in BWIA, it would make logical sense for them to continue that interest in LIAT, which provides regional distribution for them. Without them, (LIAT) I would think it would be pretty much a non-starter for the Caribbean,” he told the Barbados-based Caribbean Media Corporation.

The Trinidad and Tobago government has remained silent on the British Airways proposals, confirming only that an offer was made.

Efforts over the last three decades to create a single Caribbean airline have been dogged by a number of factors, including insularity.

St. Vincent and the Grenadines Prime Minister Ralph Gonsalves, who has lead responsibility for aviation matters within the region, told reporters this month that a lot of technical work remained before the single airline could fly.

“We are not going to meet the January 1st deadline for the nexus but we are going to meet it hopefully, sometime before the end of the first half of next year,” he promised.

“The airline business all over the world today is in real difficulty. In the region, BWIA and LIAT would be marginal propositions in financial terms but they perform a critical strategic function,” he added.

“You cannot have a community without communication and air transport is a vital aspect of communication, and we are proceeding with our strategic decisions,” he said.

Texan born billionaire R. Allen Stanford, who owns the three-year-old Caribbean Star, the latest airline serving the region, says that governments should step aside and let competition and market forces guide the industry.

While both BWIA and LIAT have been accumulating debts, Caribbean Star has been able to maintain its profits since it began operations.

“This issue of one regional airline supported by government, I think, is the wrong direction . governments are not in the business of being in business,” Stanford said in a radio broadcast here.

While governments should handle regulation and supervision, “if you regulate that industry and protect that industry, then you put the players at a disadvantage”.

Even as he praises the work of Stanford in the Caribbean aviation industry, Gilmore believes that a single regional carrier is the solution, and has called on regional governments to pursue the merger of LIAT and BWIA.

“I think Mr. Stanford should well be a part of an overall solution. If he wanted to take over BWIA or LIAT and I were a Caribbean government, I would jump at the chance,” Gilmore added.

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