Saturday, December 16, 2017

The case for keeping CAL flying

 The article in the June 11 Business Express begged the question: CAL, a business enterprise, or political toy?

Actually the much bigger question is: Do we need a national/regional airline in the first place?  And if so why?

If you were to conduct a poll amongst the rank and file of T&T citizens, the answer to the first question would probably be a clear-cut no, but if there was a well defined, strategic purpose that made long term economic development sense, that answer might be quite different.

Far too many countries have gone on costly ego trips to enable them to boast of having a national carrier, and have been obliged to pay both an economic and political price for their hubris. Operating an airline in today’s fiercely competitive world, usually in direct competition with such giants as British Airways and American Airlines, who can simply cut fares below the breakeven point until the competition folds, is surely a fool’s game.

If, however, the clearly stated strategic purpose of having a national carrier was to provide Trinidad and Tobago with the  transportation infrastructure necessary to position it effectively on the world economic stage, by opening up a highway network in the sky to our international trade, financial, and tourism markets, and so use it to stimulate a whole new range of business opportunities, then the cost of operating an airline ceases to be an expensive extravagance, and becomes a sensible long term investment in the future, not dissimilar to building a major highway network on the ground. 

To provide guaranteed access to source markets, and be able to control their long-term development would certainly qualify as the kind of strategic purpose that justifies the ownership and operation of an airline, as opposed to simply providing air transport for nationals to visit friends and relatives in New York, Miami, London and Toronto, and conversely for the diaspora to return home, which has long been BWIA/CAL’s primary marketing objective, but which contributes little to the wider economy.

Butch Stewart was frequently, and rather unfairly, accused of operating Air Jamaica for the sole purpose of filling his own, Sandals-branded hotel rooms. Actually all the hotels in Jamaica benefitted  from this service. 

But the government of Jamaica was aggrieved that over time it had reportedly cost the treasury almost three quarters of a billion US dollars. Butch, never easily put down, retained the Massachusetts Institute of Technology, one of the world’s most iconic academic institutions, to assess the overall economic benefits that  accrued to the country as a result of having its own national airline over that same period of time. Their reported estimate: 8 to 9 times greater than the actual operating loss experienced by Air Jamaica.

The trouble is that neither BWIA, nor CAL, principally because of continued political tinkering, ever got anywhere near the adoption of a credible long term development plan, or if they did, it was never published.

Trinidad now appears anxious to mount a broad-based economic thrust, not unlike what we have seen in the Gulf States. And Tobago, like most of the Caribbean, must develop tourism, since it has no employment alternative, other than jobs with the public sector.

You have to cast your bread on the waters if you want to see a return. Would it really matter if CAL were to record an operating loss, if  by doing so, it provided the communications infrastructure necessary to fulfill Trinidad’s ambitions to become a regional trade, tourism, and financial hub, and  was able to realise Tobago’s obvious tourism potential, so long lying fallow?

John Bell