Sir Ronald Sanders is a business executive and former Caribbean diplomat who publishes widely on small states in the global community. Reponses to: ronaldsanders29@hotmail.com

On November 21 this year, Caribbean Airlines – the proposed successor company to BWIA, the Trinidad and Tobago state-owned airline – announced that it was entering a “partnership” with British Airways from March next year.

Under this “partnership”, Caribbean Airlines will give up BWIA’s current lucrative slots at London’s Heathrow Airport in return for code sharing with BA from Gatwick Airport – a considerable distance from London.  BA will clearly be the senior partner in this proposed relationship controlling the inventory and pricing.

My observation in November last year echoed the views of several regional airline experts, and reflected the conclusion of the 1992 West Indian Commission which stated in its report, “Time for Action”, that a single CARICOM airline, in some form, was vitally necessary and the national airline option should be abandoned.

The calls for a regional airline came against the background of severe financial losses by all the national airlines, and even the privately owned, Caribbean Star, which was competing with LIAT in the Eastern and Southern Caribbean.

At the time, three government-owned airlines that serve multi-destinations within the region, were all undergoing major restructuring exercises.  This followed a decade during which they collectively incurred losses in excess US$1.5 billion funded by taxpayers’ money.  These airlines were:  Air Jamaica, BWIA and LIAT, though it should be mentioned that Bahamas Air, the national airline of the Bahamas and Cayman Airlines were also doing poorly.

The restructurings of the three airlines are expensive and are being funded by taxpayers.  US$400 million was spent on restructuring Air Jamaica, the Jamaica state-owned airline.  Yet, last year, the airline lost another US$136 million which will have to be picked up by the government.  This questions the value of its restructuring.

In the case of BWIA, the Trinidad and Tobago state-owned airline, the government was backing the airline’s borrowings and other transactions with guarantees.  Finally, this year, the government decided to close down BWIA and pump US$250 million into a successor company, Caribbean Airlines.

Caribbean Airlines is essentially BWIA with all the old union contracts gone.  This means some of the employees will be severed and others offered new relationships with the new entity.

With regard to LIAT, the restructuring figure bandied about last year was US$50 million.  At that time, continued competition with Caribbean Star was still envisaged.

In all this discussion about restructuring and financing, the notion of a single Caribbean airline was hardly discussed even though, in 1995, the Caribbean Tourism Organisation (CTO) commissioned a report which identified huge savings that could be achieved through cooperation and different levels of integration of national airlines.

The annual savings were sufficient to offset the annual losses that these airlines typically sustained.

The CTO-commissioned study was ignored.

In 2005, the Caribbean Hotel Association (CHA) examined the issue again and in clear, unequivocal terms, concluded that a regional airline was the only way forward.

It issued a White Paper to form the basis for a discussion between the three airlines and their government owners and called for the creation of a regional airline.

Again, the White Paper was ignored.

Then, on November 21st this year, the new Caribbean Airlines announced the formation of its “partnership”, with British Airways starting from March next year.

What is remarkable about this announcement is that a Caribbean airline can find the means to partner with a foreign airline but there is no sign that the airlines of the Caribbean can partner with each other.

Caribbean Airlines, for instance, has already made suggested plans to establish its own Dash-8 subsidiary to feed its bigger airlines at hubs in Trinidad, Barbados and Antigua.  This means that it will still compete with LIAT and Caribbean Star or the airline that emerges from a current negotiation between these two ailing airlines to create a single airline.

It took years of losing money, through competition with each other, before the shareholders of LIAT and Caribbean Star finally decided to stop their joint hemorrhaging.

In the meantime, Air Jamaica stands mightily aloof from the developments surrounding the other nationally owned airlines.  It will continue as the national airline of Jamaica and the Jamaican taxpayers will foot the bill of US$536 million that might otherwise be spent on health or education.  It will also continue to compete with BWIA/Caribbean Airlines out of New York into the Eastern Caribbean causing both airlines to lose money.

What is more, according to the Ministry of Finance, Air Jamaica will be using “older model planes” in an effort to save US$25 million.  Although, who will be happy over the use of “older model planes” is anybody’s guess.

But, the problems of Caribbean airlines have not changed since a year ago.

They still face high costs as a consequence of their separate operations.  They continue to forego the benefits of economies of scale that could have applied to a single airline or even to the merged operation of some of their activities such as offices at airports, check-in counters, telecommunication circuits, and the purchase of jet fuel.

BWIA and Air Jamaica still carry fewer passengers into and out of the region than their foreign competitors.  For instance, American Airlines carries far more people between Miami and Port-of-Spain than BWIA. The national Caribbean airlines are outdone by the foreign carriers with greater resources.

These national airlines will not long survive unless governments continue to pour money into them.  The case for grounding them remains solid.

Trinidad and Tobago may have Caribbean Airlines from January and for a time, but it seems that the CARICOM region will never have a Caribbean airline.