A worldwide economic slowdown and flying fears following the Sept. 11 terrorist attacks have decreased tourism arrivals to the Caribbean by 10 percent in the past year, according to the Caribbean Tourism Organization, which represents 34 member countries.
Three of the largest airlines – Antigua-based LIAT, Air Jamaica and Trinidad-based BWIA – have reported millions of dollars in lost revenues, prompting regional leaders and industry officials to call for a merger to cut costs and keep the planes flying.
The three airlines, which are all at least partially state-owned, have said they are restructuring and will soon return to profitability.
But "there can be no rejuvenation of Caribbean tourism without the simultaneous reinvention of Caribbean air transportation," Bahamian Premier Perry Christie said recently at a tourism conference.
Trinidad has launched a new study into whether an airline merger would be profitable or even possible.
American Airlines, the Caribbean's largest carrier, controls 70 percent of the region's $1 billion air travel market but is struggling to cut costs after large losses. Its Fort Worth, Texas-based parent company, AMR Corp., announced last week that regional subsidiary American Eagle was planning to sell Caribbean carrier Executive Airlines to Puerto Rican hotelier Joaquin Bolivar.
One concern for Caribbean businesses and residents is that declines in air service could leave some destinations cut off from tourists and much-needed revenue.
In recent years, American had demanded that some smaller islands pay to ensure air service. In 1999, St. Lucia refused to keep paying a $1.7 million annual subsidy and turned to Air Jamaica, which doubled the number of flights without a subsidy.
"You need to have some assurance that the airline service will be there," said Byron Blake, assistant secretary-general for the 15-country Caribbean Community.
Not everyone is sold on the idea of a merger. Air Jamaica, which has lost $70 million in the last year, says it's willing to cooperate with other airlines – to a limit.
"The idea that three or four companies that are losing money would merge into one company doesn't make much sense," Air Jamaica president Bruce Nobles said.
Labor unions worry a merger would mean massive job losses. "Any arrangement that threatens to put workers on the bread line must be of concern to all of us," BWIA union leader Jagdeo Jagroop said.
Merger supporters include Christie of the Bahamas, Trinidad's Prime Minister Patrick Manning, and Prime Minister Ralph Gonsalves of St. Vincent and the Grenadines.
LIAT, which started a limited alliance with BWIA in June to share flights, has said it would like a regional regulatory body to oversee the industry.
BWIA, which has requested a $13 million loan from Trinidad's government, said it fully backs the merger study.
It wouldn't have to be a complete merger, advocates say, but should include high-level cooperation. Fuel could be purchased in bulk at a greater discount, for example, and regulation could be improved by reducing the number of routes, said Luther Miller, financial director at the Caribbean Tourism Organization.
Additionally, it would limit competition, which can be fierce as airlines vie for ticket sales with U.S. and European airlines, charter services and cruise ships.
"The region does not have sufficient mass (of travelers) to support a multiplicity of airlines," said Rolph Balgobin, executive director of the Institute of Business at the University of the West Indies in Trinidad.
The Miami Herald
