by Al Edwards (Jamaica Observer Newspaper)
FRIDAY, December 16, 2011 - LOW-cost
Caribbean airline carrier REDjet, which last month began flying from Barbados
to Jamaica, Trinidad, Guyana and Antigua, is looking to add new routes as it
begins to fine-tune its operations.
On the 20th of
November, REDjet launched its inaugural flight from Port of Spain, Trinidad
& Tobago, to Kingston Jamaica. The next day it flew from Trinidad to
Barbados and the following day it flew nonstop direct from Guyana to Antigua,
the first time that route has ever been flown.
In effect, the airline opened up three new
routes rather quickly and is looking to expand on those. It has already lined
up flights to St Lucia and is now contemplating operations in Latin America.
Speaking to
Caribbean Business Report from the airline’s headquarters in Barbados, REDjet’s
chairman Ian Burns said: “The real key thing is that we have now linked the
northern Caribbean to the eastern and southern part of the region with a
nonstop all-jet service.
We made the promise that we would reduce the cost of
flights in the region by 60 per cent and we have done so. If you look at the
prices in the region there has been a fantastic reduction. One can fly from
Jamaica to Barbados round-trip for just US$200.
“From Barbados to
Guyana the fare is between US$100 and US$120 including taxes. A round-trip from
Trinidad to Barbados will set you back about US$90. The great thing about
linking the Caribbean is that you don’t need visas, you just grab your passport
and away you go. We are now linking the Caribbean in a very affordable way.”
A
helping hand to Caribbean students
Burns points to the
travel bill of students of the University of the West Indies (UWI) and notes
that is yet another hardship they have to bear on top of high fees and the
rising cost of living. He declared that as far as air travel is concerned,
REDjet is now able to cut airfares by over 50 per cent for students.
Already REDjet is
allowing students in the region to travel with two free bags. He insists that
even with baggage, students would still see a 50 to 60 per cent reduction in
airfares. He believes those savings can go back into education and during
recessionary times students need every penny that they can get.
Targeting
the Spanish speaking region
REDjet has
considered going into Suriname, but is aware that it already has a national
airline. Countries that do have a national carrier will no doubt prove
difficult for REDjet to go up against.
The airline’s
ambitions do not reside just in the English-speaking Caribbean. It sees plenty
of opportunities in the Spanish-speaking side of the region and has set its
sights there. “If you are going from English-speaking countries into
Spanish-speaking countries, then you have to make a sizable investment in the
sense of changing systems, language and specifications on all aircraft
designated for those destinations. We are now in the process of doing all that.
We have a critical plan in place for the Spanish-speaking countries of the
region. The populations are obviously bigger than the English-speaking Caribbean
countries and we think we can make our presence felt there,” explained Burns.
More
airlift needed for the Caribbean
Many have declared
that the Caribbean Single Market and Economy (CSME) and Caricom as a whole has
been most disappointing and indeed may well become a failure. One of its
shortcomings has been its inability to effectively link the region by air
travel which stymies the search for employment opportunities and leisure
travel. The linchpin of both the social and economic benefits of the CSME was
to be good air links, but after fifty years this has not yet materialised.
On this issue,
Burns said: “Most of the countries of Caricom have made it clear that they need
more airlift as a key driver of stimulating social and economic growth. What people
have not agreed upon is, how are they going to do it? What is plain to see is
that the incumbent airlines do not have the capacity to increase the amount of
airlift in the region and have been unable to do so for the last 40 years. In
fact, it has retracted, so one clearly sees that new airlines in the Caribbean
are needed. We need people with a new approach and a new product. The Caribbean
region has fallen way behind in competitiveness over the last 20 years, and the
cost of air travel has been a major factor here. That’s why many people, both
in and out of the region, find it difficult to do business there. Here I’d like
to think that REDjet is a catalyst for serious change. When one looks at
communication, Digicel came in ten years ago and nothing has come in
afterwards. We want to re-energise the airline business in the Caribbean.
“Recently the
minister of finance of Barbados was talking about an inner and outer Caribbean.
I think that is a retrograde step to say that; after all, Barbados is responsible
for the CSME. The region is supposed to be a single market, not an inner and
outer disparate entity. What we are finding over the years is that decisions
are being made based on what countries in the Caribbean cannot have airlift.
Barbados is now deciding which countries around it can have low-fare airlift
and I don’t think that is right. You shouldn’t be able to determine for another
country whether they can or cannot have a lowfare carrier. Clearly not every
country can afford to start an airline because the markets just aren’t big enough.
When you have an airline, you have a responsibility to the region and to the
consumers not just in your own country. That has to be taken into consideration
far above any narrow sense of agenda such as protection of a local airline.”
Red
tape eating away at REDjet’s initial US$8-million investment
REDjet’s Barbados
partner, the chairman of Williams Industries, Ralph “Bizzy” Williams, has said
that excessive delays and suffocating red tape had eaten away at the initial
US$8 million set aside for operating expenditure. Now with 100 staff members
and three routes secured it finds itself financially constrained and unable to
aggressively go about taking market share.
“The money had to
be used in all of the delays that took place while we were waiting for
permission to fly. We had to use it to pay staff and keep things going though
we were not flying.... I am going to lose millions of dollars.
“I believe the
technocrats decided that the politicians were wrong in designating REDjet as
the national airline of Barbados, so the politicians had to wait on them to
proceed; they are the ones who sabotaged us,” Williams is reported to have told
the Barbadian press.
Wherever REDjet has
gone, it has been met with resistance and a surfeit of bureaucracy that is an
abject lesson in how to prevent foreign investors coming to your shores. So
what are Burn’s thoughts on this matter?
“Decision making
throughout the Caribbean is unbelievably slow and people seem afraid to make
decisions. This prolonged decision-making process causes frustration and
heightens tensions and leads to the wasting of money. Obviously decisions have
to be considered and measured but it has to be much speedier than what
currently pertains in the Caribbean. It should be a much more open and
transparent process.
“You have people
hiding behind closed doors. No one will tell you what level of subsidy
Caribbean Airlines and Liat got last year and yet this is taxpayers’ money and
taxpayers are entitled to know these things. Governments here tend to adopt
this clandestine approach to taxpayers’ money and I don’t think that is right.
The taxpayer and consumer should be given far more consideration. Today people
want more information and that should be embraced. It’s not the government’s
money, it’s the taxpayers’ money and they want to know how it is spent. We have
experienced some horrendous delays with governments which have cost us a
fortune. For example we have been looking at four routes over the last two
years which has meant that Barbados has lost 125,000 passengers which means
US$58 million could have entered the economy which will not come back. Now that
doesn’t just hurt Barbados, it hurts its neighbours as well.”
Getting
a hard time from the competition
REDjet’s CEO added
that he is fully aware that many other Caribbean carriers do not want REDjet in
the region and regard it as a threat to their business. He mentions that a CEO
of one of the key regional carriers came on television and said REDjet has
forced it to reduce its fares on certain routes.
“Now that’s
something they shouldn’t be announcing with a heavy heart. It’s something that
they should be striving to do. It should be one of their internal objectives.
To say that you have been forced to reduce fares is symptomatic of the attitude
that has prevailed and why airfares are so high in the region,” said Burns.
Four
new aircraft for next year
REDjet currently
has two aeroplanes with a third expected to be operational this month. There
are plans to add a further four aircraft next year.
However the airline
is not yet certain of what routes it will be flying and therefore cannot be
more specific as to when the additional planes will become operational, as
Burns says, “ It’s not in our economic interest to bring in planes and then
wait for routes. The really bright spot in terms of doing business in the
region is that five countries gave REDjet permission to fly before Barbados
did."
St Lucia, St Kitts,
St Maarten, Antigua and Grenada all want low fares because they have lost jet
services to their countries with Caribbean Airlines pulling out and Air Jamaica
no longer going down there, meaning these countries have lost significant
airlift. Unfortunately Caribbean Airlines and Liat will not bring back those
numbers, so therefore we are the only show in town.”
REDjet’s Boeing
aircraft are comfortable and the service is friendly. Passengers are not cooped
up on top of each other. Although 179 seats could have been put, in to make
flights more comfortable, they opted for 149 seats in order to give passengers
extra leg room. Burns says he is very pleased with the feedback so far and that
passengers have taken well to the product.
“We have started a
brand new business, a business that didn’t exist before. The way we go to
market is different from other airlines. I think people are finding it very
easy to do business with REDjet and in fact other airlines are beginning to
copy our distribution models. We seem to be able to engage with the average
person on the street. Our passenger is generally someone who was not able to
previously travel because of cost,” explained Burns.
Based
in Barbados
So what advantages
does he see being based in Barbados? He responds by reiterating that REDjet is
a Pan Caribbean airline with a model that sees it having a number of bases
throughout the Caribbean. “Barbados happens to be the country that said yes
first, so we were always going to be based here. We would love to have a base
in Jamaica and three other bases in the region. Being in Barbados means that we
have received a degree of political acceptance although over the last two
months the waters have been muddied a bit. These things we will overcome. We
are very grateful that Barbados said yes to us first.”
The northern
Caribbean is clearly more populated than the eastern Caribbean and so REDjet
will be concentrating its commercial activity in terms of flying on the
northern and western Caribbean. However, it will remain headquartered in
Barbados for the foreseeable future.
Airlines
can be run profitably
“Our objective is
that everyone can fly somewhere for US$50. No other airline thinks that way. If
you look at fares over the last four years they seem to be increasing at a
quick rate despite everybody having either a fuel or government subsidy. That
is no good for the people of the Caribbean. It seems to me that the more money
these governments put into these airlines the higher the fares go. So where is
the money going? No one appears to be accountable. You can understand why there
is institutional resistance to REDjet because people will have to become
accountable for what they are doing, because competition means if they don’t
provide a decent service at a fair reasonable price then the passengers are
going to keep going to where the cheaper fares are. Now why do I say this?
Because on the routes that we fly where there is competition, the fares have
come tumbling down. If you have to keep putting taxpayers’ money into a
business every year then it is a failure, don’t you agree? The bottom line is
that airlines can be run profitably and I think it is incumbent on the
political body within the region to make airlines much more accountable in
terms of the dollar spend and making the taxpayers’ money go further,” said the
REDjet boss.
