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Making Air Transport work better in the Caribbean

Posted in: Documents | 31 May 2015

The Air Transport Sector in the CARICOM Region is close to reaching a tipping point. Some domiciled carriers that have made significant contributions to the socio-economic welfare of the economies they have served over the years, are going through a period of uncertainty. The airlines continue to make losses, with shareholder governments concerned about having to prop them up indefinitely. Against this backdrop, the Caribbean Development Bank (CDB) has commissioned an independent study that details the need for a complete rethink of the modus operandi of the regional airline industry, and spells out a set of practical ‘how to’ recommendations to: a. limit the vicious cycle of losses, high debts, bankruptcies and bailouts; and b. to place the industry on firmer footing in order to facilitate its re-launching into the global marketplace as a stronger competitor.

The Study was carried out between Autumn of 2014 and Spring of 2015, and solicited participation from a broad range of air transport industry stakeholders, including the Region’s domiciled carriers. Their evidence, along with supporting written statements and secondary evidence, yielded the following key findings and recommendations. Aggregated accumulated deficits for the three major (all government-owned) airlines of the Caribbean Region amounts to approximately USD1 billion (bn). These airlines cost their respective taxpayers around USD100 million (mn) every year to keep them in business. However, aviation provides a lifeline to the rest of the CARICOM economy, enabling tourism to contribute over USD4 bn to the Gross Domestic Product (GDP) and provide 280,000 jobs.