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The Cost of Connecting the Caribbean: BWIA West Indies and Caribbean Airlines
Looking across the U.S., it’s common to see carriers cancel unprofitable routes in order to move aircraft to more popular and profitable routes. Whether it is a single route or the dismantling of an entire hub, carriers are not shy about doing what they can to maximize their profits. However, the Caribbean poses a different issue, with many local carriers hanging onto years worth of unpaid debt to keep the island connected to the world. This series dives into the carriers of the Caribbean and their tough decisions between trying to keep their island connected to the world and turning a profit.
Lack of profitability is certainly not a new concept in the Caribbean, especially to airlines such as BWIA West Indies Airways. Growing rapidly while hemorrhaging money, the airline became the largest airline in the Carribean by 2003 and served as a benchmark goal for other airlines in the region to reach. Seemingly unhindered by its unprofitability, BWIA operated flights to 18 different cities across North America, South America, Europe and the Caribbean along with codeshares with United and LIAT to further their destinations on offer.
While the airline was the benchmark for size, it wasn’t for profitability. The flag carrier was hard to keep privatized, as investors noticed that the airline was being bailed out yearly by the government, which holds a minority interest in the airline at 35 percent. Even BWIA ‘s most profitable years included losses of nearly $50 million and the carrier’s management was only making the situation worse by starting a new subsidiary carrier in 2001, Tobago Express.
Eventually, the government started to clamp down on BWIA’s expenses and demanded the airline renegotiate contracts with the pilots, flights attendants and management. However, these talks broke down and when the crew of BWIA mentioned a potential strike, the Government of Trinidad and Tobago dissolved BWIA in favor of creating a new carrier, Caribbean Airlines.
The new flag carrier would inherit the route map and fleet of BWIA with the hopes of attracting the same clientele and hold onto vital landings slots like New York-JFK and Miami. However, the airline’s European flights would be suspended and its Airbus A340s removed from the fleet.
Over time, Caribbean started another expansion plan. The airline merged with Air Jamaica in 2011, hoping to create a large Caribbean carrier that could connect the islands instead of numerous smaller ones.
As a result, the airline overhauled Air Jamaica’s brand with the all-Airbus fleet being forsaken in favor of creating fleet compatibility with Caribbean’s Boeing 737-800s. However, legal issues arose with using the Air Jamaica name with Trinidad and Tobago aircraft registrations that resulted in the Air Jamaica name being dropped in 2015.
During this time, the airline would also remove the DeHavilland DHC-8-300s from the fleet in favor of the ATR 72s. The airline would take hold of five ATR 72s in 2011 with the last DHC-8-300 leaving the fleet in 2014. Although the ATRs are only 7 years old, the airline has mentioned already removing or replacing the fleet due to consistent technical issues, with the potential replacement being the Bombardier DHC-8-400.
Furthermore, the airline has tried to restart operations to Europe. Caribbean took hold of two Boeing 767-300ERs in 2012 and restarted the Port of Spain-London route, offering the service three-times weekly into London’s Gatwick Airport. As a result, the airline terminated its codeshare agreement with British Airways as the two carriers would be facing each other head to head on the route.
The rash spending of the company’s finances has been rough on the Government of Trinidad and Tobago, a small Carribean nation. Between 2011 and 2016, the government poured over $3 billion into the carrier to keep it afloat, all while the carrier held onto unprofitable routes and merging with an Air Jamaica that was in debt by roughly $1.54 billion.
With Caribbean headed down the same road as BWIA, government investigations into Caribbean have forced the carrier to reveal issues with the brand and the reasons for its massive losses. Upon hearing about the investigation the airline already made strides to reduce costs, including removing the London route in 2016, removing the Boeing 767-300ER from the fleet and finding potential routes that can be axed to reduce spending.
In 2017, the Parliament of Trinidad and Tobago presented “An Inquiry into the Administration and Operations of Caribbean Airlines Limited” and outlined what they believe will lead to a more profitable airline. The report findings include a further reduction in the route map and encouragement into looking at replacing the over 15-year-old fleet of Boeing 737-800s. Airline executives claim that the airline will strive to break even within five years, with the earliest planned year to break even being 2019.
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