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The Cost of Connecting the Caribbean: The Netherlands Antilles
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.
In the previous part, we analyzed the struggles that Trinidad and Tobago has with carriers. Unfortunately, the unprofitability plague isn’t just in Trinidad, as the Netherlands Antilles has followed a similar path over recent years.
The island of Aruba was the first to experience failure, with Air Aruba being the first to falter in 2000. The airline was originally owned by the Aruban government, but financial losses coupled with rising fuel prices forced the government to look for a new owner.
The airline was sold to Aserca Airlines of Venezuela in 1998 before closing all operations two years later due to unprofitability. Air Aruba had serviced 27 destinations from their hub in Oranjestad, including Boeing 767 flights to Cologne, Germany and Amsterdam.
While Air Aruba’s decline was rapid, the Antilles’ other carrier ALM Antillean was in a steadily increasing decline at the same time. The Hato-based carrier hadn’t recorded a positive cash flow since the 1970s due to heavy competition but still managed to stay afloat through the 1980s and 1990s.
However, a blend of increasing fuel costs coupled with the airline’s use of the McDonnell-Douglas MD-80s and de Havilland DHC-8-300s escalated their decline. The airline was officially bankrupt a year after Air Aruba, with losses totaling $340 million.
With ALM and Air Aruba gone, the company from ALM Antillean made one final move to save flying in the Dutch Antilles. The group formed a new carrier titled Dutch Caribbean Airlines with routes consisting of both the old Air Aruba and ALM Antillean route maps. The airline was a massive failure, lasting less than three years before closing operations in 2004.
Since then, the four primary carriers to appear in Netherland Antillean registrations have had varying degrees of success. Dutch Antilles Express was formed in 2005 but the economic recession and heavy competition with Insel Air forced them to accumulate over $125 million in losses before giving up and claiming bankruptcy in 2013.
Insel Air has been the Aruba, Curacao, and Bonaire islands main transport since then. The airline peaked in 2013 with 15 destinations served across North America, South America and the Caribbean. However, things have taken a bad turn for Insel Air in recent years. The airline has been cash strapped following the lack of payments from the Venezuelan government after the carrier agreed to continue flights despite showing a profit, with the Venezuelan government claiming they would cover the costs.
This snowball effect that led to the airline seeing their fleet of McDonnell-Douglas MD-80s being grounded after missing maintenance checks in 2016.
While the airline originally planned to get the airplanes airworthy, budget cuts led to them scrapping the aircraft instead and reducing operations to just Aruba, Curacao and Bonaire using Fokker 50s. The airline has since restarted flights to St. Maarten and Suriname using leased Conviasa Embraer ERJ-190s. Unfortunately, this comes after massive reductions with 13 aircraft parked, a reduction of staff from 750 to 160 and the airline’s Insel Air Aruba branch shutter operations.
Fortunately, there are some positive signs for the Antilles with Aruba Airlines and Winair showing potential. Although Winair nearly claimed bankruptcy in 2010, the airline has successfully restructured and is now seeing multimillion-dollar profits.
The airline has made a deal with Air Antilles to operate outside of Lesser Antilles, with flights to the ABC islands and the Greater Antilles starting in 2018. Winair is wet leasing two Air Antilles ATR 42s for the service. However, it is not clear if these profits will continue for the St. Maarten-based carrier based on their recent expansions and the drop in tourism following Hurricane Irma.
Lastly, Aruba Airlines has seen promise after starting operations in 2013. The airline will take hold of their fourth aircraft in 2018 and plans to start operations to St. Maarten while planning further medium haul expansion plans with Bogota and New York-JFK being top priority destinations for the airline.
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