With global travel restrictions imposed due to the novel coronavirus (COVID-19) pandemic which led to the significant decline of air travel, CAPA – Centre for Aviation forecast that by the end of May 2020 most airlines in the world will be bankrupted. However, Zachary Harding, board director of Caribbean Airlines (CA), contended that this does not bear any truth for the regional carrier.
“The board and management have done a thorough analysis of the financial position and have confidence in our ability to weather the storm for the foreseeable future. There are clear plans in place to safeguard and mitigate any further financial pressures, and we continue to monitor and make adjustments as time passes. It is a dynamic situation and this position may change depending on the timeline of resumption of passenger service, which is outside of our control,” Harding said.
He added that the airline has contingency plans in place for the next six months.
While all other commercial passenger services are currently suspended, CA is now operating a reduced domestic schedule between Trinidad and Tobago. The airline also introduced a cargo charter service to meet the growing demand for cargo uplift within the Caribbean region, which is now experiencing significantly reduced cargo capacity with the closure of borders to passenger aircraft due to the COVID-19 pandemic.
In addition, the airline also offers a barrel and e-container special out of New York, Fort Lauderdale and Miami to Kingston, Guyana, Barbados and Trinidad, that allows loved ones to ship care packages to their families.
According to the airline, which has had to ground most of its fleet due to COVID-19, its staff complements’ jobs are not at risk.
“The airline is an essential service and while operations are reduced, many employees continue to work — some at office and some remotely. Others are on vacation leave. There have been no staff reductions or redundancies,” CA stated.
“Caribbean Airlines is preparing to restart operations once border restrictions are lifted and is focused on ensuring that the proper safety protocols are in place to protect its employees and customers when flying resumes,” CA continued.
In the interim, CA indicated that it is working with stakeholders and its shareholders to mitigate risks and to prepare for the restart of operations, as Governments will need airlines to be ready to play their role as an economic catalyst in the recovery post-COVID-19.
“In normal times, aviation delivers $2.7 trillion in global GDP contribution. Every one of the 25 million employees in the airline industry helps to support up to 24 other jobs in the broader economy. In many countries aviation forms the backbone of various related sectors and without it, related industries in the value-chain will suffer, especially tourism, which in many countries is an essential source of income”.
ONE REGIONAL AIRLINE
According to Harding, regional collaborative approaches should be considered to mitigate the impact of the COVID-19 crisis and its effect on the aviation industry.
“I do not think that there is a need for more than one regional airline and therefore I think [COVID-19] presents opportunities for collaboration, consolidation and mergers and acquisitions. Any of those things will only lead to greater efficiency,” he stated.
“On the business and operational side, I’m saying here’s a situation which has made all the airlines sweat because not everybody will be able to withstand and hold out for six months to a year. Therefore, now is the time for regional airlines to be sitting down and discussing merging, acquiring and collaborations for the sake of increasing efficiencies,” Harding reaffirmed.
Harding also pointed out the financial woes of Antigua-based subregional air carrier, LIAT Ltd, emphasising that “it’s about time Caribbean Airlines and LIAT have a serious conversation about coming together”.
LIAT Ltd is majority-owned by 11 Caribbean governments, the largest shareholders being the governments of Barbados, Antigua and Barbuda and St Vincent and the Grenadines.
According to the Caribbean Council, in 2019 LIAT Ltd was in need of urgent cash injection to avoid collapse as it struggled to meet financial commitments.
Speaking about the need for greater support for the airline, Gaston Browne, the prime minister of Antigua, called on the governments of St Kitts, St Lucia, Grenada and Guyana to purchase shares in LIAT to signal a model of shared burden.
AVIATION INDUSTRY POST COVID-19
Air travel has been one of the hardest-hit industries in the early days of the COVID-19 pandemic. CA told the Caribbean Business Report that successfully restarting air passenger travel while restoring confidence in the safety of air travel are vital prerequisites to enabling the global economy to recover from COVID-19.
“IATA [International Air Transport Association] forecasts airlines will lose US$314 billion in passenger revenue this year amid the coronavirus outbreak, a deepening of US$62 billion from its previous projection,” CA stated.
However, opportunities to transform the industry will arise.
“Opportunities will exist for businesses involved in biometrics and other technologies that will facilitate health checks at airports. Even greater use of technology will become the norm in the industry. For the businesses which survive, the paradigm is shifting and with it comes challenges and opportunities for those who are able to navigate the turbulence”. (Jamaica Observer)
