Just a week into operation a Caribbean airline, Trans Island Air, has hit political turbulence with its owner getting into a war of words with Barbados Tourism Minister Richard Sealy over viability of the venture.
On the eve of its launch last week, Sealy scoffed at the company by questioning how long it will last in the challenging regional market where the only commercial air service supplier, LIAT operates at a loss in some 60 percent of the destinations to which it travels and said that it survives only because of support of some regional governments.
“It would be extremely difficult for an airline, and certainly one offering as many destinations as LIAT does, to be profitable. I am not going to say it is impossible but it is unlikely,” Sealy said quoting reviews by expert consultants.
“LIAT is a peculiar creature because of the governments’ involvement they can take on the social routes,” Sealy said, adding, “There was analysis done some time back which found that just under 40 per cent of the routes that LIAT is on is actually profitable, 60 per cent were social routes. No normal airline could operate like that, but LIAT, because of its mandate, can think in those terms. The aim is not to make money but at the same time not have excessive losses.”
But TIA fired back at Sealy this week in a press release stating, “we wish to remind Mr. Sealy that what is an unprofitable social route for LIAT, with its large, expensive fleet and high operating and legacy costs, is a viable route for an efficient smaller carrier like Trans Island Air.”
The small start-up passenger airline company, owned by Bruce Kaufman, further stated, “LIAT is aware that it cannot be profitable operating a high cycle route system where it moves an average of 10 passengers between low demand city pairs – Trans Island Air can.”
TIA, which has for years been running a private charter service and cargo hauling operation, began the open passenger venture with flights to and from five destinations, Barbados, Dominica, Grenada, St. Lucia and St. Vincent and the Grenadines.
In its rebuttal statement to Sealy the company officials implied that the airline may be seeking to supplement LIAT’s service by providing smaller aircraft in some of the regional destinations which the bigger LIAT with its larger planes finds unprofitable.
If, contrary to Sealy’s prediction, TIA survives and does indeed complement LIAT by providing a reliable service in the smaller market destinations, it may bring some relief to many beleaguered travelers who suffer from late and cancelled LIAT flights through the region because that operation is cash-strapped.
Success in this venture by TIA also holds the possibility relieving LIAT itself from the burden of ferrying passengers to places carrying destinations where there is not profit because of factors such as economies of scale.