Caribbean tourism leaders are increasingly concerned that the region will lose its air connections as US majors shrink departures from San Juan in Puerto Rico and Santiago in the Dominican Republic, and as other carriers plan reductions in the face of rising fuel costs.
The crisis comes as US-based carriers are slashing their connections from the north while locally-based carriers are facing a continuing loss of government support - and a near recession in their major trading partner to the north. With no strong regional carrier, the islands depend on foreign flag airlines to bring in their 15 million annual visitors.
"The situation is much more severe than we anticipated," says St Lucia tourism and civil aviation minister Allen Chastanet. "You have to be concerned because nobody can determine the price of fuel."
Starting in September, AMR subsidiary American Eagle Airlines will offer 33 flights between San Juan and the Caribbean, a 40% drop from the current 55 a day. American will also trim its flights between San Juan and mainland USA and Caracas in Venezuela to 18 from 38, about a 53% decline in service.
Cuts announced in Puerto Rico could potentially have an immediate impact, Chastanet says, noting that 75% of passengers who go through Puerto Rico connect to the Caribbean.
To retain and attract air service, landing fees in Puerto Rico will be reduced by between 15% and 45%, effective immediately. The amount of the reduction depends on a variety of factors including aircraft size, passenger volume and if the service is new, says Mari Laborde, deputy director of The Puerto Rico Tourism Company. Reductions will be in place for three years, she adds. The situation is really a cost issue for the airlines, not because of a lack of demand for service, Laborde says.
San Juan isn't the only city facing slimmer offerings. Continental Airlines will exit Santiago, terminating Boeing 737-800 flights to its hub at New York Newark in September. The carrier will scale back domestic mainline capacity by 11%, resulting in a 6.4% drop in consolidated capacity in the fourth quarter from the final quarter of 2007.
"Every cut is really going to hurt us," Chastanet says, noting that even if only domestic service is trimmed it limits travellers' ability to reach the Caribbean.
More service cuts by other US network carriers are forthcoming, and reductions may also come from low-cost carriers. Spirit Airlines, for one, will continue growing its operations in the Caribbean and Latin America but has been forced to cut some routes such as to the Turks and Caicos islands and will modify the timings and flight days of others.
It's not all bad news for the Caribbean, however. Craig Jenks, head of New York-based Airline/Aircraft Projects, says low-cost carriers will be better able to replace lost capacity now than in their past attempts to serve the Caribbean. As recently as two years ago, people from the Caribbean living in the US, as well as those living in the Caribbean, were more likely to book air travel with a travel agent instead of going online, which benefited majors like American that relied on travel agents, Jenks says.
This regional preference for booking with an agent is part of the reason JetBlue Airways axed flights to Santo Domingo less than a year after inaugurating service in 2004. Now though those passengers are increasingly turning to the Internet, and this will even out the field for low-cost carriers.
JetBlue will bolster existing service between New York JFK and San Juan Luis Marin Munoz International Airport starting in September. The New York-based airline will offer a new nonstop between Orlando and San Juan in the autumn, as well as twice-weekly non-stops between Boston and San Juan in September. Boston will jump to thrice-weekly service in October and become daily in November. Service will be offered twice-daily in December and January. JetBlue is also adding service to two smaller Puerto Rican cities, Colon and Aguadilla.
AirTran Airways will add nonstop service to San Juan from Baltimore/Washington International Airport beginning 20 December. AirTran will also offer a second daily flight between Orlando and San Juan beginning 2 November and a second daily flight between Atlanta and San Juan beginning 18 December.
"We saw the timing as a good opportunity on this additional service from San Juan," says AirTran, adding: "As far as concerns about the market - not really. No more than any leisure destination in a softening economy." Jenks says it would be realistic for AirTran to expand operations further into the Caribbean.
Continental will offer a seasonal fourth daily flight from Newark to San Juan between September and December. Laborde says the Puerto Rico Tourism Company is negotiating with Continental to turn the seasonal flight into a year-round offering.
Meanwhile, Chastanet says the region needs to develop strategic hubs that serve multiple islands via interline service. "We've had some European carriers fly to two islands. Given the cost of fuel, [that] won't be sustainable," he says. Potential strategic hubs could include San Juan, Barbados, Montego Bay and Aruba, Chastanet suggests.
However, Jenks says the Caribbean does not have the option of relying only on airlines based in the region. "There simply aren't a lot of strong Caribbean airlines. In Jamaica, maybe, because you still have Air Jamaica. [But] they are really reliant on US carriers," he says.
The creation of a single regional airline in the Caribbean - a discussion that has been resurrected by Trinidad and Tobago Prime Minister Patrick Manning and St Vincent and the Grenadines Prime Minister Ralph Manning - was discussed at the 2 July meeting of the Caricom Heads of State. One candidate, however, Liat, the Antigua-based Bombardier Dash 8 operator, uses an operating system that does not allow for interline travel. Liat needs to change its system to allow for interlining if that hub is going to work, Chastanet says. And Air Jamaica is going through a change in ownership.
Source: Airline Business
