by Sir Courtney N. Blackman Ph.D,
In Don’t Burn our Bridges, arguably the finest Caribbean work of its genre for decades, Jean Holder combines exhaustive research, thorough analysis and keen insight in presenting a convincing case for government ownership of regional airlines.
He begins with the observation that “countries in the developed world, like the US, Brazil and Australia, are very concerned about who owns and controls their airlines” … and “legislate against foreign ownership totally or prescribe the exact proportion of minority foreign ownership which is permissible”.
Holder’s judgments and recommendations are well seasoned by experience. No Caribbean person is more qualified to comment on this issue than he. After 14 years of service in the Barbados diplomatic corps, Holder served for 30 years as head of two regional institutions: first as founding CEO of the Caribbean Research and Development Centre and later as Secretary General of its successor, the Caribbean Tourism Organisation.
Since 2004 he has been chairman of the Board of Directors of Leeward Island Air Transport. In these roles Holder worked with every minister of tourism from the more than 30 participating countries in CTO, interacted with numerous prime ministers and ministers of Government, and engaged union leaders across the region. As Chairman of LIAT he acquainted himself with every aspect of airline operations, among the most complex of any industry. Having visited every continent other than Antarctica and slept in some of the world’s finest hotels, your reviewer fancied himself somewhat of an expert on air transportation and tourism — until he read Don’t Burn our Bridges.
Although not a trained economist, Jean Holder was never seduced by the now discredited “free market ideology” inflicted upon developing countries by the IMF, World Bank and IDB over the last three decades, (i.e, that the “free market” will always produce superior solutions to those of governments). He therefore rejects the erstwhile World Bank position that Caribbean countries with their own national and regional carriers “do not need to own an airline to have a successful tourism industry, and that the funds used for subsidies … would be better used in other areas”.
He recalls that the Dominican Republic, which had bought into that argument and closed their national airline, later concluded that a national airline was “vital to the growth of their tourism” and announced in May 2008 that its new airline, Air Dominica, would begin operations with flights to the US, Mexico and further afield. He also observed that Air Jamaica failed both when government owned and managed it and when it was owned and managed by the legendary entrepreneur “Butch” Stewart.
Moreover, Holder has displayed a firm grasp of the economics of the airline industry than which, as he rightly observes, there are few industries more difficult and complex. He understood quite early that price-based competition among airlines with high fixed costs (e.g. the high cost of new aeroplanes), and high intermediate costs (e.g. high fuel prices), would drive all of them into insolvency or sometimes bankruptcy, as happened to the legacy airlines in the US, and similarly in respect of small airlines with inadequate capital competing against one another in a limited market space, as the demise of Carib West, Carib Express, Caribbean Star and REDjet has proved.
In a paper written shortly after President Carter had in 1977 deregulated the US airline industry, your reviewer argued that intelligent regulation was needed in the case of an oligarchic industry with high fixed costs, not deregulation; he has not changed that view.
But more important than Holder’s knowledge and understanding of regional tourism and airline matters, are his insights gathered from participation in tourism and air transportation affairs, insights which illuminate important issues and suggest practical solutions. And, as my late Professor David Miller at the Columbia Business School repeated ad nauseam, “One insight is worth one hundred mathematical models!”
Jean Holder’s critical insight was the analogy he perceived between bridges and airline routes connecting destinations. The Caribbean archipelago is characterised by islands between which transportation by land or sea is not practicable — except in a few cases like the ferry services between Montserrat and Antigua, Trinidad and Tobago, and St. Maarten and Anguilla. Without airline service linking the islands, Caribbean peoples would be virtual prisoners — like Napoleon on St. Helena.
His second important insight was recognition of the symbiotic relationship between a flourishing Caribbean tourist industry, a financially viable LIAT, and the dream of Caribbean integration — an unusual case of Siamese triplets! None of those three goals is achievable except in combination with the other two.
To extend the metaphor, our “air” bridges are analogous to those structures that span the great rivers of North America, and should therefore be seen as permanent features of our regional infrastructure. Indeed, there are painters in the US whose sole occupation is painting a specific bridge; when he gets to the end he goes back to the beginning and starts all over again, ad infinitum. Caribbean people, for whom “air bridges” are indispensable, would have an even greater stake in the maintenance of their “air bridges”, and, if they owned them, the least possible incentive to burn them down.
Holder’s analysis leads logically to the solution that the 30-odd countries serviced by LIAT and Caribbean Airlines should combine their resources to create a regional airline system comprising carriers that deliver reliable services at reasonable rates and, in Holder’s words, “have nowhere else to go and will not be reassigned by their owners to other regions when the going gets tough”. The subsidies we now pay to foreign airlines to support our tourism industry when our airlines are in distress, may be used to keep our “air bridges” in good condition.
The strategy outlined above will not be easy to execute since, for one, an airline is as difficult to manage for American Airlines, now in bankruptcy, as for LIAT, which has had several close calls over the 50 years of its operation. But in Jean Holder’s view the critical resource required for the construction of sturdy “air bridges” across the Caribbean archipelago is not finance but the resolve of our political leadership.
However, any organisational structure for managing the proposed regional airline system, whether holding company or unitary corporation, will certainly fail if politics is allowed to pollute managerial decision-making, and management lacks autonomy in the direction of the organization’s day-today operations.
Don’t Burn our Bridges should be required reading for both those in the public or the private sector involved in tourism or air transportation, and for citizens interested in the promotion of regional cooperation and integration. They will find it a treasure trove of information on the history, travails and, yes, the contributions of regional airlines, often owned, operated or subsidized by Government — in a geographical area more dependent on tourism than any other in the world.
As a bonus, readers will find the book easy to read since the author is, above all, a natural storyteller.