The region’s newest carrier has issued an emphatic retort to Minister of Tourism and International Transport, telling the Barbadian minister in no uncertain terms that his prognosis of its future is simply wrong.
Trans Island Air (TIA) Monday issued a statement challenging Sealy’s assertion that new airlines attempting to break into the regional air transport sector are likely fail due to the number of unprofitable routes.
Pointing to the failure of low cost carrier REDjet, Sealy had told Barbados TODAY last week that “it would be extremely difficult for an airline, and certainly one offering as many destinations as LIAT does, to be profitable”, stressing that the embattled carrier had only stood the test of time because of the support of the shareholder governments.
He explained at the time that less than 40 per cent of the routes serviced by LIAT were profitable, with some 60 per cent being social routes.
He also made reference to two airline executives, who he said were familier with the Caribbean aviation market, and who had made it clear “they would never want anything to do with LIAT”.
However, TIA has fired back, claiming Sealy’s figures were off the mark, and reminded the minister that LIAT was a completely different animal altogether.
“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. LIAT is aware that it cannot be profitable operating a high cycle route system where it moves an average of ten passengers between low demand city pairs – Trans Island Air can. This is why the business plan used to justify the acquisition of the ATR fleet by LIAT; and the consultant’s report which Mr Sealy referred to, both advocated LIAT withdrawing from unprofitable social routes to be replaced by smaller carriers who would work with LIAT,” it said.
The airline also argued that the comparison to REDjet was unfair, as the company’s business model was totally different.
It also took a swipe at LIAT’s current approach, categorizing it as unsustainable.
“To compare TIA’s structure and mission with that of REDjet is like comparing apples and oranges. The minister should also be aware that the LIAT business plan called for deploying eight aircraft on the then existing route system; and adding two additional aircraft to pioneer new routes such as Haiti and Manaus.
“What has LIAT done? It has added the two aircraft originally identified for route expansion, while they took the counter cyclical step of cutting routes and aircraft utilization. As a result, fixed costs have increased while the revenue base is getting smaller. No new destinations have been added. This is a recipe for driving more routes into unprofitability,” the statement added.
TIA was set to roll out services to select regional destinations last Wednesday, but in what could be seen as portent in the wake of the minister’s caution, the official launch had to be postponed after a tropical weather system prevented several flights from landing at Grantley Adams International Airport, grounding several of the key officials.
The airline is officially scheduled to begin operations next month, servicing Barbados, Dominica, St Lucia, Grenada and St Vincent and the Grenadines. It promises one-way airfares as low as US$50 before taxes.