Tourism dependent Barbados could benefit from an overall increase in visitor arrivals from the Caribbean over the next two decades.
However, in order to do so, it would first need to reduce its taxes and airport charges, says President of the Caribbean Development Bank (CDB) Dr Warren Smith.
Pointing to the findings of one of two recent studies financed by the bank, Smith suggested that the island could receive as many as 200,000 additional regional tourists over the next 20 years if the cost of regional travel were lower.
“The biggest beneficiaries in absolute terms would be Barbados and St Lucia with 200,000 and 140,000 additional passengers respectively,” Smith said, while stressing the need to lower taxes, liberalize the regional market and make changes to increase airport efficiency, combined with a recapitalized and restructured regional airline industry.
Barbados received 95,156 visitors from the Caribbean between January and November last year, a 3.9 per cent rise, according to the Caribbean Tourism Organization. Local tourism officials also reported a 5.4 per cent increase in arrivals from Trinidad and Tobago last year, and a 3.6 per cent hike from the rest of the region.
Smith said statistics have shown that the aviation industry in the Caribbean faced several major difficulties that were stymieing the movement of businesses and leisure travellers within the region.
He warned that this was not a good trend, especially since the region depended heavily on tourism, agriculture and financial services.
“The CDB study confirms that air travel within the Eastern Caribbean is price elastic . . . . That study also concludes that a reduction in both taxes and airport charges would lead to sizeable growth in arrivals in virtually all countries.
“The study estimates that these measures would stimulate increases ranging from a low of five per cent in Dominica to a high of 18 per cent in St Kitts and Nevis over a 20-year period. In the case of Nevis, this expansion amounts to about 65,000 passengers,” Smith said.
The CDB president did not say when the survey was done or by whom. However, he said it also revealed that aviation problems in the Eastern Caribbean stemmed from a combination of internal governance issues and an insufficient enabling operating environment.
Smith explained that the aviation industry faced a combination of high and regressive taxes and airport related charges, operational inefficiencies, regulations relating to security and border control. He said there also were issues concerning arrangements for funding of the regional airline, its governance framework and the industrial relations environment.
“There is no sound justification, in my humble view, for the regional airline industry to remain in this condition. Indeed, its survivability is constantly under threat,” Smith said.
The CDB boss also reported that between 2003 and 2016 the number of annual round-trip journeys by Eastern Caribbean residents to the US rose by more than 200 per cent to 250,000, while round-trips originating from the Caribbean to the Eastern Caribbean during the same period fell by 30 per cent.
“These statistics point to a worrisome shift in the pattern of travel as regional air travellers demonstrate a growing preference for destinations in the United States over travel to the neighbouring island,” he said.
“Strengthening connectivity of the regional airlines and lowering fares via reduced taxes, are two key options for a smart regional transportation sector. These measures comprise improvements in the resilience and efficiency of the transportation network with downstream enhancements in overall economic resilience,” he said.
The economist said restructuring of the cost of regional travel without negatively impacting on governments’ revenues was necessary.
Without calling LIAT by name, Smith pledged the bank’s support in continuing to work with “shareholder governments and governments of other Eastern Caribbean countries that benefit from the services of the regional carrier”, adding that the aim was to accelerate the implementation of necessary reforms in order to create a sustainable and resilient inter-island air transport system.
Smith also pointed to the need for regional officials to give priority to developing the renewable energy sector, and a sustainable agriculture industry while linking it with other industries in a move towards building economic resilience and food security in the region.