#BTColumn – Making regional travel affordable a top priority

Disclaimer: The views and opinions expressed by the author(s) do not represent the official position of Barbados TODAY.

 

Why should it cost US$600 to travel from Barbados to St Lucia, which is a 30-minute flight, and the same amount for a ticket to Miami for four hours?

This question has been asked by many small firms who wish to explore doing business in the region considering the many calls for the development of export strategies as part of their growth models. Some research into this matter has revealed a perennial problem that needs to be addressed by Caribbean Governments and airlines as a matter of urgency – the cost of intra-regional travel.

The integration project that is the CARICOM Single Market and Economy, has as one of its objectives, economic integration. To facilitate this, a viable and affordable means of travel within the region will be paramount. It therefore is worrisome why this matter has not been conclusively addressed by the region’s Heads of Governments to date. Access to each other within the Caribbean is crucial for CARICOM to achieve its goal of economic integration and cooperation among Caribbean nations. For sure, the high cost of intra-regional travel is not an incentive for firms to trade across borders nor is it an inducement for regional tourism.

Both residents and visitors alike are feeling the effects of this issue. Statistics from the first quarter of 2023 revealed a ten per cent decrease in capacity for intra-regional travel compared to 2019. This decline has prompted discussions among stakeholders, with the Caribbean Hotel and Tourism Association actively engaging with airlines and other industry players to address the issue, according to Laura Dowrich-Phillips who was quoted in a regional online news channel.

A 2018 study by the Caribbean Development Bank (CDB) revealed that the share of intra-regional travel as a percentage of total Caribbean travel declined from 15 per cent to nine per cent between 2012 and 2017. During the same period, travel from the Caribbean to extra-regional destinations increased by six per cent according to a 2021 article in The Sun.

This shift in travel patterns indicates that Caribbean travellers are choosing to travel to destinations like the US, where costs may be more favourable, instead of exploring other Caribbean countries.

It is true that the COVID-19 pandemic has had a deleterious impact on travel the world over, causing staffing issues for airlines and delays in plane deliveries. However, efforts to address the issue of high travel costs in the region have been ongoing for years.

In 2019, the group Citizens Against High Intra-Regional Caribbean Travel Taxes launched a petition, signed by 20 000 people, advocating for a reduction in taxes and fees on intra-regional travel. They highlighted the impact of these costs, arguing that they make overall ticket prices prohibitively expensive for passengers. Research suggests as much as 40 per cent – 60 per cent of the cost of a ticket is made up of taxes, fees and charges levied by regional governments.

As posited by Anthony Francis in his article “Regional airfares too high” published in December last year: “Over-taxing regional travel is seen as counterproductive to regional connectivity, economic growth, and productivity. Decreased airfare is viewed as a means to stimulate both business and leisure travel within the region, leading to increased visitor arrivals, economic activity, tax collection, employment, and overall economic stimulation.”

Despite the persistent calls for lower airfares and reduced travel taxes, progress has been slow. An article by The Sun newspaper reports that in July 2021, CARICOM leaders agreed to consider proposals to reduce taxes on travel for a pilot period of six months. This decision came as a response to the near collapse of the critical tourism industry due to the COVID-19 pandemic. CARICOM also urged airlines not to raise fares in a way that would negate the market benefit derived from the reduction in travel taxes.

It would be instructive now in 2023 to learn more about regional governments’ efforts to address this issue.

The region’s annual hotel occupancy rate is said to be around 60 per cent, implying that a significant number of rooms are unoccupied. From a tourism perspective, affordable air travel could contribute to filling more hotel rooms and increasing tourism-related economic benefits.

Admittedly, the high cost of travel is not the only issue to be addressed to make travel affordable, as other factors influence overall cost to businesses and leisure travellers. Other improvements have been proposed and contained in a 2013 article by David Jessop “Time to make regional travel easier”, including a single visa regime, ending secondary screening for transit passengers, improved inter-connectivity and security arrangements, establishment of a regional hub, development of a Caribbean app for travel information, and promoting Caribbean-owned intraregional services.

Financial models, including revenue guarantees, may be revisited to incentivise airlines to provide services to islands without their own carriers. Short-term solutions, such as direct connections between countries, should be explored to alleviate connectivity challenges. New entrants to the market including Arajet and InterCaribbean need to increase their service offerings, while Caribbean Airlines must consider areas for expansion.

The biggest deterrent overall is the pace of progress, which unfortunately is slower than desired. With intra-regional travel still not reaching pre-pandemic levels, one wonders what it will take to get the powers that be to treat this issue with the urgent attention it demands.

The Small Business Association of Barbados (SBA) is the island’s non-profit representative body for micro, small and medium enterprises (MSMEs). Connect with the SBA: https://www.sba.bb/sba/