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CARICOM SECRETARIAT REGIONAL SYMPOSIUM ON SERVICES July 15, 2009

CARICOM SECRETARIAT REGIONAL SYMPOSIUM ON SERVICES July 15, 2009. AIR TRANSPORT SERVICES SECTOR El Perial Management Services. THE OBJECTIVE. Vital importance –regional linkages; CSME Important – tourism industry; reduced reliance on extra-regional airlines

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CARICOM SECRETARIAT REGIONAL SYMPOSIUM ON SERVICES July 15, 2009

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  1. CARICOM SECRETARIATREGIONAL SYMPOSIUM ON SERVICESJuly 15, 2009 AIR TRANSPORT SERVICES SECTOR El Perial Management Services

  2. THE OBJECTIVE • Vital importance –regional linkages; CSME • Important – tourism industry; reduced reliance on extra-regional airlines • Member states mandated to cooperate Revised Treaty of Chaguaramas “A Public Good”?

  3. AN EFFECTIVE INSTRUMENT Are we satisfied to date? • Posit the need for viable airline(s) or • Deep pocket altruistic ownership So…A viable public good?

  4. KEY CHARACTERISTICS OF AIR SERVICE • Derived Demand • Inherently dangerous….to safe and secure • High % de facto fixed costs • Optimise flight profitability Not for the poor or the faint hearted

  5. SO…BASIC REQUIREMENTS FOR VIABILITY • Large capital base • High demand for travel • Efficient economies of scale • Strong commercial service-driven culture Any Regional Examples?

  6. THUS… THE REGIONAL AIRLINE EXPERIENCE HISTORICALLY BAD! • Do not meet the basic requirements • Still require on-going support • LIAT an exception?

  7. RELATED MEMBER STATE STRATEGIES Risk Minimisation • National rather than Regional • Diversification of Airlift - all • Ownership of Airlift – minority • Liberal International ASAs • Restrictive Regional ASAs

  8. REFLECTS… THE QUERY ABOUT DOMICILED AIRLINES • Not proven for international service • Key regional examples • Can be a case for intra-regional service Both require stimulating derived demand

  9. STIMULATING DERIVED DEMAND - I Our Tourism Product • “Tourism is a potentially effective way of expanding and deepening economic activity through the expansion of the population of a community by short stay persons with a disposition to spend on services that provide value.” • Community Centred • Not Paradise…..Please!

  10. STIMULATING DERIVED DEMAND - II Neglected Markets • Multi-destination • Diaspora • Intra-regional

  11. STRENGTHENING DOMICILED AIRLINES • Stimulating tourism demand • Implement CSME • Review intra-regional ticket taxes • Maintain IASA Category 1 • Upgrade CASSOS • Implement Regional Air Traffic Control • Adopt “open skies” ASAs • Improve hub airport-client country relations • Regional airline functional cooperation • International airline strategic alliances • Proper airline capitalisation • Corporate commercial culture

  12. PRE-CONDITION FOR SUCCESS POLITICAL WILL….POLITICAL WILL • Objective examination of past marketing failures • Why has CASSOS been the only real regional success? • Why is MASA the partially agreed least common denominator? • Why is insularity paramount? What is the strategy to ensure implementation?

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