A price war is being predicted by the T&T Travel Agents Association (TTTAA), with the coming on stream of low cost carrier REDjet on four regional routes. Wayne Rodriguez, president of the TTTAA, said he has received "inside information" that CAL will be matching fares as advertised by REDjet from yesterday, the same date that REDjet held its regional launch. Rodriguez said a price war will create havoc in the travel industry. "They will have predatory pricing. One is going to try and push the other out of the market. Both companies will sustain tremendous losses. I don't know how long they can sustain that," Rodriguez said. He said that REDjet, which has stated its intention to sell seats for as low as (TT)$65 if the booking is made three weeks in advance, will mean a commission of only $3.25 for travel agents. Rodriguez said if one is travelling to Barbados in three weeks' time at the cheap fare of $65, the value added tax (VAT) will be $9.75, plus airport taxes and other charges at $584, which will put a REDjet seat at an estimated $659. He said the cost of a flight in three weeks' time on CAL or LIAT to Barbados could range between $2,196 and $2,418.
Rodriguez, who owns Chartours International Ltd and Four Seasons Travel Service, said taxes alone on a flight between Trinidad and Barbados could range from $700 to $1,000, with some regional airports having as many as five taxes, including VAT, departure tax, airport user fee and fuel charge. Ireland-born Robbie Burns, business development director for REDjet, said in an interview in Trinidad last Friday that seats booked three weeks early from or to Port-of-Spain, Georgetown in Guyana, Bridgetown in Barbados and Kingston in Jamaica, will be sold for as low as $65, with 15 per cent of that accounting for the airfare. Rodriguez said ten seats on a flight may be advertised at $65, another ten at a higher rate and others at a premium rate. Rodriguez referred to low-cost carrier, Spirit Airlines, which offered a daily non-stop service from Port-of-Spain to Fort Lauderdale, Florida, in June 2008, but is no longer servicing that route. In subsequent e-mailed questions, Burns said seats booked three weeks in advance for a shorter route will be $896, and $1,536.
Laura Asbjornsen, head of corporate communications at CAL, on Tuesday said the local airline welcomes competition because it has "a very robust product" on the market. "When the competition is turned on, when they finally launch, we will see what they bring to the table and we will deal with the competition accordingly. "Okay, another airline is launching, claiming to be a low-cost carrier. We have seen airlines come and go in the region. Just a couple of years ago, we had Spirit Airlines, and where are they now? "They're not specifically a low-cost carrier, but they were also about 'no frills and pay for the extras.' We were able to stand the test of time because of our competitive pricing, our baggage policy. "Customers don't like surprises when they get to the counter, and I think Spirit found that out the hard way," Asbjornsen said.
Asbjornsen said CAL will wait to see what REDjet's service will be like before responding accordingly.
Asked if CAL planned to adjust its rates to compete with REDjet's, Asbjornsen said, "Of course. I'd just love to send the message out there that we are very flexible, flexible in our pricing structure, we're flexible in our schedules, we're flexible in our network." She said CAL offers 11 flights weekly to Kingston. "That could go up, that could go down." Attempts to get a response via telephone and e-mail from Desmond Brown, manager of corporate communications at LIAT, were unsuccessful up to press time. REDjet's Burns, whose father Ian Burns is chairman and chief executive of the US$10 million start-up, said in an e-mail that the times of REDjet's flights to Jamaica would be revealed at the launch. Earlier, he said REDjet will fly twice daily to Barbados on weekdays, once daily to Guyana and three times a week to Jamaica from Trinidad. Regarding the flying time to Barbados, Burns said it will be "one hour from gate to gate."
Burns said he first came to Trinidad to work as an intern at Digicel, and later worked for the mobile provider in that same position in Jamaica and Bonaire. Digicel's marketing has been handled by the public relations firm SWF&Co for the five years the mobile operator has been in Trinidad. SWF&Co also has the REDjet account. Rodriguez said that three Digicel retail outlets will be used to sell REDjet tickets. SWF&Co's account manager Anne-Marie Edwards-Job, confirmed that tickets will be sold at Digicel outlets on Independence Square in Port-of-Spain; Trincity Mall and West Mall. Rodriguez said he's learnt that REDjet has appointed Laparkan (Trinidad) Ltd, which has offices at Boundary Road, San Juan, as its sales agent. Laparkan is a United States-based company that provides air and ocean shipping and money transfer services to the Caribbean. Fyzal Ali, Laparkan's air cargo manager, said the company will be responsible for the marketinig and sales of REDjet in T&T. Describing REDjet as an innovation in the Caribbean with its "no frills" service, Ali said Laparkan's role is an extension and a diversification of its travel logistics business.
REDjet's investors
Burns said REDjet's investors are from Barbados, the Cayman Islands, Ireland and Scandinavia.
Asked what percentage of the investment the Burns family has in REDjet, Burns said, "The airline is privately owned and the shareholding is not disclosed." The airline will be using two MD-82 single aisle aircraft, formerly used by American Airlines, each seating 149 passengers. The engines have been leased separately. "It is a rolling lease. It was one of the most flexible ways for a start-up airline to acquire an aircraft," Burns said. "We have leased five of them, with a spare one permanently in Barbados." Burns said REDjet employed staff from other aviation companies, such as Virgin Atlantic, Delta Airlines, American Airlines and Northwest Airlines. He said the airline has received more than 5,000 applications for only 85 jobs.Burns outlined the factors which will make it possible for REDjet to be competitively low cost compared to CAL and Liat.
REDjet has no business class. It will be using only one aircraft type, which will save money on maintenance, spare parts, training, etc. The United Kingdom company, Apple Aviation Global Ltd, will service its aircraft in Barbados. The airline will incur no costs putting up its crews overnight in any destination. The two aircraft REDjet owns were purchased during the recession-in 2010-which allowed its principals to "secure a good price for them." There's no catering offered on board, but travellers can buy coffee, beer or a sandwich. Its overheads are low. There are no corporate offices, executive cars, expensive hotel stays, mobile phones or even colour printing. "We have travelled economy from day one," said Burns. Distribution costs are low. Bookings are to be made online, through its call centre based at the Grantley Adams airport in Barbados, or through its own ticketing desks.