A senior British Airways (BA) executive has complained that majority state-owned Caribbean Airlines Limited (CAL) is benefiting from an unfair advantage as a result of using subsidised fuel on its London–Caribbean route. “Their prices reflect the fact that they are not paying in full for fuel. All the other islands are concerned about it making them less competitive. It is great for the consumer in the short term, but it’s not sustainable. It’s having an impact on the VFR [visiting friends and relations] market, which is very price sensitive,” said Colm Lacy, BA’s head of commercial at Gatwick. Lacy was referring to has been CAL’s June re-entry into the market flying between Gatwick and Trinidad in a recent interview with Travel Weekly, which was reported on the Caribbean360 Website yesterday.
He said that the cost of flying between Britain and the Caribbean had increased because of the British airport passenger duty (APD), which was having a negative impact on the airline’s plans to expand its capacity to the region. “The fuel cost on flying to the Caribbean is significant. It’s the main cost: almost 50 per cent of the total. APD is big as well, given it has gone up 360 per cent in the last six years. It is completely disproportionate. A family of four pays £324 to fly to the Caribbean (in economy), when flying to Miami it is £260. The Caribbean is unfairly penalised,” Lacy was quoted as saying.
He noted that while BA planned growth to the region two years ago, they have had to scale back their plans as costs go up. “We’ve taken a little capacity out since then. APD continues to go up. Fuel has gone up. Customers are paying more. Demand has fallen. So we are tweaking capacity, particularly in the summer. We’ve done our best to maintain as much as we can in winter.” Contacted in France for comment, CAL chairman, Rabindra Moonan, yesterday described subsidised fuel as a “plus” for Caribbean Airlines Limited (CAL) and for T&T nationals. Asked whether the issue of subsidized fuel would be to CAL's detriment, Moonan said: “Not at all. If people get good prices and good service on CAL, it may be a 'blow' to other airlines but not to our travelling public.”
Moonan added that it is a plus for T&T to have subsidised fuel. Moonan is in France with three members of CAL’s management team for meetings with officials of ATR, the supplier of the airline’s new inter-island aircraft.
CAL is due to receive a additional subvention of $527.4 million (US$82 million) for the 2013 fiscal year, according to the 2013 Draft Estimates of Expenditure. The money is defined as a transfer to a state enterprise and it comes from the Ministry of Finance’s transfers and subsidies allocation.
The airline, which is 84 per cent owned by the Government of T&T and 16 per cent by the Government of Jamaica, received transfers totalling $1.1 billion (US$172.45 million) between October 2009 and September 2012: $410.4 million in the 2010 fiscal year; $243.3 million in 2011 and $450 million in 2012. While BA is talking about tweaking capacity, CAL announced recently that effective November 20, it would start a third weekly non-stop service between London and Port-of-Spain. The 3rd weekly non-stop will leave Port of Spain on Tuesdays to return from London on Wednesdays. The current non-stop services leave Port of Spain on Thursdays and Saturdays, returning on Fridays and Sundays.