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Aviation body advises CAL: Drop London route

Thursday, April 24, 2014

The CAPA Centre for Aviation has advised Caribbean Airlines to drop its London route and code share with British Airways “to improve its fortunes.” The 24-year-old CAPA Centre for Aviation, a “provider of independent aviation market intelligence, analysis and data services, covering worldwide developments,” headquartered in Sydney, Australia, with offices in India, the UK and the US.



CAPA said in a recent analysis: “While Caribbean Airlines might have some traction in point-of-sale in the Port-of-Spain market, making inroads in the London market was always challenging given that Virgin Atlantic serves Bridgetown in Barbados from Gatwick, and Montego Bay and Gatwick, a route also served by Thomson Airways. British Airways operates service from Gatwick to Kingston.”


The analysts said at one point CAL’s forerunner, BWIA, codeshared with British Airways on service from London to the Caribbean, and “it may be time for reconsideration of that potential. “Caribbean Airlines is the largest carrier in Kingston, so a codeshare with British Airways could certainly prove more viable than a mere three weekly long-haul flights that are losing money.” 



In the Senate on April 2, Finance Minister Larry Howai, the line minister for CAL admitted in response to an opposition question that the London route has not been profitable. CAPA said if the CAL board “which has been a revolving door during the last couple of years, is giving serious analysis to route performance, then cutting service to Gatwick and shedding the aircraft used for those flights should become a key priority in the changes necessary to improve Caribbean’s fortunes”.



New pressure from JetBlue
CAL is also facing increased competition on some its key North American routes as JetBlue launches flights from Port-of-Spain to its strongholds of JFK and Fort Lauderdale, CAPA said. Prior to JetBlue’s launch, CAL held a monopoly on service from Port of Spain to JFK. It appears that JetBlue’s entry has rationalised pricing in the market, CAPA said. The 30-day moving average fare on the pairing was about US$913 on April 20, 2013, but dropped to US$668 by April 20, 2014,


JetBlue’s inaugural flight from Port-of-Spain to Fort Lauderdale is set for May 1.  JetBlue’s 34-inch seat pitch is roomier than Caribbean Airlines’ 31-inch pitch in economy class, “so the extra space at a lower fare will no doubt be attractive to travellers curious about a new alternative from Port-of-Spain, further pressuring Caribbean as it continues to struggle,” CAPA said. CAL should dismiss any further tie-ups until it gains financial footing, the aviation body further advised. 


The acquisition of Air Jamaica by Caribbean “can hardly be deemed a success,” CAPA said. “The most recent example of the failed execution was protest by pilots from both carriers over not receiving incentive payments owed to them. Against that backdrop reports have surfaced that the government of the Bahamas is in talks with T&T about a possible tie-up between Bahamasair and Caribbean Airlines. 


CAPA said roughly four years after the acquisition of Air Jamaica, the scale created by the two carriers that should have ushered some stability into the airline has failed to materialise, as previous management teams at CAL “made illogical decisions about the carrier’s network—the service to London Gatwick is the most glaring example.”


The aviation analysts said while it is not likely to occur, “perhaps an outright sale by the governments controlling Caribbean Airlines would be most beneficial for the carrier.” It argued that “in the hands of a different management not beholden to the government” the airline could take the tough but necessary decisions to place it on a path to stability.


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