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Saturday, July 26, 2025

Airbridge a failed business model

by

20170111

There was noth­ing new or sur­pris­ing about what chair­man Shameer Mo­hammed and oth­er Caribbean Air­lines (CAL) of­fi­cials re­vealed about the many op­er­a­tional and eco­nom­ic prob­lems on the air­bridge. It is an of­ten re­peat­ed litany of woes–poor on-time per­for­mances, fre­quent break­downs and fi­nan­cial loss­es.

On many lev­els, the busi­ness of op­er­at­ing flights be­tween the two is­lands has been, for the most part, a los­ing propo­si­tion. The list of air­lines that have tried and failed to pro­vide an ef­fi­cient and fi­nan­cial­ly vi­able ser­vice on the route goes back sev­er­al decades, in­clud­ing the long for­got­ten T&T Air Ser­vices (TTAS) and Air Caribbean, which both went out of busi­ness.

To­ba­go Ex­press, the whol­ly owned sub­sidiary of CAL that now ser­vices the route, could have suf­fered the same fate had it not been for the fact that it en­joys the cush­ion of heav­i­ly sub­sidised fares and on­go­ing state sup­port.

There is al­so the fact that an air link be­tween Trinidad and To­ba­go is vi­tal and that there are al­ways sig­nif­i­cant so­cial, eco­nom­ic and oth­er costs when­ev­er it is dis­rupt­ed, which hap­pens very of­ten.

But the facts laid bare be­fore the JSC this week are the same facts that come to the fore every time the op­er­a­tions of CAL and the air­bridge are in the spot­light and the is­sues raised by Mo­hammed are sim­i­lar to con­cerns raised by many oth­er chair­men and CEOs of the air­line and be­fore that, BWIA.

It is a failed busi­ness mod­el that sel­dom man­ages to break even, far less achieve a prof­it. Oc­ca­sion­al, very sub­stan­tial, in­jec­tions of cap­i­tal from the Trea­sury are what keeps that ser­vice air­borne.

In­for­ma­tion com­ing out of Mon­day's JSC sug­gests that one of the biggest chal­lenges fac­ing To­ba­go Ex­press, the fare sub­si­dies, may soon be re­viewed.

In any giv­en year, mil­lions of dol­lars of in­creas­ing­ly scarce tax­pay­ers' funds go in­to sub­si­dis­ing air­fares be­tween the two is­lands. It is es­ti­mat­ed that the re­al cost of a round trip tick­et on the air­bridge should be $600. In the present arrange­ment on CAL's To­ba­go Ex­press ser­vice, a pas­sen­ger pays $150 one way and the state pays an ad­di­tion­al $50 for a to­tal of $200 on a route on which the re­al eco­nom­ic cost of the tick­et should be $300. As a re­sult, the air­line los­es $100 per pas­sen­ger and even if every flight on the air­bridge op­er­at­ed with full load, CAL still los­es ap­prox­i­mate­ly $6,800.

Fur­ther com­pli­cat­ing mat­ters for the car­ri­er is its in­abil­i­ty to sat­is­fy the con­tin­u­ous­ly in­creas­ing de­mand for seats be­tween Trinidad and To­ba­go. At present ca­pac­i­ty, To­ba­go Ex­press can­not sat­is­fy peak de­mand, par­tic­u­lar­ly on busy week­ends.

This is due to some ex­tent to the un­suit­abil­i­ty of the cur­rent fleet of ATR 72-600 air­craft for the air­bridge, giv­en their lim­i­ta­tions in range, speed and lug­gage-car­ry­ing ca­pac­i­ty

Re­cur­ring tech­ni­cal prob­lems with the ATRs, pur­chased at a cost of US$19 mil­lion, on­ly add to the fi­nan­cial bur­den that the route im­pos­es on the Trea­sury.

Mr Mo­hammed and the CAL board, based on their tes­ti­monies be­fore the JSC, are al­ready well ac­quaint­ed with the chal­lenges of the air­bridge. What is not clear, how­ev­er, is whether they have yet found so­lu­tions to the myr­i­ad prob­lems on that route.

Giv­en the coun­try's eco­nom­ic chal­lenges, some­thing must be done to trans­form To­ba­go Ex­press and CAL in­to an ef­fi­cient, prof­itable en­ti­ty.

An ur­gent re­struc­ture of the air­bridge op­er­a­tions is need­ed and some tough de­ci­sions have to be made, not just about sub­si­dies but al­so whether T&T can con­tin­ue to whol­ly own and op­er­ate these ser­vices.


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