REDjet Writes Caricom on Air Travel

Dear Secretary General of CARICOM,

My name is Ian Burns, CEO and Chairman of REDjet, the Caribbean’s Low Fares Airline. I understand there is an important summit meeting in Guyana this month, at which all the heads of state of each member country of CARICOM will be attending. I further understand that the purpose of the meeting is to gain further momentum in developing CARICOM as an organisation and stimulate through cooperation regional economic and social growth and development. I further understand that Air Transport is seen as a key driver for this development.

The 2006 World Bank Report on air travel in the Caribbean identified the need for competition and private capital to bring the region’s aviation capacity in line with other regions in the world. The report indicates that such development would bring economic and social benefits that are necessary to improve the region’s infrastructure and competitive position which, in global terms, has been declining over the past number of years.

It is also apparent that any solution to providing effective travel throughout CARICOM must be affordable for a person of ‘average’ socioeconomic standing. Without this factor, any solution will restrict regional integration and economic growth will ultimately fail, an issue made critical by the fact that transport is as important as communications in both of these regards.’,’

I am sure that you will agree that we require a new approach to the provision of air services in the Caribbean, movement away from protectionism and the reliance on state supported intra-regional travel. REDjet sees our Low Fares Airline as being a major regional asset which creates new potential in the region for the provision of affordable and sustainable air transport.

Air Transport should be no different than any industry and indeed, is not. Whilst there are major international corporations that can provide a “one stop shop” solution, the majority of industry sectors consist of many niche players within the overall market. In telecoms, mobile service providers have entered many markets whilst not engaging in traditional telecoms sectors such as “fixed line” services. Similarly, Aviation can be segmented into three specific sectors; short, medium and long haul. Low Fares Airlines generally specialise in short to medium haul operations and their business models are built to profitably operate these models. Key characteristics are one type of aircraft, point to point services, a ‘no frills’ approach to cabin configuration, the elimination of expensive Business Class service with lounges etc., and no reward points programmes. Moreover, Low Fares Airlines are especially an ecommerce business that reduces a substantial amount of the traditional and very expensive distribution channels. Many small national airlines the world over have faced the introduction of competition, particularly from Low Fares Airlines and the majority have been able to adapt and grow. This is no surprise because Low Fares Airlines substantially grow markets and so market share of existing passengers is not such an issue in the medium to long term. Low Fares Airlines also introduce the option of true choice to the consumer and operators are forced to produce products that consumers want versus products that generally favour the suppliers.

National and regionally state owned airlines, while providing a basic level of transport, have been a great burden on tax payers and, in large part, have failed to develop profitable business models. Whilst profit is not the only objective for state owned companies, the regional consumer has been disadvantaged by the lack of competition, resulting in rising fares, a lack of direct connectivity with carriers and a lack of capacity in the market.

Due to the critical nature of air transport infrastructure, and the widely reported obstructionism REDjet has faced trying to enter many regional market, REDjet respectfully requests that consideration be given to a motion to support open competition for inter-regional travel as exists in much of extra-regional travel though open skies agreements. The motion would include an aspect that positive political support be given to all carriers within the region to have access to every state in accordance with the Treaty of Chaguaramas insofar as it pertains to fair treatment of businesses from a Member State, as would be granted to a business resident in that state.

I thank you for your time and attention in this matter and look forward to a favourable response from your office.

Yours sincerely,

Ian Burns
CEO and Chairman of REDjet
Grantley Adams International Airport