Caribbean Airlines and Air Jamaica announced the agreement representing the formal merger of the two carriers was signed on 26-May-2011 (nationnews.com/go-jamiaca.com, 26-May-2011). Under the agreement, the Jamaica government will own 16% of the Trinidad-based CAL while Port of Spain will spend an estimated USD49.2 million to facilitate expansion of CAL, which took over five of Air Jamaica’s routes in 2010. In Apr-2010, the Bruce Golding government assumed all financial liabilities up to the end of that month for Air Jamaica with CAL assuming the financial risk of continuing Air Jamaica’s activities from 01-May-2011.
CAL and JM sign formal merger
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LIAT’s woes reflect business conflicts, limited vision, in intra-regional Caribbean aviation
For intra-Caribbean aviation the old adage “the more things change, the more things stay the same” rings true. Unfortunately, the regional airline LIAT is a perfect example of an airline whose financial and operational failures are the epitome of stagnation in a region where outdated government policies constantly squash innovation.
During the past year some of the shareholder governments of the perpetually troubled airline have attempted to initiate tough love for LIAT, including threatening to withhold funds until LIAT can improve its service and operations. In some ways those threats are a double-edged sword – given the challenges of doing business in the region, a business environment largely driven by years of governments propping up state-owned airlines instead of allowing free market forces to take effect.
Although LIAT's shareholder governments would like to see more competition, the reality is that the aviation business in the Caribbean remains in a state of inertia, and all of LIAT's pledges for improvement will likely not materialise until a true mindset change sweeps over the region.
Caribbean Airlines' regional leadership has vaporised; control issues and instability persist
Caribbean Airlines has made moves during the last year that seemed to indicate its desire to create a path to sustainability, including cutting ill-advised long haul flights to London, and the declaration of its intent to achieve a break-even financial performance in 2017.
Top management upheaval continues at the airline, yet Caribbean’s strategy of attaining profitability does seem clear-cut. It faces ample competition on its long haul routes to North America from airlines that have much more brand recognition and financial wherewithal.
Caribbean appears stuck in a rut as it continually pledges change but never seems to deliver on its promises. One obvious remedy would be for the government of Trinidad and Tobago to relinquish control of the airline, but that is unlikely to happen, resulting in the Caribbean region continuing to lack a true flag carrier.