Caribbean Aviation: Caribbean Star, LIAT and the truth

Red, has been the dominant colour on the books of the airline industry particularly over the last four years. In that period, the airline industry lost an estimated US$20 billion and seems set to lose another US$3.4 billion this year due to skyrocketing fuel costs, growing competition and reduced business travel. {{more}}Consequently, the list of major airlines in bankruptcy includes United, US Airways, ATA and Hawaiian Airlines. Delta has posted a US$2 billion loss last quarter, and Independence Air may be forced to follow suit in 2005.

In light of this, across the industry both union and non-union workers are facing job, salary and benefit cuts:

• In this region, Air Jamaica has cut its workforce by 136 and said it plans to lay off another 300. LIAT and BWIA have cut hundreds of jobs over the last few years.

• Delta has cut pilot pay by a third, slashed 6,900 jobs on January 1 on top of 16,000 layoffs in the past three years and even eliminated crew meals on domestic flights.

• Continental laid off 425 workers last September and said it will seek US$500 million more in pay and benefit cuts starting 28 February.

• US Airways plans to cut US$45 million a year in pay and benefits to roughly 3700 managers and pilots have approved US$1,85 billion in reduced pay and benefits over five years. Nearly all of US Airways’ benefits obligations have had to be assumed by the U.S. Government.

• American Airlines last year cut jobs for 650 mechanics, 450 pilots and 60 managers; ATA flight attendants and mechanics have accepted pay cuts; Northwest’s pilots have approved a 15-percent pay cut; and Air Canada plans to lay off 180 maintenance workers.

Against this backdrop, compare how Caribbean Star has been performing in the face of the same difficult economic environment. The principals of Caribbean Star knew they were entering a tough business, but certainly not the most difficult market in the airline industry.

All Caribbean airlines have been faced with overwhelming losses and tough competition, especially as U.S. airlines step up their service to the Caribbean. It is evident too, that Caribbean Star continued to experience obstacles from some regional governments and air transport regulatory bodies which ultimately impacts on its bottom line.

In spite of all this, Caribbean Star has continued to make investments in people, facilities and systems in its effort to become the “World’s Best Airline”

The airline employs 338 people directly with a total annual payroll of EC$17, 131,975.

Caribbean Star contributes indirectly to the employment of 955 regional travel agents and handlers with more than EC$22.37 million in commission on ticket sales between 2001 and 2004. All this, during a time when other airlines are moving to entirely eliminate commissions.

Caribbean Star has moved approximately 1.5 million passengers since its inception, increasing tourist arrivals by 13-percent and generating more than 8,000 regional bed nights in 2004.

Caribbean Star continues to fulfill its role as a responsible corporate citizen by supporting regional events and educational causes.

They have recently embarked on:

• Upgraded first officers and flight attendant salaries at a cost of more than US$1-million

• Improved insurance benefits for all employees

• Has terminated only 44 employees during its entire four years of its existence.

The bottom line is that Caribbean Star functions in a costly, competitive and complex business with no room for error. Complete co-operation and flawless execution is required to ensure a safe, world-class experience for passengers from reservation to on-time arrival and more importantly to compete effectively.

The difficult steps the airline has had to take recently were only intended to protect the best interests of the masses of its workforce as a whole and to advance their vision of excellence for the company.

On The Local Scene:

With the preceding as the backdrop, Vincentians must be surprised at the Prime Minister’s recent attempts at inciting public outcry against Caribbean Star by prompting the regional trade unions to react.

Dr. Gonsalves is well aware of these facts as he is at the forefront of trying to resuscitate the ailing LIAT. When LIAT summarily dismissed several workers recently, the Prime Minister made no public attempt to get the unions involved. In fact when one of the workers appealed to him personally to intervene, he declined.

Do we now want to set new precedents? Should private companies now become involved in publicly commenting on dismissals made by governments? Caribbean Star is a private company and is entitled to act in the best interest of the company, its shareholders and the traveling public.

To seek to incite any disruption in the airline industry here in St. Vincent and the Grenadines is certainly not a prudent thing. Any disruption of service here would spell disaster to this already fragile economy, particularly in the area of tourism, which is under severe pressure.

Vincy Aviation, the local handlers of Caribbean Star has also noted with amazement the joint attack launched by the local management of LIAT and its union on its baggage handlers at the E.T. Joshua airport.

This action has come as a surprise because the two companies operated with mutual respect and cooperation here in St.Vincent and the Grenadines. Such was the cooperation that even equipment was shared. Such attacks, incited by whatever source can only serve to hurt the travelling public.

Is this new attitude born of the Prime Minister’s comparison made on his ‘In the Prime Minister’s Office’ radio and television programme two weeks ago where he sought to compare the salaries of workers who have worked for more than a decade with a 45-year-old company and that of the 5-year-old Caribbean Star. Wouldn’t a worker who has been employed over a decade be on a higher salary scale than a worker just starting out?

The question needs to be asked, is all this noise about the Caribbean Star Pilots a smoke screen and another attempt to bring Caribbean Star out of the sky so as to revive LIAT as a Caribbean monopoly?