Following a recent study of the airline industry, the Competition and Consumer Affairs Division has recommended that a state-sponsored airline be commissioned to counter the monopoly-like behaviour seen on some routes.
The previous state airline, the Guyana Airways Corporation was divested under the PPP/C government in 2001 after it became insolvent.
The section of the report dealing with a state-owned airline follows:
The constant stream of players entering and then exiting the market serves as an indication that that barriers to entry are not prohibitive. The exit of these firms places the citizens in a predicament. We essentially have one player that acts a monopoly, for some of our most demanded routes. The citizens are forced to pay exorbitant prices.
One recommendation we have on how to temper this monopoly is to commission our own state sponsored airline. While a state sponsored enterprise would have its own drawbacks to competition, we have to ask our self what do we prefer, a virtual monopoly, wait another decade for the market to regulate itself which it was trying to do the last decade, sponsor a firm to provide a reprieve to our exhausted citizenry.
This may not be the perfect solution, but it is a solution, we must not forget that CAL is also a State Sponsored Entity. The venture may be prone to all the ills of state sponsored enterprise but If managed properly, we can ensure that there is competitive pressure for the incumbent firms to perform. There is not need to invest heavily in permanent fixtures or to have a permanent presence in the market.
The government could lease the airplane for a five-year probational period and service only the most traversed routes. After the probation period the venture could be assessed and if is proved that is was successful, if there are other competitors the company can then exit the market. Guyana will be looking to invest its huge amount of expected revenues, from oil production, it may be prudent to consider to invest in a national airline.
