(Trinidad Guardian) After COVID-19 resulted in a near-death experience in 2020, majority state-owned Caribbean Airlines Ltd (CAL) is now seeking to transform its fortunes with ambitious plans for new routes, new aircraft along with the hiring of additional staff.
In a signal of the airline’s new thrust, CAL’s American law firm, Condon & Forsyth LLP, filed an application with the US Department of Transportation “to operate to the full extent authorised by the Air Transport Agreement between the Government of the United States of America and the Government of the Republic of T&T.”
In an operational forecast annex to 58-page document, CAL makes specific reference to Puerto Rico and St Thomas in the US Virgin Islands as new the routes.
The airline projects rapid growth for these new US destinations. An operational forecast in the application projects CAL transporting 5,339 passengers to and from Puerto Rico and earning US$694,228 in revenue in 2023. But the airline expects the Puerto Rico route to quadruple in 2024 with 21,356 passengers and revenues of US$2,776,280.
CAL’s predecessor company, BWIA, serviced Puerto Rico as part of a route that started in Miami, flew to Grand Cayman and Montego Bay with continuing no-change-of-plane service to Kingston, San Juan, Puerto Rico, Antigua, St Lucia, Barbados and Port of Spain, according to information on Wikipedia.
St Thomas would be a new destination for the national airline of T&T and it also forecast rapid growth in the US Virgin Islands. CAL projects that in 2023, it would transport 2,613 passengers to St Thomas, earning US$418,785. It expects that destination to increase by six times in 2024, with 15,678 passengers and US$2,508,480 in revenue.
The airline already flies to four other US destinations, comprising New York, Miami, Orlando and Fort Lauderdale.
According to the filing with the Department of Transportation, CAL expects to fly 328,601 passengers on the New York route in 2023, generating US$88,077,728. The New York route is forecast to expand by 10 per cent in 2024 with 361,461 passengers generating US$96,885,501. New York is CAL’s largest and most lucrative destination.
Compared to New York, CAL forecasts that it will fly some 95,702 passengers on the Miami route, generating US$20,588,414 in revenue in 2023. The airline expects Miami to increase to 105,273 passengers generating US$22,647,255 in 2024.
The airline forecasts that it will generate revenue of about US$127 million ($863 million) from the six US destinations in 2023. It expects revenue from the US to rise to US$143.71 million ($977.16 million) in 2024, an increase of 13 per cent.
CAL’s application to the US Department of Transportation requests authority to enable the airline to engage in:
* Scheduled foreign and charter air transportation of persons, property and mail from points behind Trinidad and Tobago via Trinidad and Tobago and intermediate points to any point or point in the United States and beyond;
* All-cargo service from and between the same points; and
* Any other authority permitted under Part 212 of the Department of Transportation’s rules.
The application for the foreign air carrier permit is dated April 17 and was made by the New York City office of CAL’s US law firm.
A notice in the application states: “Any person may support or oppose this application by filing an answer with the Department of Transportation and serving a copy of the answer on the applicant and all persons served with this application on or before May 8, 2023.”
The application to the US Department of Transportation states: “Despite the unprecedented impact of the COVID-19 pandemic on the world, and on the aviation industry in particular, CAL received exemption authority for the following routes:
(1) Between Port-of-Spain via the intermediate points of British Virgin Islands, Dominica, and Tortola, to San Juan;
(2) From Port-of-Spain via the intermediate point of Georgetown, Guyana, to Houston;
(3) Between Port-of-Spain and Houston, with a point beyond to Georgetown; (4) and
4) Between Port-of-Spain via Antigua, Barbados, Grenada, St Lucia and St Maarten to San Juan and beyond to Jamaica.
CAL responds
Apart from Puerto Rico and St Thomas, Sunday Business sources said CAL is considering resuming flights to Caracas, the capital of Venezuela, as well as adding new destinations in Martinique, Guadeloupe and St Kitts.
Asked to comment on the airline’s route expansion plans, its spokesperson, Dionne Ligoure said: “CAL currently has the most extensive route network in the region, which we intend to grow.
“At the appropriate time, the specifics of our growth plan will be shared with the media and the general public.
“Our plan to expand the airline’s route network is part of a strategic plan that has been thoroughly reviewed based on available data, trends and analysis.”
Ligoure said CAL’s expansion plans are being funded from its operating profits.
She also said there is huge demand for air transport in the region, coming out of the COVID-19 closures and the expansion of tourism in the region.
New aircraft
In last week’s filing with the US Department of Transporation, CAL also disclosed it is currently acquiring additional aircraft, “specifically four ATR-72-600 airframes, expected to be delivered in April and May, 2023.”
In February, a company called Nordic Aviation Capital confirmed that it had executed a lease agreement with CAL to lease the airline three ATR-600s.
Annex 6 of the document filed with the US Department of Transportation indicates that CAL currently has seven ATR-72-600s, nine Boeing 737-8 Max aircraft and two 737-800s.
Near death
In April 2020, CAL CEO Garvin Medera issued a memo to the company’s employees stating that the airline would be able to fund April’s salaries, but it would need external funding to continue flying.
In May 2020, the Minister of Finance, Colm Imbert, announced that the Government had agreed to guarantee a US$65 million ($442 million) bond that was issued to keep the airline in the air. The bond, which matures in 2025, pays an interest rate of 7.307 per cent per annum. That means CAL must service the interest on the bond to the tune of US$4.74 million a year.
The CAL bailout followed the Government’s announcement that it was closing the country’s international borders, including its two international airports, to all travelers from March 22, 2020. That policy decision of the Government, which was meant to mitigate the spread of COVID-19 within T&T, meant that CAL earned virtually no revenue for months after, apart from repatriation flights.
