Not surprisingly, the Caribbean Community’s major airlines are drowning in debt, with governments being pressured to intervene financially to stave off the possible collapse of the regional carriers.
But the problem is that countries like The Bahamas, Suriname and the smaller Eastern Caribbean nations cannot afford to not have a dedicated airline servicing routes the big western carriers are reluctant to operate in so authorities are being forced to continue pumping them with subsidies or allowing them to continue operating with staggering debt levels.
In the past week, The Bahamian government said it was forced to increase fares for state-owned Bahamas Air as the carrier is already operating with more than $60 million and counting with reduced passenger load because of the COVID-19 pandemic.
“As you can imagine, during this pandemic Bahamas Air has racked up substantial losses. We won’t know until the end of the year, when we see what the numbers are––we don’t know what will happen over the rest of the year––but I would conservatively estimate the losses will probably be between $50-$60 million,” Aviation Minister Dionisio D’Aguilar told the local Tribune newspaper.
The carrier is a major player on the lifeline route between the archipelago islands and the southern United States, Florida in particular, ferrying thousands of passengers to the country’s world class tourism industry each year.
The minister argues that taxpayers are stressed out trying to keep the airlines afloat even as other sectors compete for subsidies that have to be budgeted for the carrier with successive annual budgets. Passengers, for example, would now have to pay a $25 fee for the first checked bag to bring fares “more in line with the competition.”
He said that cabinet would not be surprised if an audit showed that the $60 million tab is a conservative estimate as he noted that fares have remained stagnant for the past eight years. The time has come to change this he said.
Way down to the very southern end of the region, Suriname Air is also barely surviving under the weight of massive debt.
Director Radjesh Radikoemar says that SLM is at least $88 million in debt with pension deduction, income and other taxes not being paid to state revenue for years.
“These are sums of the debt position of the SLM over several years plus what is added now because of the COVID-19 situation, because we have no income. I said from last year, when I was brought to SLM, that this company is in dire straits, but management is not too bad. There are plenty of options,” he told the True Time publication, suggesting that the firm needs about four good years to recover and be healthy. The carrier took a financial beating after certification of a leased Boeing 777 was delayed by nearly a year while the plane sat on the ground as lease payments were made made.
The two others flying on a wing and a prayer with debt are Antigua-based LIAT and Caribbean Airlines of Trinidad, the region’s best known and among the oldest and most established.
LIAT collapsed spectacularly last year owing $80 million to staffers and $100 million to creditors. It resumed flying to limited island destinations late last year but it quickly ran into certification problems with Barbados and St. Vincent, both of which have made it clear that the time for a new start up carrier is now rather than continuing the battle to make a highly subsidized island hopper profitable. Governments in the two are now supporting a private group’s efforts to operate a new regional service.
As for Caribbean Airlines, the continued closure of Trinidad’s borders has pushed the airline into the red after a decent 2018-19. The current situation has pushed authorities into granting a $65 million subsidy that came through a guaranteed government loan to ease the effects of the border closure. Salaries of some categories of workers have been reduced by up to 20%. Some pilots have been sent on no pay leave even as the airline has resumed limited flights to open border countries like Guyana, Jamaica and the Eastern Caribbean while also undertaking charters for varied clients.