CAL on air transport liberalization, regional integration

UNCLAS PORT OF SPAIN 000750 SIPDIS SIPDIS STATE FOR EB/TRA/AN, WHA/EPSC, WHA/CAR E.O. 12958: N/A TAGS: EAIR TD SUBJECT: CAL on air transport liberalization, regional integration Ref: A) 06 POS 1294 ¶1. Summary: Newly hired CAL executives professed enthusiasm for regional air transport liberalization, including an Open Skies agreement with the U.S., at a recent CAL event. CAL's position on regional air integration or cooperation is less clear; while the CAL executives supported the idea of cooperation and said regional interest in supporting a single CARICOM carrier was growing, CAL CEO said in a public forum that T&T should have its own airline. New competitors entering the local aviation market at a time when most existing regional carriers are in the red also make progress towards regional integration in the near future unlikely. End Summary. -------------- T&T Ready for Open Skies? -------------- ¶2. New members of CAL's corporate leadership team Ben Leon, Vice President for Commercial, and Derren Joseph, Director of Distribution & E-business, expressed enthusiasm for air transport liberalization to econoffs at a recent CAL public outreach event. In contrast with BWIA, whose reported opposition to Open Skies defeated past regional or bilateral negotiation efforts (ref A), Leon stated CAL would welcome new discussions on liberalization and the subsequent opportunity to start new routes to and within the U.S. Subsequently, Civil Aviation General Director Ramesh Lutchmedial confirmed that CAL CEO Peter Davies has long voiced his support for Open Skies. As a supporter of "globalization" himself, Lutchmedial believes bilateral Open Skies discussions now, with Davies at CAL's helm, have the best chance for success. -------------- Regional Integration - Or Not -------------- ¶3. Both Leon and Joseph noted interest within CARICOM for regional air integration but bemoaned new carriers entering the Caribbean market and St. Lucia declaring American Airlines its national carrier at a time when other CARICOM countries are discussing the possibility of creating a single region-wide carrier. At the same time, Leon admitted that Jamaica and the LIAT shareholders would be reluctant to lose their national carriers, which Joseph attributed to national pride. Leon suggested that regional integration doesn't have to mean a single regional carrier, a sentiment that tallies with Lutchmedial's report from a June 19 regional aviation forum in Barbados in which CEO Davies said T&T should have its own airline. -------------- More Caribbean Seats Coming -------------- ¶4. The CAL executives were upbeat about their inaugural six months, pointing to improved on-time performance. However, CAL will face increased competition on traditional routes as new airlines are set to enter the Trinidad market. Trinidad-based airline Constellation West Indian Airways (CWIA) plans to start scheduled flights to New York and Fort Lauderdale from Trinidad within the year. Tourism Minister Howard Chin Lee announced at the launch of Holiday Inn in Trinidad this June that negotiations are advanced for US low-cost carrier Spirit Airlines also to provide service from Fort Lauderdale and New York to Trinidad. Opportunities for cooperation with American or other international carriers are also limited. Talks with Delta on cooperation fell through after Delta announced new flights between Port of Spain and New York's JFK Airport, a traditional CAL route. Meanwhile, despite successfully negotiating a code-share on British Airway's Trinidad to London Gatwick route, further cooperation with BA seems unlikely given BA's alliance with American Airlines, a CAL regional competitor. ¶5. Comment: The GOTT acknowledged calls from fellow CARICOM members at recent CARICOM conferences to help support ailing LIAT as a regional carrier. However, since GOTT continues to financially support CAL as well as the Tobago Express airbridge, it seems unlikely that the GOTT will offer financial assistance to LIAT or move towards greater regional cooperation in the near future. While regional air integration looks to remain stagnant, CAL's reported receptivity to Open Skies offers a window of opportunity to reopen civair discussions, either bilaterally with T&T or regionally if other CARICOM countries show similar interest. However, uncertainty about the duration of CEO Davies' contract with CAL suggests that window will not stay open indefinitely. End Comment. SWEENEY