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.

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T&T Ready for Open Skies?
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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.

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Regional Integration - Or Not
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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.

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More Caribbean Seats Coming
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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