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CARICOM SECRETARIAT REGIONAL SYMPOSIUM ON SERVICES July 15, 2009

Explore the challenges and opportunities in the Caribbean air transport services sector, addressing viability, derived demand, and strategies for success in a symposium organized by CARICOM Secretariat. Evaluate past failures, discuss political will, and seek solutions for sustainable regional air connectivity.

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CARICOM SECRETARIAT REGIONAL SYMPOSIUM ON SERVICES July 15, 2009

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  1. CARICOM SECRETARIATREGIONAL SYMPOSIUM ON SERVICESJuly 15, 2009 AIR TRANSPORT SERVICES SECTOR El Perial Management Services

  2. THE OBJECTIVE • Vital importance –regional linkages; CSME • Important – tourism industry; reduced reliance on extra-regional airlines • Member states mandated to cooperate Revised Treaty of Chaguaramas “A Public Good”?

  3. AN EFFECTIVE INSTRUMENT Are we satisfied to date? • Posit the need for viable airline(s) or • Deep pocket altruistic ownership So…A viable public good?

  4. KEY CHARACTERISTICS OF AIR SERVICE • Derived Demand • Inherently dangerous….to safe and secure • High % de facto fixed costs • Optimise flight profitability Not for the poor or the faint hearted

  5. SO…BASIC REQUIREMENTS FOR VIABILITY • Large capital base • High demand for travel • Efficient economies of scale • Strong commercial service-driven culture Any Regional Examples?

  6. THUS… THE REGIONAL AIRLINE EXPERIENCE HISTORICALLY BAD! • Do not meet the basic requirements • Still require on-going support • LIAT an exception?

  7. RELATED MEMBER STATE STRATEGIES Risk Minimisation • National rather than Regional • Diversification of Airlift - all • Ownership of Airlift – minority • Liberal International ASAs • Restrictive Regional ASAs

  8. REFLECTS… THE QUERY ABOUT DOMICILED AIRLINES • Not proven for international service • Key regional examples • Can be a case for intra-regional service Both require stimulating derived demand

  9. STIMULATING DERIVED DEMAND - I Our Tourism Product • “Tourism is a potentially effective way of expanding and deepening economic activity through the expansion of the population of a community by short stay persons with a disposition to spend on services that provide value.” • Community Centred • Not Paradise…..Please!

  10. STIMULATING DERIVED DEMAND - II Neglected Markets • Multi-destination • Diaspora • Intra-regional

  11. STRENGTHENING DOMICILED AIRLINES • Stimulating tourism demand • Implement CSME • Review intra-regional ticket taxes • Maintain IASA Category 1 • Upgrade CASSOS • Implement Regional Air Traffic Control • Adopt “open skies” ASAs • Improve hub airport-client country relations • Regional airline functional cooperation • International airline strategic alliances • Proper airline capitalisation • Corporate commercial culture

  12. PRE-CONDITION FOR SUCCESS POLITICAL WILL….POLITICAL WILL • Objective examination of past marketing failures • Why has CASSOS been the only real regional success? • Why is MASA the partially agreed least common denominator? • Why is insularity paramount? What is the strategy to ensure implementation?

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