Caribbean operators need to look South

Opportunities lay South for airlines based in the Caribbean region

The Caribbean region is undoubtedly a worldwide tourist magnet, but its 1.5 percent intra-Caribbean predicted growth forecast for the next 20 years is quite modest. With fierce competition, mainly coming from the North (US and Canada) operating large modules and rapidly increasing frequencies, Caribbean based operators need to react soon if they want to restore competitiveness and expand.

Airlines based and operating in the Caribbean market serve a market of roughly 42 million inhabitants, which welcome every year about 25 million tourists. The Caribbean’s GDP (Gross Domestic Product) of $290 billion is larger than Chile. The seven non-US major airlines based in the Caribbean operate medium to small fleet, with a mix of old and new generation aircraft, mainly single aisles and are an average of 15-years-old, a rate above the world average.

An opportunity they should consider is the rather solid forecasted growth for the South American region. The growth rate there is expected to be around 5 percent per annum over the next 20 years. Linking South America and the Caribbean region has indeed already started, with a 70 percent increase in tourism arrivals from South America between 2009 and 2013. And this new market opportunity is far from being mature.

In order to properly seize those opportunities, Caribbean based operators need to use the right tools: new technology aircraft. Only modern aircraft can provide the required range and the right economics they need. With less and less older generation aircraft available and aging aircraft having an exponential effect on costs, airlines in the Caribbean should seriously consider taking adavnatge of newer technology. For example, compare a 10 year-old A320 to a 25 year-old MD-80 - - maintenance costs could be cut in half, while fuel per seat could be 25 percent less.

Even when taking into consideration the different lease rates of these aircraft, a high double digit delta can be achieved in cost reduction. And when you add the reliability and comfort a new generation aircraft can bring an airline, the decision is even clearer.

For more information contact:
Bernard de l’Estoile
Airline Marketing Director
bernard.delestoile@airbus.com