The announcement by Caribbean Airlines that it has to lay off a quarter of its workforce and restructure itself to survive should not surprise anyone.
Globally, the airline business is one of the most difficult to succeed in because it is based on margins that are hard to achieve. Costs are not often in the control of the airlines. For example, the price of fuel, unless you do a hedge, requires the capacity of scale to reduce the unit cost but not the organisational inefficiency that large companies are often saddled with. It also needs a fierce commitment to cost control, efficiency, innovation, entrepreneurship and a clear strategy.
Following years of losses between 2011 and 2017, in 2018 and 2019, CAL appeared to be making the right moves.
The airline brought in new management, cut routes like the cash-guzzler London route and reduced some of its extras. No longer were you allowed two bags in economy; it even scaled back some of its offerings in Business Class. CAL improved its on-time performance while continuing to maintain its Caribbean feel.
There was some rebranding and its partnership with Machel Montano ensured that it remained in the hearts of the people of the Caribbean.
But then came COVID-19 and, like all other airlines, it faced the challenge of how to navigate a global health pandemic.
This week, we learnt it made a loss of $172.5 million for the first quarter 2021 on top of a $738 million loss reported for 2020.
So CAL was in trouble and there is no doubt that there would be casualties.
What did not help its cause was the Government’s decision to close T&T’s borders for the past 15 months.
Let me be clear, I am not making the argument that the border closure alone is what has led to this situation that CAL finds itself in. Had the borders been opened in a managed way, however––as every single Caribbean island, with the sole exception being T&T, was able to do––the extent of the dislocation and pain that CAL faced would have been reduced.
The border closure and the Prime Minister Dr Keith Rowley-led Cabinet’s insistence that there was only one way to protect the population from death and destruction, revealed that the Government is not prepared to do anything that seems to be innovative because that would require thought, planning and execution of something that we have not already seen play out.
Some months later, the prospect of a $110 million severance payout and the anguish of people losing their jobs is yet another example of both the unexpected consequences of the pandemic and the failure of the Government to come up with the innovative solutions this current situation is forcing not only CAL but other businesses and entire countries to find.
Less there are those who are still of the view that the Government had no choice and that we could have lost thousands more citizens, perhaps we could look at our Caribbean neighbours and we would see that T&T did not perform better than any of those countries. Not even Haiti.
Barbados has had up to Tuesday, 4,045 cases with 47 deaths. If you consider that Barbados has one-fifth of the T&T population and you multiply the cases and deaths to match with T&T’s population, you would see we have done worse than our Caribbean neighbour, which chose to keep its borders opened most of the time during the pandemic.
Let’s look at the numbers for Jamaica. Twice the size of T&T and about twice the size of population and another Caribbean country to keep its borders opened, Jamaica has had 49,735 cases and 1,037 deaths.
T&T, with borders shut, citizens stateless and often begging to come back home, had 30,982 with 761 deaths. Closing the borders did not make us safer. All it did is to show the rest of the region that the administration did not have the confidence that we could operate a managed border with the requisite protocols. We had neither the innovation nor self-belief.
This situation must worry us deeply because we know, instinctively even, that to emerge from this pandemic, to build this economy to last and to find new sustainable revenue streams, we need three things.
1. We need a country united around the cause to transform the economy.
2. We need a government that is committed to reducing its stranglehold on the economy, supportive of the private sector, prepared to live within its means, willing to do the hard work of pension and social security reform and leave no stone unturned to increase efficiency and competitiveness.
3. We also need a private sector that is committed to innovation, that does not see its role as buying and selling for profit and which can carry our economy in a new approach to development.
The inability over a 15-month period to find a solution to the border issue, even when citizens, people with T&T passports, were being told to stay in place, is unconscionable on the one hand and does not bode well for our ability to innovate.
We have heard the Finance Minister make the argument that it’s better to borrow at double the interest rates from the Chinese government than from the IMF because it may demand the country do what it has to do the ensure money is well spent. We have heard the Minister of Finance continue to insist that it is fine to use the Heritage and Stabilisation Fund to pay salaries and yet he cannot see how it’s a contradiction that while CAL has to send home workers because it does not have the money to keep them employed, it’s okay for the Government to borrow money to pay salaries?
We have to take action to save our micro, small and medium enterprises, as they are the businesses that employ most of the people in the country.
We must pivot from what we have done in the last 10 years if we are to survive.