Aviation issues a focus in Cayman Islands

Intra-island airline connectivity, advancing airport technology and a tax overhaul identified as key priorities for recovery

Aviation issues a focus in Cayman Islands

Intra-island airline connectivity, advancing airport technology and a tax overhaul identified as key priorities for recovery

Key themes designed to encourage solutions for a rapid recovery of tourism in the Caribbean were discussed during the region’s first multi-destination conference in three years.

The series of meetings, held over three days in The Cayman Islands (September 12-15), were organised by the Caribbean Tourism Organization (CTO), its member partners and the Cayman Islands Government.

Top of the bill was airlift and connectivity with a dedicated International Air Transport Association (IATA) day identifying three key priorities: intra-island airline connectivity, advancing airport technology and a tax overhaul.

“Recover, Reconnect, Revive” was the theme of the day which brought together more than 250 industry experts, senior aviation executives, and government officials to discuss the sector’s key opportunities and challenges across the Caribbean region, with the aim of identifying how to jointly rebuild a more competitive air transport sector in a post-COVID world.

In his opening remarks, Peter Credo, IATA’s Regional Vice President for the Americas, stated that the region was on a good recovery track following the devastating effects of the COVID-19 pandemic and that with the right business environment, aviation could once again become a strong contributor to the socio-economic wellbeing of the Caribbean region.

Prior to 2020, aviation and tourism contributed 13.9% of GDP and 15.2% of all jobs in the Caribbean region. According to the World Travel & Tourism Council (WTTC), eight out of the 10 most tourism dependent countries globally in 2019 were in this region.

Intra-island airline connectivity was noted as a key priority moving forward. While airlift between the Caribbean and the important source markets of Canada, Europe and the USA largely has been restored, the intra-Caribbean passenger levels have only reached 60% of pre-pandemic levels. Improving this requires a concerted effort to increase air links within the Caribbean.

Julia Simpson, President of The World Travel & Tourism Council (WTTC) called for the Caribbean to have its own airline.

“I know it’s been discussed for many years but the Caribbean needs to act as an entity to build capacity to benefit everyone. Demand is there and I believe investors are there too,” she said.

An associated theme discussed how the nations of the Caribbean could remain competitive with other key tourism markets across the globe by prioritising putting multi-destination offers into the market.

Airline ticket taxes – the lion’s share of which go to regional governments to help boost infrastructure and provide travel-related services – was a contentious issue during the conference.

Several speakers said the way ticket taxes are structured comes across as punitive, divisive, counter-intuitive and counter-productive. For example, the current taxation structure is such that there is no entry route into the market for a low-cost carrier such as Spirit Airlines, which operates out of Miami. Even those airlines that do offer a limited service around the region, such as Caribbean Airlines and Cayman Airways, face daunting challenges to any expansion plans.

Price competitiveness is a challenge; with Trinidadian economist Marla Dhahran positing that taxes constitute some 30 to 40% of the total cost of airline ticket prices.

“Our governments need to address (taxes),” she said, disclosing that another major regional challenge is the ‘dis-ease’ of doing business within territories and across the region.

“Those are some of the factors that drive up the cost of doing business and make this the most expensive region, in terms of tourism and vacations,” said Dukharan, who believes as the most tourism-dependent region on earth, the Caribbean has to solve these problems.

“Otherwise, five years from now, 10 years from now, we will be singing the same song, lamenting the same problems and our economies would be much more affected by the fact that we haven’t solved these problems. We need to solve these problems now.”

The WTTC’s Simpson also called for lower air taxes to drive business and investment.

“We know that this stimulates customer demand while making it more commercially viable for the airlines to operate,” she said and praised the Government of Antigua and Barbuda for announcing a 50% reduction in taxes on airline tickets for travel within several Caribbean Community (CARICOM) countries.

“More countries need to follow in these footsteps. In fact, by the Caribbean adopting some common policies, it will make the whole of the region much more powerful,” she added.

Finally, clunky airport technology was noted as an area in need of rapid improvement to modernise and simplify outdated policies and procedures, which pose operational challenges to airlines and adversely affect the travellers’ experience.

Cerdá concluded: “Governments and Stakeholders voiced their support for the identified industry priorities during the Aviation Day. We now expect to see the appropriate actions and decisions. For example, ticket taxes, charges and fees need to be reduced to bring them in line with the global average. Increasing these would be detrimental to demand. All participants in the travel value chain need to work in unison to rebuild aviation and tourism in the post pandemic world.”

Other key topics mentioned in the Cayman Islands as a threat to tourism’s recovery included concerns over the rapid deterioration in the global economy, the financial crisis engulfing several airlines, increasing competition from other destinations, and climate change.

Acknowledging and ‘owning’ these challenges needed to be prioritised and addressed “as a matter of urgency,” delegates were told.

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