…notes Caribbean Airline’s dominance

AS Caribbean Airlines (CAL) holds a “monopoly “ over the lucrative Georgetown-John F Kennedy route, there is need for another competitor to enter the fray for consumers to derive tangible benefits.

This is according to the Competition and Consumer Affairs Commission (CCAC), which noted in a recent report that for 2018, CAL was the dominant market player with just about 59% of total CJIA traffic, although its market share has been declining over the course of the years.

The report stated that the consumer rights body recognised that there is a need for one other competitor flying the GEO-JFK route “in order for consumers to derive tangible benefits not only in price but other non-price services.”

Only last week, American Airlines announced a new service of daily, year-round flights from Georgetown to New York, beginning December 18, 2019. The airline began services to Guyana in November 2018.

The additional route will come in time to meet the usual hike in travels during the Christmas season for customers travelling between the John F. Kennedy International Airport (JFK) and the Cheddi Jagan International Airport (CJIA).

According to a media release from the airlines, the new service from JFK will be operated daily on a Boeing 737-800 with 160 seats, including 16 seats in First Class. The aircraft also features access to power at every seat, and more entertainment options, including free live TV and the ability to stream Apple Music while on board.

“This route will be an important addition for our customers with cultural, business or economic ties between Guyana and New York, and we look forward to offering Guyanese visitors air service to the ‘Big Apple’,” said Vice-President of Network and Schedule Planning for American Airlines, Vasu Raja. April next year, another US carrier, Jet Blue, is expected to commence service along the routes, and since the announcement that the latter will ply the route, the carrier has seen large numbers of bookings.

Meanwhile, the report noted that there is currently an influx of competitors looking to service routes out of Guyana. The CCAC said that it expects that there will be “fierce price and non-price competition for routes where there are two or more competing players,” as it made its case.

While providing an overview of its mission regarding the study, the CCAC said that the body collected data from market players such as the airlines, the tourism authority and Guyana’s regulatory body– Guyana Civil Aviation Authority (GCAA).

It noted that data was supplemented by interviews with both CAL and GCCA while it also gathered raw passenger data from the U.S. Department of Transportation and CJIA, along with the Joint Select Committee on State Enterprises report into the Administration and Operations of Caribbean Airlines Limited.

The commission said that during its investigation, it found that while the industry is indeed an inherently competitive industry, significant barriers to entry exists in the form of financial barriers and Industry expertise. In Guyana, it said that entry into the market was “quite easy as the other barriers such as regulatory and institutional barriers were quite low, so as to attract investment in the international industry. These low barriers to entry into Guyana can be illustrated by the steady influx of new competitors over the last decade.”

The CCAC noted the economic impact the airline industry has had on Guyana.
It said that an Oxford Economic Report on aviation in Guyana indicates that “The economic impact of the aviation sector in Guyana is substantial. The most direct activities associated with aviation create G$20.7 billion in annual economic activity. This represents 3.2% of Guyana’s total GDP in 2015. Moreover, nearly 12,000 Guyanese jobs are supported by the aviation industry (the majority in either transportation or tourism). This accounts for nearly one in twenty jobs in Guyana. Air passengers also generated roughly G$1.7 billion in travel tax revenue for the government.”

The CCAC said that because of the impact that this sector has had on Guyana, the body wanted to take stock of the industry.

It said that it sought an insight into the holistic operations of the industry as well as to understand the entry requirements for airlines, operating costs, and challenges faced by airlines.

IT also sought to determine why there is a lack of competition and, essentially, why the industry operates the way it does.