AirOne - Time for a Caribbean Regional Budget Airline?

I read the recent news about the AirOne start-up airline scheduled to start operations in 2008 from Jamaica to the USA as a low cost carrier collaborating with Digicel.

This could be good news for Jamaica, particularly as the airline will have its base and hub at Kingston and/or Montego Bay. We in the UK have seen “the rise and rise” of the Budget Airline industry in the UK with pioneer Ryanair (also Irish) in the 1980’s which grew to surpass British Airways and other European airlines in scale and importance - operating out of initially, minor, UK airports to destination regional airports. They were joined, successfully, by Easy Jet and a plethora of others budget airlines in subsequent years. To be sure budget airlines created a market that did not exist before hand and behold proved that there was market space for them - and the other, conventional, airlines - to operate profitably for the past 3 decades.

What Airone proposes to do is reported to be something similar but for the Caribbean Region. Except it says it will start with KGN and MBJ to Ft. Lauderdale and New York.
I agree the time has come for a regional (budget?) carrier for the Caribbean (and by all means go global with it eventually) but I think the dynamics in the region are somewhat different.

Caribbean Air Travel - The Market Needs
In my recent Trade Mission to the Caribbean from the UK I was struck by the hassle people had in travelling between the islands. For example, I encountered on my journeys a Guyanese entrepreneur who was travelling from Georgetown via Piarco (Port-of-Spain) and Barbados and Antigua to Jamaica to catch a flight to Panama to source supplies for his business in Guyana. And he was not exceptional - there were many such Caribbean people (business and leisure) crying out for better air transportation service across the region.

Another profile of traveller for AirOne could be those who cannot get a US visa to travel even intransit through the USA due to tightening of that country’s security measures.

(I too would join them even though I do not require a US visa at present as the experience of arriving at and transiting Miami airport is enough to put seasoned travellers off the USA as a transit point). We need more hubs and more choice of shorter routings to traverse the Caribbean Sea in addition to MIA.

Yet again there are thousands of people from certain Caribbean, South American and Central American countries who do not have the benefit of a national carrier that can service their non-traditional travel requirements to desired destinations. They could become customers, tapped on the hub and spoke routing system, bringing them in feeder flights to KIN or MBJ for onward journeys to other destinations serviced by AirOne and other carriers.

Yes indeed there are also budget travellers who want to travel more within the Caribbean or those well-heeled tourists who would do more 2 and 3 centre vacations from inside (and outside) the region if it were more affordable. And of course business and trade will be better facilitated and grow across the region with such improved air linkages.

Combined these categories of people add up to a significant number and if you provide an affordable and pleasurable experience then a market will be stimulated and develop.

Airone in entering this market space would be better served in focusing on such travellers and should be careful about going into head-to-head competition with Air Jamaica - never mind Spirit and the host of other USA based carriers – on price. No one will win such a price war - only those with the deepest pockets “survive”.

Caribbean Diaspora
True Diaspora, of which I am one, provides a loyal customer base but many tend to be, by definition, nationalistic doing things even if it doesn’t make best commercial sense.

So Airone’s entry strategy will woo some from this Diaspora category away from Air Jamaica but only so many. By all means service the likes of Ft Lauderdale rather than a Miami but I think a better strategy would be to also change the fundamental dynamics of intra-regional travel which as I said above is already a-changing. Space does not permit me to elaborate on specifics but the business model needs more differentiation other than cost in order to succeed and be sustainable. Take note, budget airlines in the EU do not succeed only because they are cheaper.

In conclusion, many moons ago, Air Jamaica and BWIA should have merged and rationalised their operations into providing the Caribbean with one regional carrier. Although it has taken outside investors to come up with the vision and the capital to get something like AirOne going that should not matter. The benefits to the Caribbean Region are potentially enormous in many ways and AirOne’s application to the CAA should be commended and supported by the Jamaican (and Caribbean) Governments.

Who knows, AirOne, if successful, may turn out to be the saviour of Air Jamaica in the not-too-distant future.