… calls for incentive packages to encourage stability
the withdrawals of major airlines from the local market over the years have left devastating impacts on the economy, yet the government seems unbothered by the risks and concerns existing in the aviation sector, Chief Executive Officer of Travel Span Nohar Singh indicated.
During an interview with Guyana Times on Saturday, Singh pointed out that though many credible airlines abruptly pulled out from the market after making huge investments, no action has been taken to examine the reasons or circumstances behind those bold decisions, and to determine what preventive or remedial measures could be put in place to address the situation.
“Guyanese have seen airlines come and airlines go. We have lost several really major airlines in this country. North American Airlines was a very reliable service; Delta. We were literally blessed to have Delta in this country. Someone could get on an airplane in India or any part of the Middle East or Africa and check in just once with their bags and then in Guyana. We lost that airline,” he highlighted.
Singh contends that the question that must be asked but not being discussed is, “why are we losing these airlines, why are they coming in and then going out? We need to talk about that, we need to look at the reasons why and understand the airline business in a bigger context,” he urged.
The concerned stakeholder explained that the airline business is not a “one man” show but rather, all players including government must contribute significantly to ensure stability in the sector, especially in light of the fact that the sector contributes tremendously to the economy.
“The benefits from the airlines spreads from so many different areas. We did a study of the 1038 passengers who came into Guyana in 2015, and of every passenger who comes in, they bring in an average of US$1500 into the economy, and for the diaspora market, it’s even greater because they build their homes and they take care of their families,” he noted.
“But just using that figure US$1500, this is a very important part we need to look at… that in itself brings approximately US$172 million into the economy, and who benefits? You have that VAT that comes out of that, you have the taxi drivers, you have the hotels, you have the restaurants, you have the stores, everyone benefits,” he explained.
Reinforcing his statements, Singh argued that in real economic sense, for every dollar that is spent in the economy, its impact is usually about six times the initial amount.
“So if you take US$172 million from 1038 passengers and you multiply that by six… so the point I am trying to make is that there are so much benefits that come in from the airline, then why are we not looking at the airline from a different perspective where it is not the airline alone that should take the risk and there is the perception that the airline makes all the money,” he posited.
The Travel Span CEO asserted that the perception is wholly incorrect, simply because if the airlines were pocketing all the profits then they would stay in Guyana and continue to operate for greater revenue.
Singh pointed out that the only airline that has been able to stay in Guyana is Caribbean Airlines, because it has the support of its government.
“Every year their government gives them over US$100 million and the government sees it fit to give them the support because their government understands the importance of the airline and they understand the economic benefits of it,” he explained.
According to reports, Caribbean Airlines used to receive hefty fuel subsidies from the government of Trinidad and Tobago, however, it no longer does. Despite losing its fuel subsidy, the state-owned company was still listed in budget documents to receive a $400.7 million subsidy from the government.
Commenting on the situation, Singh observed that Guyanese always talk about wanting stability and reliability in airline services however, decision-making stakeholders pay little attention to the circumstances under which the airlines operate to determine how best these demands can be met.
“We also need to play our part and understand the benefits of the airline whereby the government, tour operators, and all the beneficiaries need to be able to work with the airlines to be able to share and mitigate some of those risks then you will see longevity and then you will see growth,” he stated.
Singh explained that by creating an environment that fosters permanency among airlines, arrivals will eventually increase and so will the money flowing into the economy.
The CEO outlined that the first step is for the key players in the field, particularly the government, to understand the benefits of the airline sector in order to be better informed when developing policies and incentive packages to encourage investments.
“Then you will be able to develop a financial formula that works for the government, that works for the private sector, and that works for the airline so that everyone benefits from that same pool of economic activities,” he stated, noting that it is a progressive undertaking.
“It’s not ‘oh you come airline and I’ll give you that and that’. It’s something that you sit down and you work it out based on the size of the market and potential for growth, how are we going to get people here, what’s the product, what are we going to sell; are we going to sell tourism? We have to be able to say look, we are competing with (other countries), what is our product level to Barbados, etc,” he explained, pointing out that stakeholders need to examine the various aspects of the venture and establish a formula that works for everyone.
In this jubilee year and looking ahead to the next fifty years, the Travel Span CEO said it is time Guyana looks at aviation in a greater context.