Officials: Cayman Airways provides value for money

Cayman Airways will continue to need significant funding from government as long as it is required to serve unprofitable but strategically valuable routes like New York and Dallas, the airline’s CEO Fabian Whorms said last week.

By funding the airline to the tune of around $21 million a year he said government was essentially subsidizing flight prices to bring big spending tourists from the wealthiest parts of the U.S. to the island.

He said the funding also enabled the national airline to set the price point that other carriers had to follow, ensuring low fares into the Cayman Islands from all airlines operating out of gateway cities. The strategy helps ensure wealthy tourists chose Cayman over rival destinations, he claimed.

Citing a report that the Bermuda government paid more than $3 million annually to secure a single weekly flight out of Toronto, Cayman Airways Chief Financial Officer Paul Tibbetts suggested rival destinations that did not have their own airline were at a serious competitive disadvantage.

Facing questions from legislators at the Public Accounts Committee last week, the officials said government was getting a significant return on its annual investment in Cayman Airways through tourist spending in the country.

Mr. Whorms said research from the Department of Tourism and from Deloitte had shown that visitors from New York were among the highest spenders, making an economic contribution worth $5,000 per passenger to the island’s economy.

He said by operating at a loss out of New York, Cayman Airways brought valuable business to the island and “kept the competition honest,” driving up tourism from one of the wealthiest regions in the U.S.

“It is impractical for us to start flying to New York at $299 to bring tourists to the island, when we are losing $300 a passenger. We couldn’t do it without the payment from government.”

He said the amount of economic activity generated as a result of increased tourism meant government was getting value for money for its multi-million dollar payment to the airline, a frequent source of scrutiny among legislators and consultants seeking to cut government spending.

“What it costs the Cayman Islands to be in that game is we facilitated an airfare that made our jurisdiction chosen over another – that expense of $300 is well worth it,” said Mr. Whorms.

“As long as those dynamics remain viable and sensible, anyone would say that it makes sense to continue.”

Asked by PAC chairman Ezzard Miller if there were a longer term strategy to make such routes profitable and reduce the amount of government funding required, Mr. Whorms said this was not the endgame.

“As long as the route justifies its investment from government in terms of the return, the decision to continue will be made even if it loses money. There are no set time frames.”

Even when rival carriers start eating into the market share out of a city like New York, Mr. Whorms said the airline had an ongoing role to play.

“We are able to have some level of influence on the pricing of other carriers by putting a lower price in the market – that’s all part of the strategy.”

He said marketing focus on New York meant the route remained viable for Cayman Airways, even with competitors like JetBlue operating on the route.

“The pie is big enough for everybody,” he said, “What is important though is if we do not maintain a presence, the influence we have on the pricing will go away. The marketing work might be in vain because the tourists won’t find it attractive.”

He acknowledged that a large portion of the economic benefit went to private sector businesses, including hotels, but said the tourism stimulated by Cayman Airways also brought direct revenue in airport taxes and hotel taxes.

He said government would not get that revenue if tourists shopped round and found they could take their family to the Bahamas for $1,000 less.

Decisions on which routes to pursue are taken in conjunction with government, he said.




  1. It never ceases to amaze me just how much nonsense CAL representatives can dream up to justify their annual CIG handouts.

    The idea that CAL is somehow setting a ‘price point’ that other carriers like JetBlue and American are being forced to follow is not just pure fantasy, it’s delusional. The true picture is that the major carriers are setting the price point and forcing CIG to match it by underwriting the fares. In fact I suspect if the CAL subsidies were really impacting the competition on routes like Miami and JFK the airlines’ lawyers would be screaming ‘foul’ in the US courts. The reality is far more likely that this is simply all money going down the drain.

    The time when CAL’s books were opened up for public scrutiny so we can see where all this money is really going seems long overdue.

    • David – your comment is spot on!
      The public relations staff at Cayman Airways should also try selling Ice to Eskimos while they are trying to get the Caymanian public to believe their fairy tales. I truly do support Cayman Airways after all it is our national airline. My heart pounds just a little faster when I watch those planes taxi on the runway and then reach for the sky. I know many of the pilots, even went to school with a few and I would trust them with my life any day. What really ticks me off is the way in which the airline has been managed. Government cannot continue to shell out millions of dollars because of the poor decisions being made by a hopeless few. It is high time for new people with new ideas and the guts to fly our airliine to destination success.

  2. Would it make more sense, if all accommodations and restaurants and big store’s got together with Cayman Airways and made exclusive deal when you fly Cayman Airways , you get big discounts all around by booking your Vacation with Cayman Airways
    Instead of Cayman Airways trying to fight for the visitors to the Islands alone and Cayman Airways being the only looser .

    I think what Cayman Airways is doing is not going to be that beneficial to the Islands Tourism , because the the Islands would still be too expensive for the average vacation destination.

  3. I support Government help in funding Cayman Airways. It is our national Airlines remember. So the same way private schools and other private organizations look to their stipend from government every year I think Cayman Airways should continue having theirs too.


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