Tourism Minister Kenneth Bryan has blamed the cancellation of Cayman Airways’ Barbados route on negative press and the opposition’s criticism of the gateway.
However, Opposition Leader Roy McTaggart countered the minister’s claims, saying that the route was scrapped because it was not viable.
Bryan, speaking with the Cayman Compass on Friday on the looming cancellation, said he was “upset” that the flight will not be continuing, saying that it was a lost revenue stream.
He said the route, which was the result of a contract between Cayman Airways and Barbados Tourism Marketing Inc. on behalf of the Barbados government, never got the chance to grow.
“I’m very disappointed. I never wanted the Barbados flight to stop because the truth is we don’t use the plane during the period that the scheduled flights are on. So regardless of whether the Barbados flight is on or not, there will be no effect,” he said.
Andrea Franklin, chief executive officer of Barbados Tourism Marketing Inc, in announcing the cancellation of the flight in May, had stated then that the board and management of the BTMI had conducted “a comprehensive review of airlift” into Barbados for the winter season and “following the evaluation of the route’s performance the BTMI and Cayman Airways mutually agreed to terminate the arrangement”.
Bryan said the effect of the pulling of the route meant that Cayman Airways and the country has lost a revenue stream it will not get back.
“During the week we don’t use four planes. So now we’re going to have a plane parked up on the tarmac doing nothing when it had a great opportunity to make revenue for the company and because of their politics and games, now we’ve lost that opportunity,” he said.
Bryan declined to say how much revenue that flight made due to the commercial sensitivity of the contract, as well as the fact that the final payments are still to be deposited.
Last week Cayman Airways president and CEO Fabian Whorms confirmed that 70% of the revenue from the contract with Barbados Tourism Marketing Inc. has been collected from the soon-to-be-discontinued Cayman-Barbados route, but he also declined to publicly release the amount received due to “commercial sensitivity”.
‘Not viable’
McTaggart denied that the Opposition’s questions and criticism of the route led to CAL losing revenue, saying Bryan was “incorrect”.
“The route was ended due to the very low passenger numbers after nearly a year, making it unviable – an issue we had raised concerns about. Additionally, the Minister’s claim that British and European tourists would flock to the flight was also incorrect. The Minister was incorrect in so many ways,” he told the Compass via email.
Cayman Airways is already in the final stages of preparing to wind down the Barbados route after Barbados Tourism Marketing Inc and the airline announced in May that flights will move to once weekly and will end on 3 July.
Bryan said Barbados Tourism Marketing Inc.’s decision to opt out of the contract was a response to the criticism that was originating in the Cayman Islands.
“I made it clear that the country would not lose any money. Matter of fact, they would gain money from the flight regardless of what people perceive it to be, with an average of 35 people per flight because it was a revenue guarantee,” he said.
The route, he said, was an opportunity that gave people a direct flight to the Eastern Caribbean especially knowing that so many Caymanians have family ties to the Eastern Caribbean, and “that were former Eastern Caribbean nationals, but now Caymanians”.
“Outside of the tourism component we had a benefit of a risk-free, route direct service to the Eastern Caribbean,” he said.
Bryan doubles down on deal
He said the deal was a “good one” for the country and even though the opposition was made aware of this they were still critical of the route.
Bryan said he didn’t want politics to be played with the route so he had the Cayman Airways team speak with McTaggart and former Tourism Minister Moses Kirkconnell on the contract so they were aware that it would not be a loss.
McTaggart, however, in the email to the Compass, refuted the minister’s claim, saying that “we were not a part of any discussions about the route”.
“Last year, while in Parliament, the Minister did arrange for a meeting between myself, Mr. Kirkconnell, the Chief Officer and the CFO to review and answer our questions regarding CAL’s 2022 annual report tabled that morning, but the Barbados route was not mentioned,” he said.
McTaggart reminded that last year when the route was announced the opposition also questioned the timing of the launch of the flight.
He said then in a statement that, “worryingly, the Minister and CAL are proposing to start the flights during the slow season in October. This certainly seems detrimental to the viability and success of this second flight to LA. It does not seem like a business decision that CAL would usually take”.
The opposition leader stood by his position.
He also added that Bryan’s apprehension over the route could also be a result of his being “perturbed” after he was not allowed to sit in the House during last week’s Cayman Airways hearing before the Public Accounts Committee.
“Since he was neither a member of the committee nor a witness, I asked him to leave. I suggested he sit in the public gallery if he wished to stay, which he did,” McTaggart added.
Bryan maintained that the deal Cayman got was one many companies in the world would love – to have the ability to do something for one year risk-free.
“A chance to see if something can grow,” he said, adding that Barbados was promoting coming to Barbados through the Cayman Islands and that was free advertising for the country.
“Every time they spend $1 we were getting 15 cents of value out of it because you have to mention the Cayman Islands in it,” he said.
Bryan said “it really bothers” him when he thinks about the loss of value of marketing from Barbados, the loss of the value of the revenue Cayman Airways made on each flight and a loss of opportunity for people to travel.
The minister did not disclose what route, if any, Cayman Airways will next look to add.
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From the Barbados side there was no marketing of the route. It seems that on our end there was a dream that people would use it to connect to LAX.
However if the BTMI team had done some research connect Barbados, Cayman, Bermuda, Belize, BVI, the Bahamas and Panamá without having to touch the USA was the opportunity which was missed.
All of those countries are difficult to reach from the Eastern Caribbean and they all have familia connections.
This is the way politicians seek to mislead the people. He should be dismissed. He KNOWS nothing about running a business. MIA Motley prime minister please replace this man. All the emails correspondence from Cayman islands minister is contradictory to what Mr Bryan is saying. YOU don’t run a business on sentinel feeling but on FACTS
Mr. Bryan it was not a profitable deal. Want to make money, add another miami flight, simple. Fortunately, I’m flying southwest to Orlando this summer, why? CAL don’t fly there.
Mr Bryan claims the loss of the Barbados route was due to “negative press”?. Barbados cancelled the route as they realised they were on a hiding to nothing, picking up all the losses. Perhaps Mr Bryan can explain what happened to all the UK visitors he claimed would be flocking to use the new route en route to the Cayman Islands. This statement was akin to Mr Whorms saying it was a good way to use an aircraft that would otherwise be redundant!.
Oh Lord help us. Away with the fairies as usual. Don’t worry. Plane isn’t being used at that time and Barbados is paying for it, so let’s run it empty. Honestly you couldn’t make this stuff up. Accept it was a bad decision that everyone else could see except you Mr Bryan. And now you blame everyone else but yourself! Extraordinary.
Not one “hardcore” businessperson in the current Government, certainly none that know anything about the airline business.
Two thoughts …
First, the ‘Surplus Airlift’ segment needs to be for gross profit, at least. If the route was generating a gross profit, and the timing of the contractual payments was structured to minimize the risk of loss, then a short, clear statement of (just) the economics to CAL’s indirect shareholders – the general public – may have garnered more support.
Second, the article includes an interesting datapoint on CAL’s Surplus Airlift capacity. It suggests that one of the jets may be idle (or under-used) for up to as much as 70% of the time. If that’s anywhere near correct, do we need four jets? And if we do, are we marketing the Surplus Airlift capacity effectively?
If Surplus Airlift generates a gross profit, then it helps cover the airline’s more fixed operating and financing costs, so reduces the airline’s overall losses.
The Minister is quoted as saying, “I made it clear that the country would not lose any money.”
Here, I am assuming gross profit is after deduction of direct flight-related expenses including fuel used, flight crew aboard, landing fees, aircraft and passenger service expenses and, importantly, maintenance expenses linked to the number of hours flown and the number of take-offs and landings.
Unfortunately, it is unclear from CAL’s 2022 Annual Report how it calculates gross profit. It is not included as a separate line-item in the income statement. Perhaps the 2023 accounts might be changed so as to provide separate gross profit and operating profit line-items?
Per the Minister, “I’m very disappointed. I never wanted the Barbados flight to stop because the truth is we don’t use the plane during the period that the scheduled flights are on. So regardless of whether the Barbados flight is on or not, there will be no effect, …
“During the week we don’t use four planes. So now we’re going to have a plane parked up on the tarmac doing nothing…”.
The statements seem to imply:
• One plane idle (or under-used) for up to as much as five, of seven, days of the week (up to c.70% of the time);
• One of four^ 737 jets (25% of the jet fleet). (^ As of the 2022 Annual Report);
• Multiplied together, up to c.18% of max capacity unused, or under-used.
If the economics make sense, we should be open to future Surplus Airlift opportunities. And, let’s be clear on what we mean by gross profit and operating profit.
It would have been better to reduce the number of flights per week than withdraw completely from the route completely. This matter should be reconsidered and focus should be placed on giving the route at least 1 full year course to run not 8 months and abrupt closure , no- not with such a critical and vital access to the Eastern Caribbean. The hurricane season is now here and Barbados 🇧🇧 triumph any day over Miami because it’s less likely to be hit than other Caribbean islands because it’s located outside the main Atlantic hurricane belt.