Recently, Charles Clifford, the Minister for Tourism, informed the Legislative Assembly about the fuel crisis hitting the world’s airlines. The LA granted a $4 million interim cash injection to cover fuel costs, on top of what is an already heavily subsidised airline. Fuel and staff (in that order) are the two biggest costs for Cayman Airways.

The spiralling cost of jet fuel is a reality that will be difficult to predict. As of 16 May, jet fuel was $3.95 per gallon. According to the International Air Transport Association jet fuel monitor, this was a 3.4% increase in one week and 90.1% in the last year. Fuel prices are increasing weekly if not daily and airlines have no choice but to either absorb the loss, or pass the increase on to the passenger as fuel surcharges. Oil is selling at $135 a barrel, and it is expected to pass the $150 level. Airline companies never expected to operate with prices at these levels.

CAL is no exception to this financial reality. Five smaller US airlines have filed for bankruptcy in the last month and even major airlines like United, Continental, Delta, Northwest, and Italy’s Alitalia have been seeking strategic mergers or partnerships with an urgency never before experienced in this industry.

Since CAL’s founding in July of 1968, it has never broken even, let alone shown a profit on its investment. This amounts to 40 years of continuous financial losses, which the public, through the government, have had to make up with more or less US$25 million dollars a year in subsidy.

Adjusted for inflation, this comes to over a billion US dollars over the last 40 years, with no end in sight. (Assuming I am correct in my figures; I would prefer that an official audit was available showing the actual losses).

Flying a turtle on the tail is something that I think the public want to see continue, so the question becomes how to make this happen? Below are five potential options for us all to consider.

1. Let CAL continue on as a subsidised government owned and operated corporation, and keep paying the losses through the public treasury. The problem with this is that the losses will become so large the company will be forced into involuntary bankruptcy. This is obviously not a viable economic option.
   
2. We do have the Cayman Stock Exchange, and this would allow government to sell, through a public offering, 100% ownership of CAL to the general public of the Cayman Islands. This would truly afford the people of these islands real ownership of the airline. It would allow the new owners to set up their own management team, and transform our airline into a profit making, public company, as well as a national asset.
   
3. If the public did not see fit to buy the company, then it could be sold to its employees. A classic example of this was the employee buyout of nearly bankrupt Avis Rent a Car a number of years back. Avis under the ownership of its employees not only came back, but also is today the leader in the rental business. There is nothing more effective than motivated workers with ownership. This is probably the best possible alternative as it would most importantly keep CAL flying, give the public its airline to be proud of, guarantee the workers their jobs, and give government back its subsidy to spend on public works.
   
4. Find another carrier that would be willing to come in and operate CAL but maintain the logo and image. The turtle on the tail would still be there, people could still be proud of the airline, but the financial drain would be removed. It would be wonderful if the 25 million dollars saved could be made available every year to be spent on education, roads, healthcare and infrastructure.
   
5. The last alternative would be to sell off CAL to a larger carrier and get out of the airline business. The eventual failure and shut down of CAL would not be what anyone wants to see, but economic necessity will make such a move the only one available.

A model for CAL to emulate would be Southwest Airlines. Through the worst of this crisis Southwest has continued to make money, give exemplary service, and be voted the top airline in the US; Where there is will, there is always a way to survive, and succeed. It does though take motivated people who are willing to blaze a new trail and bypass the old way to do business. You don’t hear Richard Branson of Virgin Atlantic crying, do you?

Whether the airline was to stay government owned or go public, changes in the way it does business would still have to be made. Some examples include:

*No more free flights. It is good to see that the ‘unreported ticket sales’ fell from an estimated $385,000 to $10,000, but all ticket sales should be reported. Ten thousand is still ten thousand too much.

*Fly the profitable routes and get rid of loss making destinations. According to Mr Clifford, only the Kingston route makes money, so this would be a difficult decision unless the airline can compete more effectively on other routes.

*Get rid of the jets and lease large, 85 passenger turbo-prop planes. These planes have long ranges, run on 50-60 percent less fuel, and have typically lower maintenance and landing fees.

*Cut all frills, even the rum punch and peanuts and make them available for sale only. This model is used by almost all low-cost airlines and many standard operators too. If you fly the six hours from Miami to Los Angeles on American Airlines, you will need to bring your own food or pay for a snack.

*Next to fuel, labour costs are the largest. Get the labour force down to a basic minimum.

I, like everyone on the island, would like to see CAL survive grow and prosper, and I present these suggestions to address the financial problems now facing our airline. Time is running out, and we can no longer afford the luxury of putting off decisions, which have been too long coming.

I hope that government and the public can start a dialogue, as they are now doing with constitutional reform and do it before the bell truly does toll for us all.