Losses covered on CAL’s Barbados route
(CNS): Cayman Airways’ deal with Barbados to launch the route to the eastern Caribbean island guarantees the airline’s costs, plus a small mark-up according to documents released under a Freedom of Information request. The route ran at just 24% occupancy in October and although November is expected to be better when the numbers are in, CAL will not lose out even if they are not.
While the National flag carrier and the tourism ministry here had previously declined to publish the agreement an internal review following a refused FOI application by CNS has led to the release of the redacted deal with Barbados
Tourism Marketing Inc. and its request for the route.
The airline officials explained on release that the revenue guarantee agreement was redacted in two places because of the issues surrounding the commercial value that could prejudice CAL or Barbados Tourism Marketing. However, its disclosure shows that the guarantee appears to be in Cayman Airways favour.
While it has been difficult for people locally to understand why CAL launched the route the release of the documents shows that it had nothing to lose under the revenue guarantee while at the same time taking the opportunity to test out an inter-Caribbean route without sustaining any loses.
The deal for the route lasts, in the first instance, for just one year having started in October. Cayman Airways is guaranteed that the entire cost of running the route is completely covered with an additional small percentage mark-up even if the planes are empty. If the route succeeds however, the airline gets to keep the profit.
In her letter to CAL’s board chairman officially asking for the route, following discussions between officials on both sides, Shelly Williams the Chair of the Barbados Tourism Marketing Inc said the flight reflected both the Cayman Islands’ and Barbados’, “commitment to building out regional multi-destination travel.”
While CAL continues to face criticisms over its finances and the large subsidies that it receives from the public purse, the decision to enter into this deal will not have an adverse effect on the airline and could still help boost the Los Angeles route as the flights are timed to allow travellers from California to go to Barbados via Cayman and vice-versa.
Tourism officials here also said, when launching the route, that it could bring European travellers flying into Barbados to Cayman creating potential duel-destination vacationers.
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Category: Business, Local News, Tourism, Travel
Just because someone covers operating costs doesn’t mean you should use an idle asset. Adding hours on a jet incurs huge costs down the line. I can’t understand why they aren’t flying to Canada? Westjet and Air Canada run service out of Toronto so cayman airways should run out of say London Ont which is cheaper than YYZ and where airlines service the Mexico bound winter tourists.
You want to permanently be in hock to the Chinese? Because that is the effect of the Belt and Road Initiative.
Mac almost got us there with his Chinese port CHEC deal for $300million.
Thank you FCO for stepping in and stopping it.
Bring back the late night MIA GCM flight. Tourists from Europe and Asia transiting to Cayman from Miami now need to overnight in Miami (unless they arrive in Miami on a Sunday). Lufthansa, which is amongst the earliest flights from Europe only arrives at 2.30PM…so a 3.30PM MIA departure does not work
No just tourists, residents wanting to get back on island the same day.
CAL’s scheduling and routes are a joke and subject to political whims rather than being run as a proper business.
Just look at Little Cayman,lucky if you find a seat when you need it.Some days can’t get back from Grand, unless going through the Brac, having to deal with going through security twice. for a domestic flight?
You summed it up with ‘ Political Whims ‘.
This is what you get when you have politicians meddling in such a business as a commercial airline.
Rather than an actual tourism board & a commercial airline authority /entity running the show.
This is Cayman though, through & through.
Politicians get to meddle with the various portfolio’s, often with their own agenda, that has nothing to do with being commercially viable & …accountable.
So Kenny, was the region Tourism role value for money? Losses of $47 million. Please do tell us of the 24% occupancy how many were actually paying customers.
My intel tells me there were less than 5 revenue tickets in the last 2 flights.
Early election – sent the PACT packing!
CNS NOTE: As noted on an earlier comment the 24% occupancy is calculated based ONLY on paying passengers. The flights may have bee packed to the brim with people enjoying a freebie but the occupancy rate is those that pay.
Nobody can honestly believe Kenny chased the CTA role for any reason other than ego and personal freebies…
There’s nothing in it for Cayman other than yet another loss for the airline.
If I run my business like CAL I would be bankrupt eons ago, a 10 year old can do a better job!
CAL always makes a profit after subsidy: Trumanomics.
$35million in Gvt contributions and they still have a $12 million deficit, can CAL explain where all this money goes – up in the air?.
The point that is being missed here is simple. We are using CAL to provide air transport services for Barbados, they are essentially leasing our brand-new planes to operate their air transportation needs. Those needs satisfy THEIR economic interests not ours.
To say that there is no cost to the Cayman Islands or CAL is misleading. There is an opportunity cost here that nobody is talking about.
1. We are giving up revenues that could be gained by operating routes that have greater synergy with existing or new CAL routes that serve our tourism markets and OUR economic interests.
2. The time and energy spent operating a Barbados route with a handful of passengers provides no economic benefit overall as the handful of passengers are not considered significant tourism visitors. The same time and energy could be invested in a more realistic route that provides a much higher economic benefit. The Minister is not thinking realistically. Look at any Miami flight and what do we see? A mix of local and tourist passengers, this is the equilibrium we need on these routes where the incoming tourist will provide GDP boosting revenues for local businesses and the economy overall.
The Ministers action here are more than questionable. He has taken a local resource (Government owned airline) and leveraged it to benefit a sovereign government over the Cayman Islands Government. Is this not potentially grounds to remove him from office?
If the Minister wants absolution…show us the cost benefit analysis which states what the opportunity costs are.
As I said in another post they are operating charter flights with our airline. That is why It appears as if the cost is pre-fixed. So if they fly one or 100 persons the income is the same. Why don’t the Minister and/cabinet come right out and tell us? They are curtailing the revenue that we should have if the plane was being utilized to fly our people to profitable routes instead of chartering to a destination that is probably only covering the fuel cost. However we don’t even know what the revenue is. Can the Premier step in to stop this craziness?
Why don’t you name the profitable route(s) CAL should have pursued instead of this one? As far as I am aware the flight to Barbados is on a day and time of the week when the aircraft was idle, therefore no opportunity costs. If the flight turns out to be profitable CAL makes money, if it doesn’t CAL is not worse off financial than it was prior to beginning the route.
i get what you’re saying 1:38 but have to ask is it possible that the cause and effect of the Ministers ignorance has actually proved favourable ? If this Barbados shenanigan really isn’t costing us anything shouldn’t we be relieved rather than having Spendy dabbling in the legend of his air commerce killing us with alternative obscure destinations ?
The opportunity cost is the real loss! We could be using these planes on routes that not only generate profits for the airline but also boot tourism. Kenny wants the Barbados route for personal reasons “aint that right playa ?”
in theory yes 8:35, – the reality is CAL has never generated a profit.
Cayman’s No.1 tourism market is TX. No. 2 is NY. CAL should immediately drop Barbados and any other loss making routes (Panama) and start a daily flight to Texas. It makes no sense not to have a flight to our No.1 tourism market…….
Agree 100%, for some unknown reason AA drops the direct GCM-DFW route in the high winter season. KX should take over that route .
Does anyone really know why this route was introduced? If the route is not profitable can’t the airline board terminate it? How many paying persons have travel to or fro on this route? How many Europeans have travel here to get to the US? Does the Premier and /orthe Finance Minister have any responsibility to stop this stupidity? Does KB know that this is not his airline? If he needs to go to Barbados for any reason why can’t he go through Miami? Can someone please answer my questions?
All great questions, but you will never get answers. Even though we the taxpayer keep CAL afloat we are not privileged enough to understand CAL-enomics. We are just expected to sit down and let the smart people make the decisions.
We know about Panama, but does Barbados have direct links with South American countries..?
Nudge nudge wink wink..?
Charlotte is actually our number 1. The route flies almost everyday for the whole year and is a full flight most of the time then two per day on the weekends during the busy season. You are right about NY tho being number 2 as two airlines consistently service the route all year long although with lower numbers.
so what’s really the point? spending millions on aircrafts for test runs
If Barbados can’t pay their own debts, how the F are we to believe that they will or are covering CAL losses. Why doesn’t the Minister, Board, CEO and other CAL bigwigs, take their finger out their asses and put on a schedule and destinations that make sense. For example, the old KX042 and KX247 flights to and from Miami, or the old KX300 and KX301 from Houston. Find meaningful routes such as Vegas, Orlando or even return to Atlanta. It’s time to run CAL as a business and stop the hemmoraghing of cash.
Since no one is held accountable for the losses, and the airline expects the taxi will simply fund any shortfall, how do you expect CAL to ever be run as a commercially viable business?
Run CAL as a business, well that’s a novel idea!
Since aviation is a massive contributing factor to greenhouse emissions, it should be criminal to keep flying a barely used vanity flight that makes zero sense.
Yawn, hardly relevant to the real issues of this subject.
No loss of revenue at a rate of 24% occupancy? Whatever this deal is someone is gaining and it is certainly not the Cayman public. Rather than burning fuel, time and the expense at 24%, why not increase the Miami and Jamaica flights which are 200%?
Not to worry- this route will cease to exist in 6 months or less.
We can but hope and pray. How long is Cash Kenny’s tenure as Chairman of the CTO over? Soon I hope.
8.40pm Not Jamiaca flights. Far too many of them here already. Need to make them travel through US w/US Visa to get here.
What a joke. True costs will never be recovered. Barbados is a failed state. IMF bail out just few years ago.
And, 7:43, having shaken off the last vestiges of the shackles of British imperialism, they immediately put on the new shackles of Chinese economic imperialism by getting involved in China’s Belt and Road project.
Compare the new Chinese built roads in Jamaica to ours
Yes, 7:29, but compare the debt to China the Jamaican government and other governments, especially in Africa, are piling up with these “generous” infrastructure projects.
“allow travelers from California to go to Barbados via Cayman” – sorry but I thought WE were the tourist destination!
Will the travelers from California going to Barbados be counted towards our tourist arrivals?
How many passengers, two or so per month? Why are we accepting this nonsense anyway? Do KBs constituents even realise that their Minister is negatively impacting our tourism product by catering to a non- productive route instead of going to a viable destination that puts money in our treasury? Are they aware that our government is subsidizing CAL and if the airline can make more money then that means that perhaps that money could eventually trickle over to lower CINICO costs for us?
Probably, as long as they don’t go via Miami!
There will be exactly zero people from California flying to Barbados via Cayman
7 hours flight from LA to Cayman, then 4 hours more to Barbados..!
Yeah right, thousands from LA will be lining up for that..!!
Put freemasons in charge of anything, someone is gonna get their pockets lined.
Kenneth is no Free Mason trust me he would not qualify
Free and Kenny are not words you would normally see in the same sentence.
better than caymanian tax-payers covering the loss i suppose…but shambolic business plan from cal management again.
why not develop and profitable route thaat people want to fly too (vegas?????)
You really believe Barbados is going to cover the losses..?
Kenny does not have the education to read or intellect to understand a contract…he needs Barbados more than they need him.
Miami morning and evening!
So you drank the Kenny Koolaid.
Caymanians WILL have to cover the losses.
lo-cal You are trying to make sense of nonsense which will never ever make sense”
Losing money wasting a plane on a dead route, Barbados not covering that.
That’s right and what about all these Cayman environmentalists not objecting to these empty flights? Flying around in empty planes doesn’t seem like you’re “saving the planet”
There would be no losses if they stuck with choosing Las Vegas as their next route! It’s the fastest growing city in the US.
and biggest tourist destination in the world!!… should be a no-brainer…even for a caymanian)
It is sin city and we will not let our national airline near that Sodom & Gomorrah.
That’s correct. Vegas has grown from 500,000 people to now over 3 million! Many are Californians fleeing due to gruesome Newsom’s lawless, high crime, high taxes, defund the police woke State. Even the Oakland baseball team is fleeing California to Las Vegas.
The Raiders have already done it.
legends.rnfl.
That “woke” state of California must be doing something right, other state politicians (mainly Republicans of the GOP variety) are jealous that California’s economy is the largest in the United States, with a $3.8 trillion gross state product (GSP) as of 2023. And it is the largest sub-national economy in the world! If California were a sovereign nation (2022), it would rank in terms of nominal GDP as the world’s fifth largest economy, behind Germany and ahead of India
Additionally, California’s Silicon Valley is home to some of the world’s most valuable technology companies, including Apple, Alphabet, and Nvidia. In total, over 10% of Fortune 1000 companies were based in California in 2018, the most of any state. (Source: Wikipedia).
In closing, I’ll take the gamble that California will be just fine. Go Newsom for president 2028!
I don’t see how this makes sense for a Cayman to LAS route though. are we expecting people from Cayman to travel there? or people from there to travel here? Cayman doesn’t have enough people to fill that plane every week.
Can we just get a daily 7 am flight to Miami please?
so you think more people want to go to barbados than vegas???
Wrong. Expats and Caymanians would choose Vegas over Miami for a vacation. What the heck is in Miami? Vegas has luxurious 4 and 5 star hotels for cheap rates sometimes as low as $14 a night or complimentary (free) if you signed up for a players rewards card at MGM or Caesars etc. Vegas has far superior food, nightlife, shows, entertainment, sporting events, singers and gambling. What’s in Miami? Inferior beaches to Cayman, long taxi rides, high priced hotels and nightlife and pool parties no where even close to Vegas standards.
McKeeva? Is that you?
Great. We won’t lose money directly. Glad we’re shooting for the stars.
As others have pointed out, the real loss to both locals and tourists is that if we could increase frequency and have an early morning and/or later night flight to Miami, this would greatly increase our ability to connect to flights elsewhere without the need to overnight in Miami.
I accept that it’s possible that slot restrictions or some agreement between CAL and AA prevent this. But absent something like that it’s a no brainer to end this Barbados mess as soon as possible and start running CAL more practically.
This is a great business move by Minister Bryant and assisted by Minister Seymour. You guys are the best, we love you.
Thanks Jay Ebanks for your feedback and support of your fellow un-educated Ministers.
Surely another loss is while that plane is flying a quarter full to Barbados it could have been flying full to Miami or Las Vegas
Sleeping on Nashville too. Fun town with two professional sports teams, live music everywhere, and family friendly
Or Kingston
Or Manila, or Cape Town.
24% occupancy sounds about right to Barbados. Put on your thinking cap on real tight and ponder whether people on island wanting a change of scenery would really want to travel to see more ocean and beach?
Direct flights once a week Cayman to Las Vegas would likely be packed.
Los Ángeles is crime and drug ridden and a homeless crisis and that flight route from Cayman to LA should be cancelled.
Barbados is surrounded by the Atlantic Ocean. The Cayman Island are surrounded by the Caribbean SEA.
What beach in Cayman?
The private one with all the deckchairs
i wonder how many of the 24% actually paid for their ticket?????
CNS Note: The occupancy rate of 24% is calculated on paying passengers only.
Perhaps, now tell us who’s paying.
The “revenue guarantee” will only work IF Barbados actually pays…but as always loopholes will be used..don’t forget their Prime Minister is one very smart lady, who could hypnotise Kenny using his own inflated ego.
All at our expense. Everyone in Barbados should be very happy!
It has become clear that CAL is not here to serve the local residents (ie subsidy payers) but exists solely for the MP’s egos and free tickets. Why is there not a daily 7 am flight to MIA and return flight at 9pm? It is certainly not sexy but serves the needs of the local population and business community. Obviously it makes too much sense so will not be implemented.
Does the deal with Barbados include the cost of maintenance delays? What if the flight is stuck there and CAL needs to wet lease a replacement?
Given the total lack of transparency around the “commercial ” aspects of CAL’s operations we will never know.
Don’t know about all that but the CAL board fill up with Moses acolytes is in need of new blood and a full accounting of debts and expenditures need to be published for the public preview like how it use be to see the viability of our national Airline.
Very shortsighted.
Call may not lose money on this route to Barbados but they definitely loss revenue on the Miami route due to less frequency and cargo. Miami and Jamaica have always been the cash cows for the airline and reduced flights to each of these destination to accommodate a Barbados leg does not make sense.
Is it confirmed somewhere that they are running reduced flights to those destinations? I get that it makes logical sense with a limit on aircraft, but I am wondering if this has been confirmed by a CAL rep (or MoneyKenny).
Confirmed on the CAL website, they only run the early morning Miami flight on Friday and late return from Miami flight on Thursday and Friday.
I will believe that there is no loss to CAL if and when we can see the accounts as well as the entire agreement. If by some miracle what they are saying is the truth we are still losing. What about the wear and tear? The route with 24% load factor is of no benefit to the Cayman Islands. Is this is a real bonifide route or is it an extended charter service?How long will Barbados be able to pay the bills when obviously it is a loss to their treasury? This makes no sense. Why would a plane load of Bajans come here and why would a plane load of Caymanians want to fly to Barbados as a regular destination? Except for a few Bajans going home or coming here to visit family and friends I see no reason for this route.