Impact case study database

Impacts on aviation policy

Subsequent to the underpinning research, the CARICOM Secretariat and Caribbean Tourism Organisation [5.2] made some revisions to their air transport policies paving the way for a partial opening up of aviation markets in the CARICOM and wider Caribbean region. The 2013 Caribbean Development Bank (CDB) Socio-Economic impact of LIAT study was carried out in connection with a large fleet renewal loan request to CDB by LIAT, which was granted [5.4], allowing the carrier to increase its overall capacity and route capability. The 2015 recommendations were supported and endorsed by various Caribbean Heads of State including Dr Ralph Gonsalves, Prime Minister of St Vincent and the Grenadines.

““ As a broad framework of analysis I think the authors of the report have done a fairly good job” (Jamaica Observer, 2015) [5.1]

As recommended in the underpinning research, in February 2019 Jamaica, Trinidad and Tobago, Barbados, Dominica, Grenada and St Vincent and the Grenadines all signed the revised Caricom Multilateral Air Services Agreement (MASA) [5.2], which extends full freedoms to all Caricom community carriers on routes within and between Caribbean Community states. Non-community carriers would still be subject to existing bilateral and extra-bilateral agreements. This allows small island states to pool scarce air transport resources together and creates an enhanced level of local commitment, flexibility and continuity in the supply of air transport services across the region.

“MASA is…in keeping with their (Caribbean Heads of State) quest to deliver adequate, fair, competitive, efficient transportation services at affordable costs.” (WIC News, 2019) [5.2]

More recently, the European Commission Joint Research Centre has been reviewing its regulatory approach to Latin American and Caribbean states upon recognising the additional gains in air connectivity that can stem from promoting additional traffic rights and reduced regulatory fragmentation to enable additional direct and indirect flights, particularly those that exploit behind and beyond market flows through designated hubs.

“I found it highly relevant for the policy discussion on the liberalization of international aviation” (with reference to EU-Latin America/Caribbean markets) [5.6]

Socio-Economic impacts

Key regional financing institutions such as the Caribbean Development Bank along with the region’s major aviation service providers such as LIAT and Bahamasair were able to use elements of the underpinning research to justify investments in route networks and fleet renewals as well as lobby regional governments to review aviation taxes as ways to enhance the socio-economic impact of continued air services across the islands; islands which would otherwise be cut off from commercial and scheduled air transport services.

“This work supported the evidence base for investment in a new fleet. The study was also used to corroborate the findings of a separate research report some years later, underpinning the case for reform of taxation on regional air travel” Damien Reeves, Economist, Caribbean Development Bank, June 2020 [5.3]

“We are still transitioning into the new fleet, seven so far and an eighth due in June/July.” May 2014 [5.5]

“We are still using your data and analysis, which you carried out so long ago (in the 2012-2015 period)” October 2019 [5.5]

Julie Riefer-Jones Chief Executive Officer, LIAT

Ultimately, this has helped to safeguard and in some cases enhance air services provided in countries such as Dominica, Grenada, St. Vincent and the Grenadines and the Bahamas, among others. Employment and expenditure estimates, for instance, (Direct, Indirect and Induced) averaged out at 975 FTE jobs and US$22.42mn related to LIAT’s hub activities and 98 FTE jobs and US$1.7mn for LIAT’s outstation activities in 2011/12 with a moderately significant variation around the averages (Caribbean Development Bank, 2013).

Impacts on trade in tourism

In line with the above socio-economic impacts and as pursued by CARICOM, a more open and liberal bilateral and multilateral environment for air services, as recommended in the underpinning research, has led to gains in extra-regional connectivity, as a result of the increased number of air routes and carriers able to operate services into the region. Between 2008 and 2018 change in connectivity from international markets averaged out at +50% across 25 different Caribbean states (Caribbean Development Bank, 2018) [5.7].

“The report made the case for a series of reforms to policy and operations, some of which have been taken forward by the Caribbean Community (Caricom) Secretariat”. [5.3]

For Caribbean states, many of whom reliant on incoming tourism for foreign exchange, the more liberal approach to air transport, the continuation of air services (Caribbean Development Bank, 2013, Warnock-Smith and Morell, 2011) and minimum revenue guarantees (Caribbean Development Bank, 2015) for the provision of foreign carrier air services have ensured that countries such as Jamaica, the Bahamas and Barbados have been able to increase incoming tourist receipts during the post-intervention period (Table 1).

Table 1: Incoming tourist receipts selected Caribbean states in 2010 and 2017

Source: UNWTO Tourism Highlights, 2018 [5.8]

Overall, aviation provides a lifeline to the CARICOM region’s economy, enabling incoming tourists to contribute over US$4bn to Gross Domestic Product (GDP) and provide 280,000 jobs (Caribbean Development Bank, 2015).