REDjet is all set to become the Caribbean's first low-fare airline and is now looking to acquire a licence to fly from Jamaica. Founded in 2006 by Ian and Robbie Burns, the father and son duo made a concerted effort to get the airline started in Jamaica under the name Airone, but it was thought at the time that it would prove a competitor to Air Jamaica, the national carrier the government was eager to divest.
The two men relocated to Barbados refined the model and remained steadfast in their tenacity to launch the Caribbean's first low-fare carrier. Today the company is privately owned and incorporated in St Lucia, with its corporate offices located at Grantley International Airport in Barbados. Plans are afoot to establish other bases in Jamaica, Trinidad and Guyana.
Speaking with Caribbean Business Report from the Courtleigh Hotel in New Kingston, Chairman of REDjet, Ian Burns said: " Since we left Jamaica, we have relocated to Barbados where we received Cabinet approval and were granted carrier status. Now we have gained our AOC, we are weeks away from launching REDJet."
The new airline now has two MD-82 jet aircraft which are fitted with 149 seats and powered by two JT8D-217A engines. They will be entirely economy class. Cabin crew, ground crew , pilots and engineers are all trained and certified and are ready to go.
The Ryanair model
REDjet will follow the Ryanair model and Burns is hoping to emulate his countrymen's success. Ryanair is an Irish low-cost airline with its head office at Dublin Airport and with primary operational bases at Dublin Airport and London Stansted Airport.
It now operates 264 Boeing 737-800 aircraft on over 1,100 routes across Europe. The airline has been characterised by rapid expansion, a result of the deregulation of the aviation industry in Europe in 1997 and the success of its low-cost business model.
Ryanair is Europe's largest low-cost carrier and the second largest airline in Europe in terms of passenger numbers. Revenues have risen from 231 million euros in 1998 to close to 3 billion euros today. Last year it posted a profit of 319 million euros. The Irish airline has an average airfare of 32 euros and in 2010 reported traffic of 72 million passengers.
The way Ian Burns sees it, the term "low-fare airline has" evolved significantly over the years. For example, JetBlue and Spirit would be called low-fare airlines in the United States, yet they are a totally different low-fare airline model to the likes of Ryanair or EasyJet.
"In the US, low-fare airlines have evolved very much into a situation whereby at the outset with SouthWest there was a complete differentiation between SouthWest and the legacy airlines like Delta and American Airlines. What has happened over a period of time is that you once had unlimited alcohol, baggage and everything, and at the bottom you had to pay for everything. Now at the top they have stopped giving out free booze, reduced baggage allowance and flexibility in fare structures. Now from the bottom up they have reduced the size of seats, cut back on in-flight entertainment and trimmed back on the flying experience. Today it all meets in the middle and there isn't a big differentiation at product level between the American low-fare model and the legacy airlines. We are following the Ryanair model. This is where you wield the lowest cost base you possibly can around your business so you can provide the lowest air fares into the marketplace. It's on an opt-in basis, so you only pay for what you get. So if you just want a seat, you pay for just a seat. You want a seat, a patty and a drink, you pay for that. It's your choice. It's about what you want out of your travel experience.
A new option for the Caribbean
"What we are bringing is a new option to the Caribbean. Most of the airlines of the Caribbean are basically offering the same product. What we are offering is a brand new product designed to grow the market. The Caribbean is full of islands and air transport is the only feasible option. Many people want to travel but just cannot afford it, so what we are trying to do is make it more affordable for the people of the Caribbean,"said Burns.
The chairman of REDjet stressed that the objective is to reduce the cost of airfares by as much as 60 per cent. The fare will be US$9.99 on all routes one way, excluding taxes and charges. This means the average fare will be around US$59. However, if the flight demand has been strong and the lowest fares have been sold out, then the fares will increase and cross the US$100 mark. Still, this is way cheaper than the competition.
Burns explained, "We want people to see travel in the Caribbean as a commodity and not as a luxury they cannot afford. It's hard to believe that to travel across the Caribbean takes you almost as long as to get to London and costs hundreds of US dollars."
Linking the region
REDjet comes at an opportune time. One of the failings of the Caribbean Single Market and Economy (CSME) has been the inability to link the region. If the region is to provide a source of employment and economic opportunity, then air travel has to be the linchpin that brings the region together. To get to St Lucia from Jamaica can take four hours. Doing the "milk run" to Trinidad is a five-hour-plus ordeal. The Caribbean in effect has become a number of disparate states with little sense of community. Air Jamaica, Caribbean Airlines, LIAT have all dropped the ball in that respect.
"I think many of the airlines look at the tourism industry as a huge market for them and by default have excluded the Caribbean people themselves. We have set our business model up to carry Caribbean people, firstly within the Caribbean and then to destinations outside the Caribbean within a short-haul range where they would have friends, family and business interests. Our model is a very focused one. It is predicated on flying between forty minutes and four hours. Outside of that we will not deviate. Whilst we are currently in the eastern Caribbean, obviously the parts of the United States we will reach are the Miami, Fort Lauderdale regions," explained Ian Burns.
The plan is to have five to ten planes based in Jamaica which will allow the airline to fly to New York. Now that the divestment of Air Jamaica is a reality and the Trinidadian carrier Caribbean Airlines is now its owner, it is hoped that the government will move swiftly to green-light REDjet's approval. Clearly it is stated that there is no exclusivity in the sale of Air Jamaica agreement. Jamaica has demonstrated that it has a much more open attitude to the development of aviation and that bodes well for REDjet. So is it second time lucky for Burns?
"We can bring not only jobs, but huge social and economic benefits to Jamaica.We did understand that if Air Jamaica was to be divested successfully, then therefore the government could not have anything that would impede that. We are still passionate about being in Jamaica and hopefully the circumstances are now right to bring REDjet here."
Burns added that REDjet is here for the long term and though it will begin operating with two aircraft, it will build the airline block by block into a robust business. The vision is to have 25 aircraft within a five-year period spread across five countries.
The all-economy airline is set to make an impact on air travel in the Caribbean and is a testimony to the Burns' tenacity, but what level of investment has gone into REDjet and when does it expect to make a return?
Ian Burns would not be drawn on numbers but did say that the investors had planned REDjet as a long-term business proposition. He took the opportunity to assure all concerned that no effort was spared to ensure a safe, well maintained and financially sound airline set to service the region.
"The way we finance our aircraft and the running of this venture is different from the way other airlines go about it. Throwing out numbers doesn't really matter. What does matter is we have a business plan that we have submitted to both investors and governments and they are confident that we can roll the business out,"said Burns.
Addressing the question of marketing and the strategy to be employed there, Burns fancies the Digicel model where one comes into a deregulated market and becomes an integral part of people's daily lives.
"Digicel brought unique marketing techniques and methods to the Caribbean. We see ourselves coming to the market with a different attitude that currently prevails among other carriers. It's about how we get to the people. If we intend on growing then we have to get everybody to touch us easily. We have already created 306 retail points where people can touch us at street level. We are a web-based reservation airline and people will be able to access us via their mobile telephone handsets."
The route structure is based around the operational side of the business. The four initial routes will be Barbados, Jamaica, Trinidad and Guyana. Here Burns sees the ability to make use of efficiencies in terms of costs. This will allow REDjet to connect the Caribbean on a greater scale than what currently prevails.
"Many of the places we want to fly to, nobody does right now. Two things we noted were the cost of air travel in the region and the other is the inflexibility which sees people requiring visas. We saw a huge opportunity to make it easier for people of the Caribbean to travel around the region. Intra-regional travel over the last five years has fallen off by 25 per cent, according to the CTO, and that is largely due to the escalating cost of air travel. Also, apart from LIAT, many of the airlines have reduced their services in the Caribbean. Therefore we see a huge market there for us," ventured REDjet's chairman.