Aviation Tribune talks to Trevor Sadler, Chief Executive Officer of interCaribbean Airways, a successful passenger airline based in the Turks and Caicos Islands.
The airline offers scheduled domestic and regional services from its hub at Providenciales, Turks & Caicos, to multiple destinations in the Bahamas, Cuba, Dominican Republic, Haiti, Jamaica and Puerto Rico.
It all started when Mr. Lyndon R. Gardiner, Founder and Chairman, purchased his first plane in 1991 and started providing an informal but popular on-demand air taxi service that he called InterIsland Airways. In those nearly unregulated days of flying in the Turks and Caicos, he was often called out in the middle of the night to fly Medevac flights after having put in a full day. He felt a strong obligation to assist, as a Medevac flight flown by his long-time friend, the late Howard Hamilton, saved his own life after a devastating motorcycle accident on Grand Turk that broke his legs.
By 1999 Gardiner had acquired a small fleet and was running a full-fledged charter service. Realizing that his true potential lay in business, not flying, he left the piloting to others and concentrated on growing his fledgling airline.
In 2003 the Turks and Caicos Government started a push toward regional and international development and it seemed the time had come for the Turks and Caicos to have its own airline. A scheduled license was applied for and granted, and thus began an ambitious expansion project that involved adding international destinations and acquiring larger and faster aircraft. The company re-branded to become Air Turks & Caicos to serve key international destinations, with daily scheduled flights to cities in Haiti, the Dominican Republic, Jamaica, Bahamas and Puerto Rico.
In 2013 after operating for 10 years as Air Turks & Caicos, the company re-branded from Air Turks & Caicos to interCaribbean Airways to embrace new opportunities across the Caribbean.
Can you briefly tell us about the past and present of interCaribbean?
interCaribbean is the renamed nearly 25-year-old airline formed as interIsland Airways renamed Air Turks & Caicos in 2003 to begin international services and in renamed to interCaribbean in 2013 to reflect the new opportunities for the company across the Caribbean not simply to fly back and forth to our home base of the Turks & Caicos Islands.
Where do you see interCaribbean in five years time?
We see our company growing across the entire Caribbean, within the framework of what is possible using the available freedoms granted to us. The evolution of our growth will see a much larger and stronger airline.
How would you describe your management style?
I joined the company to lead the change to a completely different airline, it is not a role that I alone can accomplish so it is a matter of involving the core management to be involved and lead their departments. We have challenges in having a limited number of airline experienced resources, so we have to help develop the skills to allow that each person becomes a positive practitioner in their irrespective fields of responsibilities I am very much hands on.
What qualities are needed in a modern airline CEO?
A modern airline CEO needs to have a substantial understanding of the moving dynamics of the environment we operate in sufficiently so to ensure that the airline evolves around such issues as social media. In days gone by, customers would write a letter, this moved to faxing, today social media is used to voice their views and share it not only with the airline but everybody else they know too… A tragic event highlighted the speed at which information moves when an aircraft crash landed, before first responders were even aware of it, it was already sent across the country. The elements of training and maintenance, are changing, the way in which sales are made continues to change, how smart devices globally are now used for reservations, updates, sending beacons to enhance sales to baggage claim data in real time. No CEO is an expert on all of these issues, but best have sufficient understanding of these to ensure the business supports the staff charged with owning each of these in their evolution as they affect each business.
Can you tell us some words about your staff?
We have a multinational staff from over 30 countries working in the 9 countries we fly to today. Our staff has grown in their responsibilities over the last 18 months as we have grown, and we see great promise for many to succeed with us.
We see that interCaribbean has a wide range of destinations. What is the best performing route in terms of customer demand?
We are at 17 going to 18 destinations and we see growth across many of these destinations. The growth in traffic to Jamaica is significant for us as we have doubled our frequency to Kingston and onward to Montego Bay seven days a week. Our services into the Dominican Republic are gaining strength as more tourist find our services a convenient connection point to other Caribbean Islands.
The Caribbean is certainly popular among the local and international travelers. Will interCaribbean´s domestic and international operations continue to grow?
Growth in our traffic has been continuous and with additional new services into the region such as the entry of Air China, this will only strengthen the growth of the region. In some cases, we need to look carefully at the available hotel rooms to ensure that there is sufficient, especially during the high period.
Are you happy with the infrastructure and infrastructure costs in the region? How would you like to see Providenciales Airport develop?
Taxes are a significant issue in the Caribbean. In so many cases the taxes are greater than 100% of the airfare that we charge. We have been advocating with IATA to lobby governments on inter-Island travel to see a different level of taxation. We have ourselves held direct meetings with the head of state in more than one country and are pleased that we now have the beginnings of support to make it a reality. There are some airports that simply do not have a runway capable of our 30 seat aircraft let alone anything larger, so any development in air service levels is held back until this can be addressed. Our airport in Providenciales was renovated to accommodate some additional passengers out of the rain and sun at a cost which may best have been a down payment on a new facility. We recently launched services to Antigua, where a new airport terminal just opened reportedly at a cost of $90M. It is an impressive facility and possibly extraordinary value for money in construction. Those in the region thinking of renovating versus new build would do well to see what can be done quickly and timely.
How important is the role of interCaribbean Airways for the development of a region like the Caribbean?
We play a greater role than is recognized. As a simple example in our home country, if we did not exist there would be no service that connects the majority of the nationals from surrounding countries to be able to go home. In Jamaica, we operate domestic flights, the first non-Jamaican airline to ever be allowed in 50 years of independence. Travel across the Western Caribbean without our services would be difficult to impossible. We recognize not every traveler has a US visa, and not every traveler has all day to go somewhere. We bridge those gaps for many.
Your current fleet consists of Beech 99 and Embraer 120 aircraft. Would any other aircraft type be suitable for your operation in the future?
The Beech 99 has good capabilities, but it is not the best customer experience aircraft. We are reintroducing the Twin Otter aircraft back into our operations. The Embraer is a good workhorse, which we see as the right size for most routes we operate, with only an occasional opportunity for an aircraft that is larger, which we prefer to meet with greater frequency. We do have in mind a larger aircraft that will see service in 2016.
Are those two types meeting your expectations?
The Embraer 120 is a very capable aircraft on all current operations. As I said the Beech is not meeting our needs while remaining a very capable aircraft.
How was the year 2015 for interCaribbean?
We have implemented a lot in 2015 starting with a new reservations system, introducing a frequent flyer scheme – Cacique Rewards, an in-flight magazine called Cacique, introduced a complete flight operations and crew scheduling suite, introduced online flight tracking, our first interline agreement with a major airline, introducing three new countries to our network increasing to 17 cities with the 18th coming shortly. We are not done yet with things but so far so good.
interCaribbean was founded in the early 90s. What is the key to the success of the airline?
interCaribbean has survived and begun to thrive as a result of careful fiscal policies imposed since the beginning of the company. While the future could not be predicted that careful management has opened the door of opportunities that have allowed our growth in the recent years.
There are lots of risks in the airline business. What do you see as the biggest?
Today there is no one single risk, what happens in one country can and usually affects many. We have seen two decades of massive swings in oil prices, which has had the effect of bankrupting many companies. The adoption of technology has helped the economics of the industry, but it is not a once and done item, continuous investment and reinvention are needed to keep pace with how the world is adopting around technology.
Several major airlines are currently operating to Providenciales Airport. Do you see this as a threat or rather as an opportunity for further cooperation with them?
The same airlines who operate to Providenciales also operate to the many sunspots of the Caribbean, so we do not see this as a threat but an increasing opportunity as we connect more islands creating greater opportunity for multi-island vacations, increasing business opportunities between neighbor countries.
What would you say are the biggest challenges to your growth strategy?
We can’t predict the future, the opportunities are many, it is always possible a competitor can emerge. We are clear on what the opportunity is and we are moving forward with this plan
What about the worldwide crisis? Is it over and how is it affecting your performance and strategy?
Every crisis creates an opportunity, currently, world events favor our region. Regrettably, there will always be some events that will shape the world in which we live in. For us, it has been an opportunity at this current state.
In the past 40 years, the industry has managed only a 0.1% margin. Does the industry structure mean it is a poor investment?
The industry has often been slow to evolve to the financial changes. In the past over ordering cycles for aircraft to create a false demand led to capacity issues and the downward spiral. The industry is much more disciplined today than at any time in the past, so many new markets have opened that did not exist previously so the investor can look to a much better-structured industry for investment. Many airlines have posted extraordinary profits despite seeing fuel prices higher than the past where money could not be made. Discipline and achievement of other economics have helped all of this to finally settle down the opportunity for investors.
With mergers and joint ventures gaining momentum, is there still a place for the small airline in the aviation market?
Actually, the evolution of mergers leaves many opportunities for the smaller airline to take an opportunity from. The larger airlines have focused on the larger opportunity leaving small cities to find the smaller airline to fill the void. No city grows by 40% in a year or two, which is what has happened in the capacity replacement, so the opportunity is possibly as good now as it ever has been.
Looking in the future, what do you think the market will develop like in the next years and in which ways will you have to change your business model?
I believe the GDP product in all Caribbean countries will grow to fuel a financial ability for greater travel, this will provide the benefit to increase service levels to the region, and connectivity within the region. These events will be able to sustain larger aircraft.
To understand the market: who is the standard customer of interCaribbean Airways?
The history of our customer is quite different to that today. In the past, we saw essential travel domestically, and VFR. Today we see a significant number of business and visitors to the region finding and using our services.
Looking at your competitors, how do you differ in services and rates? Why should our readers fly with interCaribbean?
We have few competitors but we do not use that as the basis to increase rates. Our rates are competitive with much larger aircraft where we may characterize indirect competitors. We have seen growth in demand by making those routes competitive. We cannot compete with a 737 economics, but we offer a time saving of 8 to 12 hours on such a journey between islands compared to the alternatives. If time is worth money, then we are the best choice on many routes.
Can you detail your environmental strategy at the airline level?
We operate environmentally friendly aircraft, that currently do not have an equivalent replacement with any particular environmental advantage. Living on an island we must address and take of the environment, it is what every country offers in the Caribbean. To ignore it is to remove the future appeal of why visitors come to the Caribbean. Governments across the Caribbean must create policies that ensure the protection of the environment, at all levels. Many countries allow import of used tires for cars as an example. This creates twice as much left over or landfill. These pollutants will affect the environment when simply reduced to landfill. There is a movement towards import of more fuel-efficient cars, this can be seen across the Caribbean as a positive thing. We work with our own Ambassador of the Ocean, Henry the Conch. Henry has a mission to save the Oceans, starting with education, reducing or eliminating the use of, and disposal of plastic bags in the ocean that harm marine life and destroy the environment we all seek to sell the Caribbean wide.
Is the environment a commercial or a political problem? Do customers want to see airlines being environmentally friendly?
The environment is something that commercially and politically we must care for, no one constituent can regulate the issue into people action and care. It requires an education and a desire to recognize the issues and consciously seek to reduce, reuse and teach environmental stewardship. We can regulate at government but we cannot compel the individual to be responsible. Each airline has to find ways to be environmentally responsible adopting environmental measures that also translate into cost savings. There are efforts for example on domestic flights in the USA to recycle plastic glasses and tin cans but when it comes to doing the same thing on an international flight, we continue to adopt a policy that is decades old, yet there are solutions right before us that can neutralize the perceived threats from such items. Do the math on how many passenger flights enter or exit internationally for which these products end up as landfill. Other areas of reduction including the use of digital company manuals removing the need to print endless weight of paper and carry this around on flights that also contribute to fuel burn. The savings in this globally are already being seen. Customers may not recognize these issue fully, the industry must share its efforts to show its actions.
We thank interCaribbean Airways and Mr. Trevor Sadler for their help in facilitating this interview.