Caribbean Airlines is set to discontinue its route to London Gatwick, effective 10 January 2016, according to an internal memo issued today by CEO Michael DiLollo. The information was subsequently relayed to the media after lunch.
CAL’s London route not only serves Trinidad and Tobago passengers but also travellers from Venezuela, Suriname, Guyana and elsewhere in the Caribbean. If executed, it would be the second time the route has been closed, after a similar stance between 2007 and 2010.
An airline insider, who spoke on the condition of anonymity, pinned the blame on old airlines purchased during the term of the People’s Partnership, which have not been retained after their leases expired.
Wired868 was informed that CAL already lost the use of three Boeing 737s earlier this year and are now set to hand over two Boeing 767s as well. It allegedly leaves the airline with just nine working aircraft.
In the memo, sent in the immediate aftermath of the Budget, DiLollo warned that staff reduction is necessary but did not say whether there would be retrenchment.
“There will be reductions,” stated the memo, “but this will be done predominately through term contract expirations, retirements, voluntary unpaid leave and split working blocks to the extent possible.”
The following is the full memo issued today to staff:
Caribbean Airlines is in a mode of transformation. During the last year we have conducted a detailed review of our operations as we work towards improving our financial performance.
After intense consultations with two of the world’s leading aviation consultancies, certain strategic initiatives were recommended. One of the recommendations is simplifying our fleet of aircraft and withdrawing the two Boeing 767 airplanes from our operations.
As a consequence of this change, Caribbean Airlines will have to discontinue service to London Gatwick, effective January 10, 2016. This has not been an easy decision, since our customers have loyally supported the London service especially in the peak periods.
Unfortunately, the costs associated with maintaining the Boeing 767 aircraft operation has led us to the decision of simplifying our fleet and focusing our limited resources to build connectivity in the North American and Caribbean markets.
Simplifying our fleet will positively impact our bottom line as we transform into a self-sustaining entity. The strength of strong corporate governance is one where difficult decisions are needed to bring success in a fast paced and evolving business environment.
Many of you may have questions and concerns, and your Management Team and I are happy to provide feedback. Below are some answers to some of your immediate concerns.
Q & A
Q: How will the removal of the 767 and fleet reduction impact jobs?
A: There will be reductions but this will be done predominately through term contract expirations, retirements, voluntary unpaid leave and split working blocks to the extent possible.
Q: What will happen to customers who are already ticketed to travel after January 10, 2016?
A: Ticketed customers where both the departure and return between POS and LGW is after January 10, 2016 have the following options:
1. Full refund
2. Re-allocation to other services where possible
3. Contacting our Call Centers for alternative options
Ticketed customers who will have commenced travel before January 10, 2016 to POS or LGW have the following options:
1. Full refund
2. Refund for your return portion only
3. Contacting CAL Call centers for alternative options
Q: Why would Caribbean Airlines stop the London route now, recognizing that London is a major gateway to Europe for many Caribbean travellers?
A: Our fleet complexity costs are significant and the investment required to update the cabin interiors of the 767 to make them competitive is significant and unrecoverable over the remaining lease period (end 2017). The current competition provides for “beyond travel connectivity” which is a significant advantage over CAL. The competition also receives incentives and support to operate certain routes, CAL does not and has not benefited from this form of support.
CAL is in a positive place, but there is still work to be done:
Transformation is no easy task, but we have made positive strides in a short time through several initiatives. While there is still much work to be done, our performance indicators are quite encouraging.
These indicators are showing:
· significant cost reductions
· on-time performance that is above the United States industry standard
· decreased duplication and
· the elimination of non-value-added processes.
We celebrate these accomplishments. However, these achievements did not occur by chance, they are the result of consistent, structured, focused initiatives geared towards improving efficiency in all areas of our operations. We must continue to persevere with passion to ensure our sustainability in the long term.
We all want to see and feel the pride in Caribbean Airlines, as a high performing and profitable entity. If you have additional questions please send them to Dionne Ligoure and you will receive feedback.
Have a safe and productive week.
Chief Executive Officer.