Guyana does not have the passenger numbers or infrastructure to develop into a regional hub for air traffic in the foreseeable future, according to an Inter-American Development Bank (IDB)-funded report done for the Union of South American States (UNASUR).
“…the settlement of hubs answers to the action of market forces (airlines’ profitability) and not to political will, and given current market dynamics and characteristics, neither Guyana nor Suriname will be able to develop a regional hub in the foreseeable future,” the report titled ‘Constraints to regional air connectivity between countries of the Guyana shield and South America,’ says.
The report, submitted in November last year, focused mainly on the Guyana’s Cheddi Jagan International Airport, Timehri and Suriname’s Johan Adolf Pengel International Airport (PBM). It was done under the auspices of UNASUR and the objective of the study was to investigate the main causes of the constraints to regional air connectivity between countries of the Guyana Shield and with the other UNASUR member states.
The report said it is evident that only Suriname and Guyana experience very low levels of connectivity, hampering their connection to the region and to the rest of the world in general. Therefore, it focused on “the connectivity of Guyana and Suriname since it is their linkage to the region and to the world that needs to be analyzed to identify the opportunities for improvement.”
The CJIA is currently undergoing expansion under a US$150 million project. Among other reasons cited by the former PPP/C administration under which the project was initiated, was that the venture will provide Guyana with the infrastructure to accommodate the widest variety of aircraft type, and become an international travel hub.
However, the report says that even when the Paramaribo and Georgetown airports could in the future develop the necessary infrastructure to become hub airports -which they currently don’t have – they would still need to have a large origin and destination (O&D) traffic volume so as to attract an airline to develop a hub in one of these airports.
“Given that O&D traffic demand in these countries is scarce (and will probably continue to be scarce in the next 15 to 20 years compared to other regional hubs), it is unrealistic to think that an important airline will select either PBM or GEO as a regional hub in the near future,” the report declared.
Typical types
It noted that there are two typical types of hubs: those that work as an entry gateway to the country, distributing passengers to other local destinations and those that work as a connection between two or more international flights, passing by a connecting hub. The former have a trunk route through which they receive a large number of incoming passengers, who are then embarked to other lower volume domestic routes while for the latter, airlines use sixth freedom rights to transport passengers between two countries that are not that of the airline.
The report noted that a hub must be geographically located in a way that allows passengers to connect to other destinations without implying an important delay in the main route. “Hubs should be evaluated in both qualitative and quantitative terms: In quantitative terms, the important driver is the number of available connections, while in qualitative terms the most important variables are the total time to connect between flights and the simplicity of the process,” it says.
It further pointed out that airports have control over some of the factors that have an influence over the quality of connections, such as the infrastructure, the design of the terminals and the variety of services offered to passengers.
However, it said, a fundamental characteristic inherent to hub airports is the need to have an important volume of O&D traffic. Airline profitability or yield per passenger is higher with O&D passengers than with connecting ones, which is why airlines seek high volumes of O&D traffic to finance the development of hubs, which by definition will have a large number of low profit connecting passengers, the report said. It is in fact the important volume of O&D traffic that develops a connecting network that is used to feed/distribute the connecting traffic. In summary, the O&D traffic subsidizes the connecting one, it stated.
According to the report, given the limited options for Guyana and Suriname to develop non-stop services to most destinations in South America, the connectivity of both countries with the rest of the region will depend on how well connected GEO and PBM are to close regional hubs.
Bogota
In this sense, the closest hubs to Guyana and Suriname that offer a wide array of connections to South American destinations are Bogota (main hub for Avianca) and Panama City (Copa Airlines’ main hub), the report said. It noted that Guyana already has two weekly services to Panama City through Copa Airlines, which enables passengers to reach multiple destinations in South America using Panama as a connecting hub.
In terms of Bogota, the report said that while presently, neither Georgetown nor Paramaribo have direct services to Bogota, their connectivity to other South American countries would definitely be increased through the implementation of a non-stop service there.
“It is very important to remark that neither Suriname nor Guyana will be able to develop a similar level of connectivity to that of Peru or Brazil with the rest of South America, at least in the short term. However, by increasing the number of available services to these regional hubs, both countries would increase their connectivity, allowing departing passengers from GEO and PBM to reach multiple destinations in South America using these hubs as gateways to the rest of the continent,” it said.
It had also explored other hubs such as Port of Spain’s Piarco International Airport (POS) which is the hub for Caribbean Airlines and Hato Curacao International Airport (CUR), the hub for Insel Air.
“…given the limited options for Guyana and Suriname to develop non-stop services to most destinations in South America and Europe, the connectivity of both countries will depend on how well connected GEO and PBM are to close regional hubs. Through the establishment of additional services to regional hubs, both countries would increase their connectivity, allowing departing passengers from GEO and PBM to reach multiple destinations in South America using these hubs as gateways to the rest of the continent,” it says.
The report recommended that the authorities of both Guyana and Suriname have a close dialogue with the airlines that present opportunities to increase their regional connectivity: Copa Airlines, Avianca, Caribbean Airlines, Insel Air and TAM – a Brazilian airline which has spoken of developing a Northeast Brazilian hub.
“All policies aimed towards the establishment of additional frequencies from these airlines to GEO and PBM will definitely have a positive impact in Guyana’s and Suriname’s connectivity. Ideally, market forces should be able to provide for the development of these services to regional hubs. However, if existing demand for these services were to prove not to be large enough so as to be financially feasible, the governments of Guyana and Suriname could study the implementation of financial or other type of incentives for the development and sustainability of these services,” the report asserted.
It said that the establishment of talks with Copa Airlines and Avianca appear as the two most relevant actions to be executed in the short term, given that these two airlines operate the two largest regional hubs closest to Guyana and Suriname. “The importance of establishing talks with these airlines is related with the potential increase in the available opportunities to connect with South American nations, as Bogota and Panama City offer numerous non-stop services to South American countries,” the report said.
It said that the initiation of talks with Insel Air and Caribbean Airlines to establish new services to Curaçao and Port of Spain appear as second tier actions to be developed, as they would be aimed to increase the connectivity levels to destinations in the Caribbean and North America.
“The talks with TAM are related to the establishment of an operations hub in the Northeast of Brazil, considering the geographical proximity of this region to Europe and Africa. However, the establishment of talks with TAM has a low urgency, given that the current economic slowdown of Brazil will probably delay the settlement of the hub, which was initially planned for late 2016,” it said.
