The Caribbean seems to be inhospitable for its local air carriers. Air Caribbean gone, Air Aruba gone and Air Jamaica dropping its heavily-promoted KIN-BGI-POS route, all in one week. What a situation!
I will tell you more about Air Caribbean (C2). C2 was formed in 1993 by Leslie Lucky-Samaroo to run the domestic Trinidad-Tobago (POS-TAB) sector. It had won the exclusive right to the route over several other bidders, including LIAT. From the start it has had a rough relationship with its big neighbours BWIA. BW decided to relinquish the local sector because it found it uneconomic to service the route with the MD83s, which were the smallest planes in its fleet at the time. However, when BWIA actually ended service in August 1993 (by which time a leased Air Ontario Dash 8 100 was flown), they protested their limitation to 15% of the market (only 1 flight daily) and hence the tug-of-war began.
Air Caribbean experienced delays in getting its first 3 YS11s so a leased Dash 7 inaugurated the service. Subsequently C2 expanded service on the route when the YS11s came, with 8 daily roundtrips and more on busy weekends and holidays. With the increased capacity and on-time performance the route experienced a surge of growth; the hitherto languishing route thus became very strong. C2 however objected to the controlled fares on the route; although they got an increase in fare from TT$240 to $300 (one TT dollar= 17 US cents) it was not as much as they had hoped for. Meanwhile BWIA was eventually barred from the local route altogether, much to the chagrin of those who felt that their airlift could have helped out during the peak times. A war of words between the 2 carriers ensued, a war which continues today.
C2 decided to expand to the region in 1996 and, with the 6 YS11s they had obtained by then, opened service to Grenada and Barbados in 1997 and shortly thereafter to Georgetown, Guyana. They introduced low fares and open seating arrangements with a no frills service - only US$99 to any of the destinations, compared to, say, US$150 to Barbados on BWIA for 7 days or less. Additionally they linked Tobago to Barbados in cooperation with Danish charter Premiair. Their main ambition by that time, though, was flying to MIA with a fleet of 737-200s which they were acquiring. It was this shift of focus from being a strong regional carrier to flying internationally which cost them dearly and has floored them. It was also alleged by many that they were trying to subsidize their cheap regional flights by demanding more from domestic passengers.
Anyhow, T&T suffered under FAA Category 2 status at that time so that only BWIA could fly to the US. When that was lifted in 1997-8 C2 moved ahead and developed the MIA route, which took off in January 2000. The 2 737s received (the third was impounded and never came to POS as far as I know) had by then taken over the BGI and GEO routes and only 3 of the 6 YS11s were active; 2 were flown at a time on a rotating basis. The low US$299 fare charged by C2 was immediately matched by BW and AA, the competitors on the route.
Despite all of this show, C2 had serious problems. Its fleet was very old and inefficient and engine difficulties had grounded half of the YS11s. The impounded 737 was held because a hushkit upgrade had not been paid for. BW had launched BWee Express, a feeder service serving the nearby islands from POS, which ate into C2's regional business. In fact BW Ex started 3 flights into Grenada daily, causing C2 to cut from 2 daily to 3 weekly. Meanwhile BWee was gradually weaned back onto the domestic route from 1998 and, with the loss of the C2 monopoly in 2000, flew 4 daily flights.
C2 thrived in Georgetown; its low fares were a hit with the small traders who frequently fly between both countries. Barbados also fared reasonably well as a destination for them but MIA was not a success; by early October C2 had cancelled their daily MIA flight. The cash flow problems escalated from there, leading to First Citizen's Bank calling in the receiver this Monday. FCB had financed the 737 purchase.
C2 was done in by its persistent low fares despite spiralling costs and its old fleet. It also proved unable to withstand BWee's competition. POS thus loses 13 daily flights and much of its claim to being a regional hub - what is a 1-airline hub after all?
So long, Air Caribbean.