Private airlines have failed, I can think of many off the top of my head. But without going to the trouble of digging out the facts, my recollection is that the Caribbean governments were often obstructive in granting them route licences.
And as for LIAT versus Caribbean Star: a major reason why LIAT survived is that it was continuously subsidised by its shareholder governments. There is no such thing as a level playing field in this region.
Insel didn't have anyone blocking them and yet now they survive as a virtual state owned airline.
BWIA and JM failed miserably as privately owned carriers, even though Butch Stewart got every thing he wanted and gained access to markets that the previously state owned JM didn't get. Yet it ran up debts as large as a small nation and then had to be rescued by the Jamaican gov't which panicked at the prospects of an airline bringing in 40% of the tourists and accounting for 60% of the passengers suddenly collapsing.
It took Fly Jamaica ONE YEAR to gain access to the JFK route from KIN. Red jet gained access to various routes in the Caribbean within a few months, this despite the fact that it lacked its own maintenance facilities and was based, in BGI, a Cat 2 rated jurisdiction.
If Fly Jamaica fails should they blame the US gov't for taking a year to approve their flights from a Cat 1 country? Yes, they had a plane sitting down on the ground for ONE year, not earning a cent. But then this is what one can expect a start up carrier to endure.
Redjet was so arrogant that they began to sell seats into POS even before they received approval. Can BW start selling seats to HAV before they receive approval? I think not. They will have to wait until the Cuban gov't allows them access.
So what is this babble about Redjet failing because it was blocked. It failed because it embarked on a ludicrous venture of using MD80 jets to fly a route (BGI POS) which is just over 200 miles. This route being so thin that the plane couldn't operate more than daily, assuming that it received 100% market share.
It failed because its LCC strategy was unattractive to business travelers who account for a huge % of the year round travel between KIN and BGI/POS. Who wants the frustration of a Spirit Airlines type of operation when one needs to have a hassle free trip and one doesn't care about the fare?
It failed because it thought that running an MD80 from BGI to GND made sense.
It failed because it thought that running an MD80 on the ANU BGI route made sense.
It failed because he flew from BGI to UVF when every one who knows anything will suggest that 90% of those flying into St Lucia from BGI will use SLU, which is closer to where 70% of that island's population lives. But of course SLU isn't friendly to ageing MD80 planes with its short runway and tricky approach.
It failed because the Caribbean is a high cost place with low volumes of travelers. What works in Europe with its hundreds of millions of relatively affluent people doesn't work in a sub region with under 3 million mainly impoverished souls. And where the bulk of the travel is generated by tourists or by overseas based nationals residing mainly in North America.
Then the Irishman ran around screaming victimhood. He would NEVER have behaved like this in Ireland. Had the man used turbo prop planes he might have had grounds to complain, but running 30 year old jets, prone to mechanical break downs is not a way to succeed. Even many who welcomed competition to BW and LI fled in droves when his planes broke down, stranding many, and forcing them to be rescued by these same airlines.
Caribbean Star had all the route rights that it wanted from Caribbean gov'ts. It was the US gov't which limited access, forcing it to establish Caribbean Sun, to allow it access to the US Caribbean. So accommodating were the Caribbean gov'ts that Caribbean Star ran a flight against 100% of the routes that LI had out of BGI and ANU. Matching its schedule and slashing fares to unsustainable levels. Like US$75 R/T on the ANU SKB route Then it ran out of cash.
I fail to see what support that LIAT received that prevented Caribbean Star from being a success.
The bottom line is that privately owned airlines in the Caribbean are no more successful than the state owned airlines. Private investors will never toss money into a money pit as a government might, seeing its airlines as utilities (or employment agencies), and therefore more willing to sustain loss making operations.