Caribbean Currents #008: The Bad Design Tax

Trinidad traffic concerns, LIAT (finally) dies, and the high costs of digital connectivity

Shem Best

Jan 29, 2024

January 29th, 2024 edition of Caribbean Currents 🌴🌊📊

Commentary on the headlines from across the region

Port-of-Pain

Trinidad traffic sparks economic concerns

Imagine spending a month out of every year of your life, sitting in traffic. According to a study by the UN’s Economic Commission for Latin America and the Caribbean (ECLAC), this is the depressing reality faced by commuters in Trinidad and Tobago. The study revealed that drivers experience roughly 793 hours or 33 days stuck in traffic. Surprising to no one, this level of inefficiency results in a significant dent to the country’s economic output, estimated at around 2.2 billion TTD (300 million USD) per year in losses.

Trinidad and Tobago is the most developed CARICOM nation, boasting a road network of over 9500 km of paved roads facilitated by the country’s status as the region’s premier petrol state. The twin island’s economy is synonymous with oil reserves, gas fields, and its infamous Pitch Lake, the largest of its kind in the world and a primary source of bitumen used in paving its roads. These geological blessings and the resulting prosperity, rarely translate to an innate knowledge of urban design and may be the root cause of the congestion Port-of-Spain faces today.

In 2020, there were 1 million vehicles on the roads of Trinidad and Tobago, a harrowing number when you take into account that the country’s population is just over 1.3 million. That’s more than 0.5 cars for every citizen, increasing at a rate of 2000 per year. In light of this information, it would not be inaccurate to describe the country as rather car-centric. How did this happen? A centralized government (yay!) and an anemic public transit system (boo!) are the culprits.

The greatest congestion occurs around Port-of-Spain, the capital, and its environs. Workers make the daily journey to the north of the main island, where the majority of government offices are located. As a result, most commercial activity is also condensed to this region. This is a naturally occurring and expected outcome and the standard development of a modern city. Unfortunately for Trinidad and Tobago, you need modern transit to go with it.

A few reporting newspapers posit that the growth of the urban core has outpaced the road network, basically “there aren’t enough roads”. This is not dissimilar to the misconception that more lanes will alleviate traffic congestion à la the United States. One only needs to take a glance at the headache that is Texas’ Katy Freeway for an effective lesson on induced demand. Building more roads will not solve Trinidad’s traffic problem, but a robust public transit option could.

Currently, the Public Transit Service Corporation (PTSC) is the government's attempt at doing just that, but it is failing. The bus service it provides replaced a now-defunct rail service and initially was able to handle demand to and from the city. However, the service grew a reputation for unreliability and in a tale as old as time, customers fell back to the next best option- the private vehicle. As a petrol state, the government highly subsidizes the oil and energy industry, leading to some of the lowest fuel costs in CARICOM which has incentivized car ownership.

A failure to convert its energy industry gains into funding for much-needed public transit for a growing urban landscape has finally caught up to the Republic. It echoes a similar situation in nearby Barbados, which has seen its bus system collapse to a shell of its former self, subsequently ballooning the car tally on the island to 70000+ on a mere 1500 km of poorly maintained roads. Barbados too now faces intense traffic jams but unlike Trinidad, has no golden goose with which to fund a solution. Caribbean islands seem doomed to repeat the failures of many US cities, mistaking rapid and uncontrolled urban expansion as a sign of prosperity. Robust mass transit is the gateway to citizen mobility. It is a far more effective and environmentally conscious investment over the long term, which can’t hurt when your country’s primary source of wealth comes from the ground. Let's hope that Trinidad and Barbados’ predicament will serve as a lesson to would-be burgeoning economies that wish to grow without the choking effects of runaway car-centrism. We’re looking at you, Guyana.

LIAT is dead, long live LIAT!

Caribbean carrier to be reanimated soon

Leeward Islands Air Transport (LIAT) has ceased operations. Caribbean news outlets bid farewell to the long-beleaguered airline with nostalgic trips through its history and bittersweet headlines. After 60 long years of connecting the Eastern Caribbean, LIAT was put out of its misery, with a final afternoon flight from Saint Vincent to Saint Lucia. It is, as many have deemed it, “the end of an era”. Or is it?

Prime Minister Gaston Browne believes otherwise. Alongside the shuttering plans that had been foreshadowed since December, PM Browne declared that a hefty 11.1 million USD would be allocated from Antigua’s 2024 budget towards the revival of LIAT’s replacement, creatively called LIAT (2020). All employees were made redundant, sparking outcry from the local Labour Unions, even though the Prime Minister also announced that most of them would be re-employed by the newly created airline later this year.

It will be just like the old times, except this time with a bit of intervention from across the Atlantic. Air Peace, a Nigerian Airline, will be the majority stakeholder in the new company with a 50% majority holding. Dominica has expressed interest in holding a smaller stake alongside Barbados, which is interested in doing the same via the Caribbean Development Bank. The band is back together! And herein likely lies the project's path to failure - seemingly nothing has changed. Most failed companies have a story or at least a lesson to be learned from their demise. LIAT’s own is complicated, but even today, that lesson has yet to be read. Even more concerningly, no plan on how that lesson will be heeded has been announced.

LIAT was ground to a halt by several factors. Insularity, logistical mismanagement, and an unfortunate global pandemic are the three primary reasons that come to mind. Let’s start with the first - insularity. LIAT as we know it today started in 1974 following a near glance with death, after the bankruptcy of its initial majority stakeholder, British-based Court Airlines. Not keen on watching the only true air bridge in the Lesser Antilles fall right out of the sky, 11 governments stepped in to acquire the company, and LIAT (1974) was born. Its primary purpose was to connect the smaller territories of the Lesser Antilles to the greater region and the South American mainland; it said so right on the tin, after all. Over the years, the stakeholder governments have forgotten that entirely.

Each took it upon itself to extract investment in any way it could right back out of the airline. And every last stakeholder country taxed the tickets for the airline so thoroughly that demand was depressed more deeply than the Caribbean Sea. LIAT was simply not treated as the loss leader it needed to be. Its early 2010s jingle “The Caribbean Airline” was true in marketing only as it was not perceived as the facilitator of CARICOM that it should have been. The powers that be saw a cash cow and nothing more, even when the company was performing poorly.

We may never truly know what happened in the hallowed halls of LIAT management. What we do know is that a veritable plethora of questionable decisions came out of it. From high maintenance costs due to the choice of aircraft to preferential hiring influenced by the stakeholder jurisdictions, few decisions were made in the interest of maintaining or improving LIAT in its primary capacity. The resulting unreliability garnered jokes all around. LIAT meant “luggage in another terminal”, “land in a tree”, "leave island any time” and the list goes on.

Perhaps the most unavoidable nail in the coffin was the COVID pandemic, which brought international and regional travel to a standstill. Even though travel demand is returning to pre-pandemic levels and even seeing a boom in some markets, LIAT continued to languish. Competition from incumbents and newcomers would also erode what little foothold the airline once had.

We can concede that no airline could have truly braced itself for 2020, but the aforementioned problems still loom above this new proposed carrier. And with a foreign entity now holding most of the cards it is unlikely that the new airline will be a CARICOM-first initiative. Air Peace, emerging from financial troubles and a government bailout in 2022, will be keen to streamline the new company into a profitable venture. This may come at the expense of LIAT being a true “Caribbean Airline.”

The Expensive Age of Data

Caribbean risks being left behind with 5G

The chart above gives the varying costs of 1GB of mobile data across each Caribbean country and territory. Leading the pack with one of the highest costs is the Cayman Islands. These prices are in USD, so for any onlooker, $8 for just one gigabyte is outrageous. For the customers of the Caribbean however, these fees are part of the everyday.

This is only one part of a broader picture. Low competition and small markets, drive the cost of connectivity to unfathomable prices. As demand is depressed and the barrier of entry becomes higher, carriers can’t recoup the costs of their infrastructure investment, nor are they willing to take the risks on upgrades to newer technologies, even if those technologies would be beneficial to the region.

Digicel Chairman Denis O’Brien shot down any speculation that 5G could be coming to his company’s network plans anytime soon.

“We’re not doing it [deploying 5G] because the Caribbean 9, which is all the main operators, have come together and said to CARICOM and the telecom union we are not rolling out 5G until you do something about fair share because there is no business case, 4G was a shocking business case. 5G is a disaster.”
- Digicel Chairman Denis O’Brien

Denis spoke of the Caribbean 9, which included the largest carriers such as Flow, Claro, and even some Central American carriers like Tigo. This sentiment could diminish the push to position the region as “ready for business”.

In the meantime, 4G is robust and adequate for locals and visitors to the islands alike. Businesses are also at liberty to deploy their own 5G networks for internal use as they see fit. However, it is only a matter of time before that technological debt reaches a point at which the Caribbean’s standing will suffer. Being at the tail end of this deployment could set the region back in its bid to be perceived as an internationally connected and standards-compliant market.

CPSI Podcast of the Week

Bitter Medicine: Argentina's Reform Dilemma

A return to Argentina. On this episode of the Rasheed Griffith Show, we focus again on the beleaguered South American economy and discuss Javier Milei's meteoric rise to claim victory in the recent elections. Our guest, Argentinian political analyst Bruno Binnetti, explores the socio-economic conditions that paved the way for Milei's win and the harsh recovery journey ahead for what was once one of the continent's financial powerhouses.