Even for the airline's chief executive, Conrad Aleong, the journey was not an easy one. He took over the helm in 1998 for the second time in his career, as a last ditch effort by its major shareholder to transform what was then a loose collection of airplanes, support equipment and staff, into a corporate dynamo that was determined to reclaim the Caribbean's skies for its people.
Although clawing itself out from a sea of red ink was no easy task, the announcement of a US$9.2 million profit for financial year 1998 prompted a full week of celebrations for management and staff alike. And, as a show of gratitude for their contribution to making it all happen, the first US$1 million of the profit went back to the employees.
However, the celebration may have been short-lived, as the carrier's success triggered a plethora of new airlines and charter services together with higher fuel prices immediately cut into 1999's razor thin margins, reducing profits by nearly two-thirds to just US$3.7 million.
Although the airline has gained new respect from its regional and international competitors, aggressive pricing strategies and rising fuel costs continued to pressure margins into 2000 and only a nominal surplus is projected.
"Securing our regional dominance in this competitive market will always be an ongoing battle," says Aleong, "but we have gone a long way to prove to our current competition that we are a force to be reckoned with and any new carrier would take a long second look before they consider coming our way.
"I have always maintained that we should not shy away from competition. In fact, I believe that competition is good for the industry. It helps us to pay attention to our costs and focus on top-quality service and our on-time performance. We are also mindful that if we slip up, there is always someone else waiting in the wings to take our place.
To weather through the intense competition over the past three years, the whole airline was geared up for the battle for market share, he said.
Expenditure in all sectors was curtailed, an unofficial freeze in new hiring was enacted, even telephone and communications costs were reduced by 15 percent. However, for BWIA, the real trump card for their success was fuel.
"Our only advantage was our ability to plan and prepare properly for new competition. Unlike past situations when taxpayers would support the airline, we received no favours from Government. We were operating under the same terms and conditions as any other airline in the region."
The management team kept a close watch on the factors that would impact on profitability and their competitive edge. With stocks dropping dramatically in the US and Far East producers threatening to curtail supplies, we anticipated increased fuel costs well in advance and started to plan for the lean days ahead.
"As the market players buckled down for a prolonged period of depressed ticket prices, we realised that fuel would be a key issue and we hedged the fuel in early 2000 at a price we knew we could afford. That move saved us at least US$1 million a month and put us in a firm position to ride out the low fares - and still make a profit."
So, apart from the lower ticket prices and the high costs of breaking into the market, the new carriers also faced higher operating costs. In many cases, their inability to plan for rising fuel costs may have quickened their demise.
"We also took a position that emphasised the wider needs of the region. Despite the lower ticket cost, we still moved to improve the standard of service to our customers. No other airline could claim that it had the interest of the region at heart. This strengthened our cause, and added to the will of our staff to get through this crisis.
"We believed that as the regional airline, our first allegiance should be to our own people. So we knew that extra effort was needed to succeed and to secure our links with the outside world.
"I think a lot of our customers understood this and they never abandoned us. Therefore, in addition to improving our personalised service, we were able to expand our market share and secure a very loyal client base that we will protect at all costs.
"In fact, many of the frequent flyers relate on a first name basis to our staff and that is something you cannot easily get from the larger international carriers," added Aleong.
"So we made a strategic decision to defend our market share from all comers as we were certain it was going to be a long battle. As a first step, we were resolute that no one would undermine our fares and we'd match anybody's ticket price. This was important because the Caribbean is not a high-income region, and understandably, the market is price-sensitive.
"This task was made doubly difficult by the fact that we were fending off attacks while we were in the process of transforming the airline to improve service and on-time performance.
"The employees also understood the implications and the high stakes that were involved in the process. As a result, they were determined to prove to the public that they were up to the task and they weren't going to be let their customers down."
Aleong said the real pressure from the price wars over the past few years was on the staff, as they struggled to keep down costs. In 1998, to survive, a hiring and wage freeze was implemented, and they did not complain, because they understood the situation. In addition, many of the staff members took on more responsibility than their job specifications required.
It was a sacrifice they were prepared to make, as they knew the long term survival of the airline depended on it.
They would often volunteer to help without extra pay. They understood that the high stakes involved in the success of the airline was tied to their own job security and the security of the region's air links. They really came through for the airline, and they deserve all the praise, he added.
The interesting thing was that the travelling public was not even aware of the behind-the-scenes effort that was being made on their behalf. All they knew was that the prices were unbelievably low, the service at the counters, as well as in-flight, had improved dramatically and more flights were maintaining their on-time performance than ever before.
We also kept the communications channels open, as management was aware that the cut-throat predatory prices could not be maintained, he said.
"For example, it was clear that the prices for flights to destinations such as Miami and Jamaica were below cost, but we just had to ride out the storm as something was going to give soon - and it did." Air Caribbean was sent into receivership and Air Jamaica withdrew its service from the southern Caribbean.
"Fortunately, the low prices expanded business for us as well and the real beneficiaries were the customers. In addition, many got the opportunity to experience our improved service and are now repeat customers."
One of the airlines to underestimate the Caribbean market was Virgin Atlantic.
After just eighteen months on the route between the Caribbean and Europe, the airline announced it was cutting back flights in mid 2000. Tower Air fared even worse and filed for bankruptcy soon after, permanently cutting its service to New York.
"What the international carriers have to understand is that their role is to bring vacationers and tourists to the region," says the BWIA chief executive.
"This market is too small for them to even consider competing for regional traffic. Many of the travellers originating in the Caribbean are very loyal. They will travel with the airline that is familiar and has a track record of serving the islands.
"Many have come and gone and some only serve the region when seasonal traffic increases, but they leave when things turn down. Passengers remember these things," he added.
"BWIA is not like that. Knowing that we are here to stay and so will be around when they are ready to return home is more than enough to secure their loyalty," says Aleong.
"Along that same vein, our main concerns, however, are the activities of charter flights. They come in when the market is good but leave immediately when it takes a downturn and we are often left to clean up after them.
They will also enter the market with ridiculously low fares that keep the market depressed, as they don't have to maintain the supporting infrastructure of the scheduled carriers. After their withdrawal from the market, the scheduled carriers would often have to return the passengers that charter flights left behind.
Because of their proliferation, the regional airline business often becomes a struggle. This adds to the difficulty of meeting financial targets in the peak season in order to increase revenue to carry you through when the seasonal downturn returns, he adds.
"In many ways, this market is too small to maintain the kind of capacity it now has. Out of Canada, we face competition from Air Canada, Air Transit, Sky Service and Canada 3000. From Europe, there are British Airways, Virgin Atlantic and Caledonia. From New York, we faced Tower Air, American Transair, World Air and American Airlines. There are just as many airlines out of Miami.
On the regional scene we faced Air Caribbean, Helen Air, LIAT, Guyana 2000 and even Carib Express in the early 1990's.
"The interesting thing about these airlines is that they each had the advantage of selecting a niche in which to compete. However, we had to compete on all fronts as we were obligated as the regional airline to service all the islands, even during the times when it was clearly unprofitable to do so.
"There was suddenly excess capacity on all our major routes and we knew the low load factors and unreasonable pricing strategies could not last. The problem with indigenous airlines, however, is that unlike their foreign competition, who can withdraw from a market when it is weak and return when the situation changes, small regional carriers often take it right on the chin and they usually have to fold up operations completely.
American Airlines, Air Jamaica and Virgin Atlantic curtailed or withdrew service to some Caribbean destinations, but upstarts such as Carib Express and, more recently Air Caribbean, will simply be forced into receivership.
Now, with all the major players, which were threatening the airline's market share and growth projections relegated to the sidelines to lick their wounds, BWIA's future seems more secure and brighter than ever before.
"I am clearly seeing 2001 as a crossroads for the airline," says Aleong. "We intend to wrap up our Initial Public Offering (IPO) before the end of the year as the first step of our long-term strategy and we will be getting our business plan for success immediately back on track.
"We have received approval for the IPO launch from our major shareholder (the Trinidad and Tobago Government) and apart from raising funds, our objective is to widen participation and ownership of the airline across the region. We have reached this far with the help of our loyal customers and as well as the Caribbean people as a whole. They have stuck with us through the hard times, so they will get the opportunity to share in the new future we have ahead.
The funds raised from the IPO launch will be used to purchase a new engine, some airplane spare parts, new equipment for the maintenance department, an upgrade of our information technology and bookings systems, as well as to underwrite our restructuring and retraining programme.
"In the future we plan to increase the size of the fleet, service new markets in North and South America and expand our maintenance department."
Several years ago, the airline started to do all its maintenance functions internally in order to reduce costs. The operation has since grown to provide service to other airlines and has since gained a strong reputation for competitive pricing, technical expertise and top-quality workmanship.
Plans are being made to further upgrade its equipment and the new focus will be on training, as the department will expand to offer its services to more airlines.
Aleong said that despite the problems facing new airlines in the region, there is still room in the market for everyone. If a new airline intends to compete on the basis of price alone they will fail, as there is too much excess capacity and prices are already very competitive.
"We also feel that there are some regional airlines we can work with to adequately serve the region and everyone will make a decent profit. That includes Air Jamaica, which withdrew its new service to Trinidad after just a few months.
Aleong's vision is for the larger regional carriers which provide long haul service such as BWIA, Guyana 2000, ALM and Air Jamaica, to bring extra-regional passengers to their own hub. Then the smaller island-hopping airlines will carry passengers on to their final destination.
The much larger global carriers like American Airlines, United and British Airways, should be the main source of tourist traffic to the region. None of the smaller regional airlines have the information technology edge, financial resources or global flight networks and connections, to attract tourists and foreign vacationers from these markets in the right volumes to make it viable. BWIA can do this to some extent, and has a scheduled service to Washington and soon Atlanta in the New Year.
He insists that the principal role of the regional airlines should be to service the needs of Caribbean residents. And, any international airline thinking about competing at the regional level will face a tough challenge from BWIA.