“Fields of Dreams”

by Jacob Gelt Dekker

Kevin Costner in “Fields of Dreams” as an Iowa corn farmer, hearing voices, interpreted them as a command and built a baseball diamond in his fields and the Chicago Black Sox came. Market economy theories try to explain the workings of perfect and free markets. The ultimate gospel of Supply Siders being “If you build it, they will come”, where as Demand Siders firmly believe that viable markets only react to demand of the consumer, although, nowadays, even Demand Siders admit that demand can be created by marketing.

Reality is probably somewhere in the middle since market mechanisms are no longer free and perfect, but heavily regulated and influenced, by governments.

I was taken by surprise, hearing nonchalant remarks at the failure of DAE; remarks of “Airlift is only created by demand. There was not enough demand.”

In tourism, Supply siders may find their ultimate dream reality in the creation of the Yucatan, a god forgotten piece of abandoned, malaria invested, Mayan jungle in Mexico, as a world attraction, tourist resort. Investors built it, and tourists came, day-after-day, month-after-month and year-after-year. Since Maya cultures abandoned the area under mysterious circumstances, no demand existed in the world to ever return there. If-you-build-it, they-come became reality in the Yucatan

Demand siders will eagerly quote you China’s new cities, built as replicas of Paris, Venice or Rome, now abandoned and boarded up, since, no matter what developers tried, no demand could be created.

Curacao, as a tourist destination, is not a Holy-Mary-apparition destination, like Lourdes. It also does not have one unique selling proposition— one USP — to pull in streams of tourists, but a number of fairly attractive attributes that could work together as a nice package product for the eager adventurous tourist. If all ingredients of hotels, community, culture, nature, health, security, hospitality, friendliness and service work together, Curacao could have a very good product. It is the task and duty of the Curacao Tourist Development Board to advertise this package product in international markets and thus create demand. That demand than requires airlift. No matter how many nice hotels and golf courses Curacao builds, overnight tourists do not arrive by cruise liner or ferry board, but by airplane. The only organization able to facilitate the needed airlift, is the government.

Complex international air traffic conventions, rules and regulations, as well as an extensive set of local laws—written and unwritten— authorize government only to set up and enable airlift. In the past, many reputable airline companies, like KLM, Delta, American Airlines, applied for extensive permits, but were only granted limited access by governments, no matter what the markets demanded. To suggest that airlift is only a function of market demand is a fallacy, it is a question of politics, more than anything else.

Under which commercial circumstances an airline must function is also in the hands of government, since landing fees, taxes, employers benefits, handling costs etc. etc. are all under control of the State and not the entrepreneur. In the case of DAE, an estimated 50% of its gross revenue flowed into government coffers directly, and indirectly through the expenditure of its passengers, considerably more. DAE was the chicken that produced golden eggs for the island.

It was most surprising and baffling to witness the local government’s refusal to become the financier of last resort for DAE, and for an amount that was only a small fraction of what government received annually. The Curacao government decided that it preferred to butcher the golden egg producing chicken. The damage for government and community will be far greater than the small loan that was requested.

The question for community and government is where to draw the line as financier of last resort, and that can only be answered by political preference and ideology. With all business on the island working for the community and government for at least 50%, government can no longer, just stand by, and not assume responsibility. The time that governments were leeches only, is long over. A more creative funding and financing strategy is needed. As an autonomous nation, we should take responsibility.

Source: https://www.facebook.com/jacobgelt/posts/10151667382015073

Jacob Gelt Dekker, is the founder and owner of Hotel Kura Hullanda and the Kura Lodge & Beach Club resort on Curacao.