Business
LIAT: Shareholders resolve to cut back on routes
Shareholder governments of the regional airline, Leeward Islands Air Transport (LIAT), said they had taken a number of “tough decisions” including cutting back on routes as they seek to make the Antigua-based airline financially viable.
St Vincent and the Grenadines Prime Minister Dr Ralph Gonsalves, speaking with reporters at the end of the deliberations, said the decisions were necessary to ensure the survival of the airline that operates 110 scheduled flights daily.
He said that the global economic crisis, the price of fuel, competition on certain routes as well as from the Barbados based low cost carrier REDjet and the Trinidad-based Caribbean Airlines (CAL) among others had made it difficult for the regional airline, but that all concerned were “working very hard to turn things around.
“It’s straightforward really. We have to enhance our revenues and we have to reduce the unit cost of operation. These are the times we are in and at all times we should be doing that,” he said, adding “route cuts are also on the cards.”
Gonsalves said that last year, the airline lost an estimated US $17.07 million compared with a loss of US $7.4 million the previous year.
Gonsalves said that the meeting also agreed to make representation to the Trinidad & Tobago Prime Minister Kamla Persad Bissessar to ensure there is a level playing field in the region’s airline industry.
“Let’s face it, they have a subsidy, a very significant subsidy for aviation fuel. While they pay US $50 a barrel while we pay US $110 to 120 and sometimes more.
“Clearly no one wants to stop CAL and no one can properly stop CAL from coming on any set of routes but let’s have a level playing field and let’s have fair competition,” he said, adding “It is our contention that such unfair competition is subversive of the Revised Treaty of Chaguaramas – that governs the regional integration movement, and also of the common air services agreement in the Caribbean Community (CARICOM) and we must address this.”
Gonsalves said that the board of directors had presented the shareholder governments with a number of options to keep the cash-strapped carrier servicing the region.
“We adopted from the board a bundle of proposals relating to a recovery plan in the short to term which will stem some of the cash flow problems, we addressed a number of routes which we have to reassess, this is a continuation from what is ongoing.
“In relation to the fleet renewal and expansion, there are some proposals which are before us and we go back to our capitals and we study them and within two or three weeks we go back to the board and the management as to where we go forward.
“Then decisions have to be made with various airlines, the financing arrangements, a numbers of steps will have to be taken in relation to expansion and the study of routes,” he said.
Gonsalves disclosed that St Lucia and Dominica have expressed an interest in investing in LIAT.
The meeting was taking place amid severe criticism from the labor unions, headed by chairman of the Regional Grouping of Trade Unions, Chester Humphrey, that they had not been given sufficient time to study the strategic plan outlined by the airline.
Humphrey told the reporters last week that the new strategic plan developed by the Business Unit of the University of the West Indies (UWI) involved issues of manpower requirements and the state of capitalization of the company ….”
Prior to the meeting, David Massiah of the Antigua & Barbuda Workers Union (ABWU), said the unions would be issuing a letter to the shareholder governments outlining their concerns.
“They gave us a copy of the strategic plan for the company which outlines what they plan to do – to downsize,” he said, adding “we have not had the opportunity to go through anything.
“There is an item on the agenda, identification of agreed action, but we will not be able to agree on anything, so at the end of the day where do we go?” he added.
The prime ministers of St Vincent and the Grenadines, Antigua & Barbuda and the host country, Barbados, also held discussions with representatives of regional trade unions that represent workers employed by the cash-strapped airline. – CMC.