KINGSTOWN, St. Vincent – LIAT shareholder prime minister, Dr. Ralph Gonsalves knows that the fuel surcharge recently imposed on the airline’s passenger “has caused some pain”.
LIAT announced mid-August that the fuel surcharge is based on mileage and that passengers will be charged US$12.50 for a one way trip of up to 150 miles; US$17.50 for a one way trip of between 151 to 300 miles; and US$20 for a one way trip above 300 miles.
Gonsalves on Monday that LIAT’s fuel cost in 2010 was $10 million more than 2009 and this year will be $26 million more than two year ago, if fuel prices remain as they are.
“When LIAT had to put on the fuel surcharge, we hear a lot of complaints but it is something we had to do. If we didn’t take the step to put on the fuel surcharge, the losses for the year would have been entirely unsustainable,” Gonsalves said at a press briefing on Monday.
He further said that LIAT does not have the 50 per cent fuel cost subsidy that Caribbean Airlines gets from the government of Trinidad and Tobago. LIAT lost $21 million in revenue during the first six months of 2011 as passenger revenue fell faster than operating cost.
Gonsalves, the airline’s chairman, who attended a shareholders’ meeting in Barbados last week, said that non-shareholder governments need to understand the economic importance of the airline to the region.The three shareholder governments are St. Vincent and the Grenadines, Antigua and Barbuda and Barbados.
“[Non-shareholder governments] have to realise that they’ve got to provide us with market support,” Gonsalves said, adding that LIAT’s flying to some of these destinations is not profitable.
Gonsalves said that in 2010, LIAT spent EC$20 million in fuel and landing fees of $3 million servicing these unprofitable – “social” – routes.
“We can’t continue like this. And the other governments have got to understand. They’ve got to understand the facts of life,” he said.
LIAT like ‘a faithful mother-in-law’
Gonsalves further said that while some of these countries say they will get their own airlines, the region has already had experiences in this regard.
“Remember, a lot of airlines have come and gone. They aint last as long as Miss Janey fire. They come under private sector, state sector, state and private sector. As they come they go,” Gonsalves said.
“And they come with all sorts of advantages. They batter LIAT’s bottom line, but LIAT has to still be there like the faithful mother-in-law who takes care of your child at home while you gone out. But always there to do the drudgery, always there to be giving the helping hand,” he further said.
Gonsalves said that LIAT would be focusing on fleet renewal; streamlining the structure of the airline, including staffing to get the right skills; reduction in government taxes; ensuring that the airline has the relevant technologies, and focusing on LIAT as a commercial entity.
He further addressed the recent industrial actions in Grenada, which disrupted LIAT’s operations there. Gonsalves said that the 32 workers in the Grenadian union could cause major disruptions in the Eastern Caribbean.
He said that he was not getting involved in the industrial relations dispute but said, “when they go slow or go on strike and cause the disruption of the network throughout the whole of Eastern Caribbean, should LIAT just simply blank that country during the period of the dispute?
“And if it does, would the union use its connections with the rest of the region to cause strikes or go-slows? And if that happens do you just say lock down the whole of LIAT across the region and let us see how Caribbean people feel about that?” Gonsalves said.
He further said that he was not absolving LIAT’s management from any issues relating to the labour dispute.
“I am just showing that we all, particularly in this difficult period … when so much international problems affect us adverse … that … there is an additional responsibility to act in a manner which is reasonable and a manner which is not disruptive and to keep vanity and power plays and all those things at an absolute minimum and perhaps to get rid o them all together, to the extent that it is humanly possible so to do,” Gonsalves said.