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Prime Ministers Freundel Stuart, Dr Ralph Gonsalves of St Vincent and Baldwin Spencer of Antigua with LIAT CEO Brian Challenger. (Photo: Barbados Nation)

KINGSTOWN, St. Vincent – Cash-strapped regional airline LIAT will cut routes and jobs as it tries to remain operational and return to profitability.

There could also be a change in the “nature and character” of the airline Prime Minister Dr. Ralph Gonsalves, chairman of LIAT’s shareholder governments, said at a press conference in Barbados yesterday.

Gonsalves, who will hold a press conference here today at 10 a.m., was speaking at the end of a day of meetings with his Barbados and Antigua and Barbuda counterparts Freundel Stuart and Baldwin Spencer, LIAT’s board and management and unions representing the airline’s workers.

“Across the board, we have to make savings, we have to be more efficient in the way we are doing things . . . we have to enhance our revenues and we have to reduce the unit cost of operation,” Gonsalves said.

He told journalists in Barbados that LIAT shareholder governments are deeply concerned about the unfair competition in the regional airline business.

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He mentioned Caribbean Airlines Limited (CAL), which gets a subsidy for aviation fuel from the Kamla Persad Bissessar government in Trinidad and Tobago, where CAL is headquartered.

Gonsalves said that CAL has “a very significant subsidy”, paying US$50 a barrel for fuel while LIAT pays US $110 to US $120 or more.

“Clearly no one wants to stop CAL and no one can properly stop CAL coming on any set of routes, but let’s have a level playing field and fair competition,” said Gonsalves who is the Caribbean Community (CARICOM) spokesperson on air transport and the Minister of Air Transport here.

By August of last year, CAL had posted US$16.5 million in profits. Its fuel bill at that time was approximately US$56.9 million and total operating expense was US$316.7 million.

Port of Spain between 2006 and 2007 gave CAL US$139.2 million to start up and in 2009, the airline registered US$2.6 million in profit. In 2010, the company posted a loss of US$17.6 million. But by August 2011, total revenue was US$332 million with profits for that time at US$16.5 million.

“It is our contention that such unfair competition is subversive of the Revised Treaty of Chaguaramas and also of the Common Air Services Agreement in CARICOM and we must address this,” Gonsalves said of the CAL fuel subsidy.

The meeting mandated Gonsalves to communicate concerns about the fuel subsidy to the government in Port of Spain.

Read also: St. Lucia not investing in LIAT

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