KINGSTOWN, St. Vincent – Cash-strapped regional airline LIAT lost US$46 million last year, US$26 million more than in 2010.
And the airline is considered suing Caribbean Airlines (CAL) over “unfair competition” under CARICOM protocols.
“It means that the capital of the company has been eaten into,” Prime Minister Dr. Ralph Gonsalves, chair of the shareholder governments said at a press briefing yesterday of the losses last year.
He said that while shareholder governments are committed to keeping the airline afloat and recognisees its necessity and desirability, they would have to take some “serious decisions going forward”.
Gonsalves, who is also the CARICOM spokesperson on air transportation, said LIAT would seek legal advise on how CAL “is conducting its business by providing subsidies and coming on the routes, competing with us”.
“They pay just US$50 a barrel for aviation fuel, we pay $110, $120. Obviously that can’t be correct. I have no problem with CAL coming on our routes, none whatsoever. The competition is fine but the competition has to be one a level playing field,” Gonsalves said.
Gonsalves, along with his Barbados and Antigua and Barbuda counterparts Freundel Stuart and Baldwin Spencer, the other LIAT shareholder prime ministers, met on Monday in Barbados with LIAT’s board and management and unions representing the airline’s workers.
The meeting mandated Gonsalves to communicate concerns about the fuel subsidy to the Kamla Persad Bissessar government in Trinidad and Tobago, the owners of CAL.
“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 told reporters in Barbados on Monday of the CAL fuel subsidy.
He said at the press conference yesterday “a person may say, ‘If they (CAL) don’t come on a level playing field and we get cheaper fares, that’s good for consumer.’
“Until you knock LIAT out the sky, just like what [embattled Texan billionaire Allan] Standford was trying to do with Caribbean Star,” Gonsalves added.
“And then what would have happened to us if we had allowed them to knock us out the sky?” Gonsalves said. “We have to retains some influence, some determination as to what happen in our airspace,” he further stated, adding that BWee Express, a branch of BWIA, CAL’s predecessor, stopped flying to St. Vincent without notice.
“They make their decision in the interest of their own company. I have no problem with that. … But we have to compete on a level playing field,” Gonsalves said.
“If we had not rescued LIAT, we would have had real problems moving from these islands and a lot of development which we have had, including tourism development, would have been at a number close to zero because it would have been difficult for us to get in an out of St. Vincent and the Grenadines,” said Gonsalves, who is Minister of Air Transport.
Gonsalves said that LIAT has a short-term recovery plan to deal with cash flow problems, including cutting unprofitable routes and also reviewing its manpower cost and “working with the unions to have rationalisations”.
“The LIAT workers pension fund with CLICO, that issue has been satisfactorily answered,” he said.
He said there are ideas for the further reform of the decision-making process in LIAT and progress had been made regarding fleet renewal and fleet expansion, with a report having been received.
The prime ministers on Monday decided that a working group be set up to look at the institutional modalities in going forward with LIAT.
Considerations include revamping or closing LIAT (1974) Ltd. or setting up LIAT (2012) Ltd. and leasing the aircrafts to LIAT (1974) Ltd.
“All kinds of modalities are possible but we need to have the detailed consultancy work in that regard,” he said, adding that this will also inform the extent of capital investment required by the various shareholders for fleet renewal and expansion.
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