Honest conversation about LIAT overdue (Pt 2)

In the previous programme, I stated that LIAT was a disaster for the region. I gave some facts to support my position. I also addressed some of the reasons and excuses that, over the years, have been given for the persistent failures of LIAT. I then identified the reasons for that failure and my solution to address the failure. In short, THE reason for failure is government ownership and involvement in LIAT.

The solution is simple and two-fold. The first critical thing is for the governments of the region to adopt an “open skies” policy. The second critical thing is that governments must either privatize LIAT or kill LIAT. This twin action, open skies and getting rid of or privatizing LIAT, are inseparable. Doing one without the other will result in guaranteed failure.

There is a role for government. That role is in regulation for safety and to promote competition.

An open skies policy is one that calls for the liberalization of the rules and regulations of the aviation industry. This will create a free market for the airline industry and will promote competition. This policy must be adopted at the regional (OECS and Barbados) level and preferably CARICOM level.

I promised in the last programme to begin addressing the arguments for maintaining the status quo of government ownership of LIAT. The first argument I usually hear when I suggest that LIAT be privatized or killed is “but we won’t have any air transport”. This is said by people who have given no thought to the subject and/or do not understand how the competitive marketplace works. Assuming, and this is the critical assumption, that we have an Open Skies policy, which simply means an open competitive marketplace where the same rules and regulations apply equally to all entities, then the first thing that will happen is that existing airlines will expand (this likely includes SVG Air and Mustique Airways). The second thing is other individuals and Companies will get into the airline business. How do I know this? Because we have seen it in Europe and North America. I have evidence for my position.

The second argument is, “we tried competition before with Carib Express and Caribbean Star and they both failed”. They failed because LIAT continued to “compete” while receiving government subsidies or “investments”. We are currently told that LIAT competes on some routes with Caribbean Airlines (CAL). We are told that this is unfair competition because the government of Trinidad and Tobago provides cheap subsidized fuel to CAL. However, we hear very little of the fact that LIAT continues to receive heavy subsidies from their government “investors”.

The third argument is that air transport cost between the small islands of the OECS is by its very nature is unprofitable and therefore some destinations would not be serviced in a competitive market. So I then ask which markets? There are not many markets in the OECS that are smaller than Union island, Bequia or Canouan. These markets are served by two private airlines.

The fourth argument is that private airlines will raise prices and make flying unaffordable to most people. Is flying LIAT cheap and affordable to most people now? Lets assume that private airlines do start to charge more than LIAT does. Lets go further and assume they begin to gouge the general public. Then what? Well its actually quite simple. In a competitive marketplace, other airlines (or people) will begin to fly these hugely profitable routes. How will these new entrants gain passengers? They will lower prices to compete. This competitive process is normal in most of the rest of the economy and normal in all competitive airline marketplaces in the rest of the world.

I think have addressed most of the major arguments for government maintaining LIAT with taxpayers money, our money. Millions and millions of wasted dollars that could be better invested in health, education or infrastructure. When will we stop this insanity?

Let me also repeat: there is a role for government but it must be limited to regulation for safety and to ensure a fair competitive environment.

On the last programme I asked you, the viewer, for only one thing. That is to have an open, thoughtful and questioning mind. You have now listened to my arguments, my positions, my reasons and my evidence. Evaluate my positions against my opponents and come to your own conclusion about which position is best for our future.

I am still hoping that someone in support of government ownership of LIAT will step forward to have a one-on-one debate with me about LIAT. We have the “Unrendered” programme here on IKTV that would provide an excellent forum.

We have an economy to build. LIAT is an obstacle to that process. We have tried the government ownership route for too long!!! We must admit failure and move on. I urge you to tell your political representatives that its time for a change in regional air transportation.

Please note that I am NOT saying that the implementation of my proposals will be easy but we MUST at least know where we need to be going BEFORE we can head in the right direction.

My name is Stephen Joachim. Thanks for viewing “To The Point”. Please feel free to share your views with me on Twitter on @Stephenj5 or via email at [email protected]

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