It is generally good business sense to only invest in viable enterprises.
But when a journalist made that statement to Prime Minister Dr. Ralph Gonsalves in Grenada in relation to LIAT, it seemed to unsettle him.
Gonsalves was being interviewed by Beverly Sinclair on a range of issues, including LIAT, in which St. Vincent and the Grenadines, Barbados, Antigua and Barbuda, and, to a lesser extent Dominica, are the major shareholders.
(See video at the end of the post)
“What I would like to take the opportunity to do is to repeat what Chester Humphrey, the head of the union here (in Grenada), says, the plea that he made for … other governments to come aboard,” said Gonsalves who is chair of LIAT’s shareholder governments.
“It is just not fair to have three governments and now Dominica has come in an important though small way,” said Gonsalves, who is also CARICOM’s lead spokesperson on air transport.
“But, Dr. Gonsalves, if you have a business and you are asking investors to come and put money in it, it should be a business that’s viable,” Sinclair told Gonsalves.
“With respect, you completely misunderstand air transport,” Gonsalves retorted.
“Ma’am, ma’am, ma’am, you completely misunderstand regional air transport,” he further said as Sinclair attempted to respond.
The journalist further accused the Prime Minister of making an assumption regarding what she knows.
“From that comment. Let me tell you why you don’t know. You don’t know because air transportation inside of the eastern Caribbean is not anything of luxury type of investment. It is an absolute necessity — absolute necessity for islands,” Gonsalves said.
He further stated that when his Unity Labour Party government decided to invest in LIAT shortly after coming to office in 2001, he told Parliament that he was investing in an insolvent company.
He further noted that he told lawmakers then that if LIAT didn’t exist it ought to have been invented “and that the important thing is for us to get involved in that company, put money in it to try to make it better”.
Over the past few weeks, as LIAT implemented its re-fleeting exercise, the airline’s passengers have had to endure frequent flight cancellations and inordinate delays.
Gonsalves said that “until this recent problem, we have made it (LIAT) better than what it was in 2001.
He said governments of the countries served by LIAT should support the airline.
“I say to them, put money or give market support in the way they give market support to other airlines outside of the region because they bring passengers.
“LIAT brings passengers just as much as American Airline or Virgin or British Airways or any of them.
“… This is why I make the point with crystal clarity. A regional airline of this kind, this is not anything which is going to make money. This is a service that has to be provided and we seek, if we can break even with this service, fine. But you cannot make money out it.”
Gonsalves said that the same investment criteria as for a hotel or a beer factory cannot be used in relation with regional transport.
“Otherwise, you will stay here and can’t go Jamaica,” he told the journalism, who accused him of using personal slurs — which the Prime Minister denied.
The journalist restated her point that one does not put money into a business that is not doing well.
Gonsalves retorted that they are going around in circles.
“But isn’t it a business?” the journalist asked.
Gonsalves at this point, seemingly frustrated by the repeat of the question, kissed (steups) his teeth and slapped both hands against his thighs.
“Alright,” he said.
“It is a simple thing if you don’t understand it,” he said after a pause.
“Isn’t it a business?” the journalist asked again.
“I just explained to you that it is not a business like other businesses. To ask in a puerile sense ‘Is it not a business?’ Of course it’s a business but it is a business of a different type. That’s the point I am making,” he said.
“So it’s not a business designed to make a profit?” the journalist asked.
“I just [told] you that a regional airline like LIAT, which is going about here, don’t look for it to make any profit. I tell you if it breakeven, you are going OK. There are a lot of countries, which subsidise their airlines. I am not calling for perpetual subsidy of airlines. I am not calling for that. If the cost of LIAT was to be borne by the users of the service, it would be far more expensive than it is at the moment,” he further said.
Asked how, without the subsidy, the balance is going to be maintained, Gonsalves said:
“Well, what we try to do, frankly speaking, is to see if we can break even, if we can made a very modest profit, so be it.”
Difficult to justify investing in a business that doesn’t make money. Good interviewing Beverly Sinclair!
This particular airline is not a business it’s one of two things 1/ a non profit organization. 2/ a disastrous money gobbling organization.
It cannot possibly be a business, because no business is run in such a way as LIAT, its a total disaster.
All the countries which LIAT flies into should put money into a subsidy fund. Those that do not, Liat simply must stop flying there.
SVG cannot keep putting in $15 to 20 million dollars every year, and that will accelerate this next time around to possibly 3 of 4 times that figure for SVG. We must sort it out or give it up, split it up and sell it to several separate private enterprises.
Over the weeks things have not got better, they have got worse.
I actually agree with Gonsalves from that perspective. From the perspective of offering an essential service because people need it, this makes sense. We would need to pump money into the failing something, or start from scratch, which the latter is harder and crippling. Consider this: where are the other regional and international airlines that can operate on the scale of liat. Why have they not invested in this profitable region? Why have all that have tried failed?: Carib express, Caribbean Star, etc with the exception of REDJET. Where is American Eagle? It simply isn’t profitable.
” Where is American Eagle? It simply isnt profitable. ” – Really?
Ask the FAA why American Airlines not landing here, sure its not an issue solely of profitability. As per my understanding was related to safety and runoff area. Am sure if we construct a Runway Arrestor system at ET Joshua they might return if allowed.
I did some research on the FAA certification / approval process, would be nice if we can be told which of their Pre & During Construction documentations has been submitted and approved to date for A.I.A. Too much money has been spent to not hit the ground running if construction is to be completed in under one year.
Does anyone know what is the call sign for A.I.A ? ET Joshua is SVD, assuming not too far off from that.
What Ms Sinclair needed to tell the PM was that it is he who seems not to understand. That the islands need air transport may be true; but that’s not the same thing as “the islands need LIAT”. LIAT is not like other businesses because it is a monopoly that seems to think that we need LIAT more than LIAT needs us – so we must take whatever inefficient and unprofitable actions they impose on us because they know that when push comes to shove governments like St Vincent’s will pump more taxpayers’ money into company. They don’t have to sell their services to us; we must to buy from them because there is nobody else. And I am afraid that the opinions expressed by those who think like Dr Gonsalves just do not give LIAT any reason to think differently. As far as I have experienced LIAT I would say that they have very skilled pilots; they have competent and generally very friendly cabin crew; they have ground staff that do what they can, but I have found, on at least two occasions when I was traveling, that they are not always kept informed about the true causes and likely length of delays. I cannot judge their engineers, but the fact that their planes keep flying and we don’t have engineering flight scares, barring the odd wheel falling off (sorry engineers, I couldn’t resist that dig; and I really don’t mind a delay while you fix a plane, if I’m told that’s the reason for the delay. The problem often is that I’m told nothing, because the ground staff have been told nothing). Which all leaves me to assume that the fault lies with the management of the airline. Have you all read the self-serving statements from the management about the disastrous last three or four months? How do you buy new planes and train staff for those planes without ensuring that you have adequate staff for the existing planes which you must continue to fly? And how do you plan such a changeover without contingency plans for the things that can, and probably will, go wrong – like one of the new planes being grounded for whatever reason? So while we provide more “loans” (which will probably never be repaid), and urge other governments to do the same (I’m sorry, “invest” is apparently the correct term), nobody, least of all our Honorable PM, seems to be doing anything about the management of the airline. It is indeed a business unlike any other.
While listening to an interview with Ralph on the topic of LIAT via I-Witness News, I came across an interview with Margaret Parsons explaining her encounter with the PM. She made some predictions about women in SVG and I must say the recent abuse of women in SVG can relate to that encounter.
I would advise you to take another look at this interview and then check what she said against whats happening to women in SVG today.
During the last election I tried to get Lunch on Nice Radio, to press the issue, because the women who called in to his show were concerned about the abuse of women. He failed to listen to what they wanted to address. Instead he kept talking about Astafan – the lawyer from Dominica. He and the entire NDP failed to grasp the issues that concerned women before and during the election.
This interview has brought forward the issue of WOMEN RIGHTS in SVG. I dont think Ralph past alleged behavior can be used as an election issue, but the abuse of women in SVG is right up there, because of recent and the numerous cutlass killings taking place, to damn often in the country.
Here is the link: http://www.youtube.com/watch?feature=player_embedded&v=bGEEpRD2NQE
Kenton did you get this?
This particular airline is not a business it’s one of two things
1/ a non profit organization.
2/ a disastrous money gobbling organization.
It cannot possibly be a business, because no business is run in such a way as LIAT, its a total disaster.
All the countries which LIAT flies into should put money into a subsidy fund. Those that do not, Liat simply must stop flying there.
SVG cannot keep putting in $15 to 20 million dollars every year, and that will accelerate this next time around to possibly 3 of 4 times that figure for SVG. We must sort it out or give it up, split it up and sell it to several separate private enterprises.
Over the weeks things have not got better, they have got worse.
mr balls, We are paying for LIAT and we are still being screwed by the same LIAT, so should we just lie there and dont whine, when we are not enjoying being screwed.
Gimme a break!
LIAT is protected by the various governments that are shareholders. Hence they put up road blocks in the way of any and every competitor and thats why most fail. Ralph is dead wrong on this issue, because it this was a private company it would be bankrupt and has to be liquidated.
.