Gregor Nassief
Dominica hotelier, Gregor Nassief.

PORSTMOUTH, Dominica, CaribPR Wire — Dominica hotelier, Gregor Nassief, is urging St. Vincent & the Grenadines Prime Minister, Ralph Gonsalves, to step aside as chairman of the shareholder’s committee of regional airline LIAT, in a fourth open letter to the shareholders. Nassief insists that since Gonsalves believes LIAT can never be profitable, then the airline urgently needs a new chairman and “general” who can find a new approach for taking LIAT and the Caribbean aviation industry forward without a perpetual and unfair burden on the treasuries of St. Vincent, Antigua, Barbados and Dominica. The open letter follows:

February 25, 2014

Honourable Dr. Ralph Gonsalves of St. Vincent and the Grenadines

LIAT (1974) LTD
V.C. Bird International Airport
P O Box 819
Coolidge
Antigua
Dear Prime Minister Gonsalves:

Re: Run it like a business before it goes out of business

On the televised program Time to Face the Facts on Sunday, February 23rd, I appealed to you to step aside as Chairman of the Shareholder’s committee of LIAT. As mentioned on the program, given the respect and admiration I have for you, particularly on your stance and leadership on issues such as reparations and the cholera outbreak in Haiti, it was personally difficult for me to do this. But it is necessary.

LIAT has moved from an operational meltdown in the Summer of 2013 to a financial meltdown a mere 7 months later. LIAT drains our treasuries, operates inefficiently and stifles competition. The source of LIAT’s problem is its financial unsustainability and as with everything else at LIAT, no one is accountable. As Chairman of the Shareholder’s committee, the buck stops with you.

LIAT needs to fight the battle of its life to transform itself to be financially viable and sustainable. But you believe, and have stated so publicly, that LIAT can never be profitable. This battle, therefore, needs a different general.

Unsustainability

LIAT has lost ec$120m in the last four years. Last month, LIAT could not pay both the lease on its aircraft as well as its payroll. So it chose one and delayed the other. A leased ATR gives 36% more seat capacity than its closest Dash 8 equivalent but is double the (lease) expense. In 2015, repayments will begin on LIAT’s recent loan of us$65m to purchase new aircraft. So monthly cash outflows go up even more.

And the new inflows to cover this? Inter-island tourism is down 60% in 7 years and LIAT’s load factor is running at about 55%. The fantasy (aka “business plan”) is that the load factor will go up to 75%. The fantasy is also that LIAT will fly its way out of losses by expanding to new destinations – Jamaica, Haiti, Aruba, Panama, and eventually to cities in North and South America.

LIAT employs 850+ people, flies 22 destinations, operates between 10 and 12 aircraft from 2 hubs (3 if you count Trinidad) to move 800,000+ passengers a year to generate massive losses.

So it’s bail out time again. Call on shareholders, and call on other good neighbors so that we can continue to drain our treasuries, operate inefficiently and stifle competition. And for you this is acceptable because LIAT should not be run like a business and can never make a profit.

Our fragile economies can no longer support perpetual bailouts. If we do not take the bull by the horns LIAT will go out of business – it will employ no one, fly nowhere, operate no aircraft and use no hubs. But alas, it will generate no losses and competitive players will fill the gaps because LIAT, the airline unfairly propped up by perpetual subsidies, will not be there to run them out of business.

LIAT must therefore immediately begin a journey towards financial sustainability to save itself. But if the leader does not believe in the journey, then the journey will never begin. It is on this basis, with full respect and admiration, that I ask you to step aside as Chairman of the Shareholder’s committee, so that a new mandate to make LIAT financially sustainable can be ushered in.

Sustainability

The new chairman of the Shareholder’s committee needs to believe that the battle can be won. And what needs to be done is not rocket science.

Appoint a Chairman and a Board capable of turning around the financial fortunes of the company and running a top-notch airline. Give them the authority and autonomy to do what needs to be done. Allow them to appoint a CEO and restructure the management team as necessary. Allow LIAT to become a real business free from political interference tasked with a perfect safety record, high employee satisfaction, great customer service and solid financial performance. A fierce focus on the company’s finances with adjustments made to yield (including renegotiation of government/airport taxes), network efficiency and operating costs will be required. The resulting operation will have fewer employees, fewer destinations and fewer aircraft. It will be profitable, dependable and it will deliver great service. Like any airline, unprofitable routes will continue only with guarantees from the interested party/government. But at least then, the taxpayers will know what they are paying for, and can make that decision. And other/smaller airlines will take up the slack. Competition will flourish, as will LIAT, and the Caribbean will finally get the airlift network it needs.

With a restructured board and executive, confidence in the airline’s financial performance will be established and other Caribbean governments may even want to invest.

At the right time, joint venture the company while maintaining a minimum 50% shares among shareholder governments. The two best run airlines in the world (Singapore Airlines and Air Malaysia) are run like a business and are profitable and remain owned 50% or more by the State and 50% or less by private interests. Like LIAT, they were bleeding losses and their shareholder governments could no longer manage the bailouts. So they took the tough decisions, appointed the right board and executive team, and turned the airlines around to the benefit of all stakeholders.

Yes, it will be painful, but it is necessary. And most importantly it will pull LIAT back from the financial cliff and put it on a course to long term financial sustainability.

Please consider that I am a hotelier from an island that is almost 80% dependent on LIAT for airlift. Cut one route to Dominica, and we/Dominica will suffer. But if my option is (a) to continue to have all the LIAT routes we have today with an airline that is prone to poor service, ad hoc cancellations, occasional and irrational pilot strikes and constantly at the edge of a financial precipice due to insurmountable financial losses – OR – (b) an airline with fewer routes but with good service, dependable schedules and solid financial performance, then my choice is definitely the latter. And other airlines, once permitted, will take up the slack.

In Summary

Thomas Edison said, “I have not failed. I’ve just found 10,000 ways that won’t work.” And then finally, he invented the electric light bulb.

We have lived through and exhausted the many ways that LIAT won’t work. It is time to try the way that will.

I appeal to you, Prime Minister Gonsalves, as well as the other Shareholder Prime Ministers, to mandate a new approach for taking LIAT and the Caribbean aviation industry forward without this perpetual and unfair burden on our treasuries.

It is time to run it like a business before it goes out of business.

Respectfully Yours,
Gregor Nassief
Owner/Director – Secret Bay
Executive Chairman – Fort Young Hotel

cc: Honourable Dr. Baldwin Spencer of Antigua and Barbuda
Honourable Freundel Stuart of Barbados
Honourable Roosevelt Skerrit of Dominica

p.s. As we again desperately seek additional funds for yet another bailout, make it the last please. Don’t put the money into the black hole of an unsustainable business model. Instead, use it to restructure the airline, rationalize its operations and place it on a solid long term footing. In other words, make it the last bailout!

 

8 replies on “Dominica hotelier calls on Gonsalves to step down as chair of LIAT”

  1. If they ran LIAT like a business, it would stop in Dominica once per week. The flights into and out of Dominica are always half empty. Then what would he say? LOL

    1. Zhao Gou…I see the ability to read and understand fails you. Can you point to something in the writings above that’s not true.

  2. Hahah don’t be telling De Comrade about figures he don’t like that, he might start calling you dutty dog and saying all you know is how to balance the book. What you have said sir is what many have been trying to tell the guy, but he doesn’t listen he is the Minister of everything, that knows everything. So your plea is going to fall on def ears.

    but let’s be real here, Liat is a front for money laundering, let’s call it like it is. You can’t have hundreds of millions of dollars invested every year and not make any profit, someone is pocketing some money somewhere that’s my opinion. Someone is making lots of money at the expense of the taxpayers.

    And why are Vincentians paying so much money to fly on Liat?, our PM is the chairman for petesake, Liat is rinching our hands everytime we have to fly just because the have a monopoly. One thing I learned about business a long time ago, if the money is not adding up, then somebody is stealing.

  3. If LIAT is REALLY to be run as a “business,” then several UNPROFITABLE routes would have to be cut.

    Part of LIAT’s function is to assist Caribbean nationals living in those areas, to leave and return to their homes. Tourists and visitors as well, would be unable to access those areas if LIAT is not there to fill the air transportation void.

    YES, most such ventures are ONLY looked at as businesses, but one of LIAT’s obligations is to help our Caribbean nationals do things they are unable to do for themselves.

  4. Fast-ferry service would help a lot. The respective governments should recognize and celebrate the fact that we are tiny islands in a vaste sea: this is why most tourists come here. Such boats must be entirely privately owned and run but should be given long-term tax exemptions akin to those given to foreign-owned hotels. LIAT should be entirely privatised and allowed to sink or swim.

  5. At least 60% of the cost of any ticket fare is government tax’s. If the greedy governments stopped charging such huge ticket tax’s the cost of flights would be less and more people would fly the air routes.

    The loss is created by the tax,s. They take the money up front on tickets then pay it back to the airline by way of loans or support subsidies.

    Greedy governments are what is creating ticket prices that no one can longer afford.

  6. Nicholas Providence says:

    Mr. Hotelier I am not only listening to your plea but I am feeling your pain like every other tax payer in the region who is affiliated with LIAT whether or not they use its services. Because once you pay taxes you subsidy the bill that keep LIAT flying. Your letter make social, economic, financial, business, trade, political sense and more. Simply put, everything man who engages his effort in anything must add value at the end of the day to the lives of others with minimal negative impact. However, when LIAT can’t pay it own bills off its own efforts, the tickets have to be overpriced which means people travel less, trade declines, business declines, the economies bleed and the politicians continue to lost political credibility due mishandling of LIAT’s management.
    LIAT’s constant failure and your plea to King Gonslaves is rooted in one thing. And it is, the failure of political leaders in the region to let go off the old style of management. Usually, when Gonslaves and other are out of power they criticize those that are in power but when they get in there, it is always business as usual and they are even worst. If Gonslaves is such a genius why in this day and age he can’t see political management of an entity such as LIAT is not the best way to maintain the airline as an effective, efficient and via mean of air transportation to meet the needs of the region. It is time that government step aside, be the guardian of the people interest and let businessmen/women do their jobs. Come on, we need better than these types of political blackmails in this day age that only lead us down the parts of economic, social, financial and political decadence. It is time that governments give LIAT a chance to be profitable, effective, efficient and viable by allowing it to spread its own wings with proper private intervention.
    Nicholas Earl Dutch Providence

  7. Nicholas Providence says:

    What was wrong with my comment on the Hotelier letter calling for Prime Minister Gonslaves to step aside as Chairman, so that the airline and the people of the region can prosper for once? Is this freedom of speech in a democracy? Did I lied or scandalized or misrepresented anyone? You guys need to do better than this. That is why we will always be at the whims and fancies and mercies of the politicians and the likes of you guys, who claims to practice a free press but instead practice slanted reporting.
    Nicholas Earl Dutch Providence

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