Friday, August 26, 2011

‘Difficult life’ without LIAT?

By Gercine Carter - Friday, August 26th, 2011.

Chairman of regional air carrier LIAT Jean Holder has warned the “opportunity costs” of not having the airline “are quite substantial.

Speaking Wednesday in support of LIAT shareholders spokesman, Prime Minister Dr Ralph Gonsalves of St Vincent and the Grenadines, Holder said LIAT paid many millions of dollars in taxes in regional countries and “if you shut it down tomorrow, you may think that you have gotten rid of a problem but the opportunity costs of not having LIAT are really quite substantial and people need to give it a lot of thought.”

LIAT employs 955 people across the Caribbean.

Following a shareholders meeting Tuesday, Gonsalves said: “You can’t be subsidising or paying for other airlines into your space and your country and you just treat LIAT as though it is a floormat.”

He said the airline was at a disadvantage when competing with the Trinidad-based Caribbean Airlines (CAL) on the Port-of-Spain to Barbados routes, and pointed out that LIAT’s fares on those routes had to be cut “in order to stay in the game with CAL.”
“When we cut our fares, we are losing money but we have to be in the game because they are important routes, but CAL can’t go and be having a fuel subsidy,” Gonsalves argued.

Holder told The DAILY NATION CAL’s aviation fuel was heavily subsidised, resulting in the airline paying no more than US $50 per barrel for jet fuel while LIAT paid US $120 per barrel.

“LIAT has for years been the bus service of the Caribbean trying to make sure that every little country in the region gets air service,” he said, “and there comes a time when one has to review this.”

In this regard, he disclosed a route profitability analysis was being undertaken. The chairman pointed out that LIAT operated about 1,000 flights weekly from Tortola in the north to Curacao, taking in Puerto Rico, the Domincan Republic, the French islands and many small islands with small populations along the route.

“That network is an extraordinarily difficult operation to run on a daily basis,” Holder observed.

While Gonsalves threatened that LIAT’s “social routes” would have to be cut if the respective governments did not help to fund them, Holder suggested “there is nothing wrong with saying to a country ‘LIAT needs to survive. It is in our interest that it survives. Where do you expect it to operate without any kind of support from you or anybody else?’”

However, Holder said LIAT, “would not likely cut services because it recognises that we are in a community and people need to get around the community.” (Barbados Nation)

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