Houston, we have a problem

“LIAT is not sure of long-term survival as a stand-alone entity.” This is the gloomy weather picture painted by St Vincent and the Grenadines Prime Minister Dr Ralph Gonsalves. As a matter of fact, if LIAT is to continue flying for the next three months it will need an immediate cash injection of some TT$35 million. No solution to that predicament has yet been announced. But rather than PM Gonsalves seeking effective measures to keep LIAT in the air profitably, he seems more concerned with finding excuses for LIAT’s failures over the years and with “bigging up” himself as chief aviation spokesman for Caricom.

It seems that he has become so engrossed in his self-importance that he is even prepared to run afoul of his other Caribbean colleagues at the leadership level. In a recent speech in the St Vincent parliament, Dr Gonsalves was accredited with two statements, which could have far-reaching consequences in an already fractious Caricom environment. He suggested BWIA use LIAT aircraft (and their pilots) to operate its commuter routes rather than use planes belonging to Tobago Express. Secondly, that the BWIA/LIAT merger should be hastened along so as to reduce LIAT’s payroll in Antigua. “Most of all the strategic partnership with BWIA is vital. When this happens, LIAT will be able to reduce its payroll further to fewer than 200 employees by outsourcing certain backroom functions such as finance, marketing support and information technology to BWIA, among others,” he said. “Pilot productivity and aircraft utilisation can be significantly improved if BWIA were to use LIAT rather than Tobago Express for its Dash-8 hire operations,” said Gonsalves.

Obviously the Prime Minister is oblivious of the fact that the labour situation in Antigua and Barbuda will be severely impacted should such a scenario come into play, in an economy that is currently under serious strain. Further, is the Vincentian PM suggesting that Trinidad and Tobago pilots should sit around idly while the LIAT pilots and aircraft service BWIA’s several southern Caribbean destinations? He goes after Antigua again when he said, “In the past LIAT has been inefficiently managed. There was waste, poor customer relations, over-staffing in Antigua, poor scheduling and overpricing.” Dr Gonsalves then takes credit for the recent changes in LIAT when he said that over the past three years that situation had been changing at his insistence, since he is Caricom’s lead spokes-man on air transport. In a scathing attack on competing airline Caribbean Star, PM Gonsalves said his party could never be supportive of a policy “which allows a neo-colonial or a neo-imperial domination of the regional, inter-island air space by an airline owned and controlled by foreigners.” He added that such a situation could never be in the strategic interest of the people of the region. Dr Gonsalves continued his tirade against the LIAT competitor when he said, “A Caribbean Star monopoly will put us at its mercy in more ways than one.” But in the same breath Gonsalves admits “the competition to LIAT is a good thing, but LIAT must fly.”

It is stated fact that the owner and the two CEOs of Caribbean Star have said on numerous occasions since the airline began operations in 2000 that the grounding of LIAT was the last thing any of them wanted. They wanted to ensure that there was always competition on the routes so that the customer always has a choice. As recently as two weeks ago, current CEO of Caribbean Star, Paul Moreira said publicly in San Juan, Puerto Rico, “We always want the customer to have a choice of schedules and fares.” Should Gonsalves really worry about a monopoly? LIAT has been a monopoly almost for its entire existence. LIAT has already presided over the demise of two carriers which tried to compete with it over the past ten years or so. Remember Caribe Express and that Air Jamaica subsidiary, EC Express, both of which were based in St Lucia? They folded after trying to compete with LIAT. If however Caribbean Star has proven to be a more solid competitor, Dr Gonsalves shouldn’t become so peeved. It simply means that the time came to strip LIAT of its traditional lethargy and devise ways and means to go toe to toe with Caribbean Star.

He admits that LIAT, because it is severely under-capitalised and heavily indebted, is a “structurally weak company.” He agrees also that the under-capitalisation of the airline and its heavy indebtedness have not been really addressed over time, so that “LIAT has been continually bandaged for continued survival” and had not really been restructured, and he sees the nexus between BWIA and LIAT as a way out of the mess. Continuing with LIAT’s litany of economic and other woes, Dr Gonsalves reminded the Caribbean community that the airline’s “current problems flow from a half-hearted privatisation of LIAT in 1996 in which 65 percent was put into private hands with BWIA leading with 28 percent of the shares.” No fresh equity was invested in the company and all government subsidies came to an end, but the company remained under-capitalised and continued to endure cash flow difficulties throughout the 1990s. What Dr Gonsalves has not told the Caribbean taxpayers is that passengers using LIAT actually pay twice for that airline’s services. They pay in advance to keep the airline flying with their tax dollars and then they pay to fly to whichever island destination they choose whenever they purchase a ticket. Of course the St Vincent Prime Minister is also required to give an account to his constituency of the monies his government has continually thrown into LIAT’s coffers and which to date has not helped to solve that airline’s financial problems. Sooner or later Vincentians will begin to ask some questions about their tax dollars, as it relates to LIAT.

Pigeons coming to roost

Given all this PM Gonsalves still finds that blame for LIAT’s undoing should be placed in Antigua, in Port-of-Spain, on unfair competition and the list goes on, although he himself has given all the reasons why LIAT should have folded a long time ago. He speaks about unfair competition, but maintains that LIAT controls 60 percent of the traffic in the region. What he doesn’t say is that while LIAT is busy refitting its aging fleet with new engines, Caribbean Star now has a fleet of six 50-seater Dash-8-300 aircraft thus increasing capacity. LIAT’s chairman, Wilbur Harrigan has insisted that there is too much capacity in the region, but while LIAT is announcing passenger load increases, so too is Caribbean Star. Does that reflect too much capacity? Hardly likely. Just before the advent of Caribbean Star in the regional skies, LIAT’s total payroll stood at more than 1000 for a nine-aircraft fleet. After some cost cutting measures, that figure now stands at a little above 600. Caribbean Star on the other hand, with the same number of aircraft, has a staff of less than 300.

For more than four decades LIAT has become slovenly and complacent and almost unheeding to the needs of the Caribbean traveling public. Now that the pigeons have come home to roost in the person of Caribbean Star, the people concerned are looking for excuses rather than solutions. We are in the 21st century and no amount of excuses can relieve LIAT of its responsibility to become a better airline. Prime Minister Gonsalves and his Caricom air transport committee needs to grab the LIAT bull by the horns and work towards making it a better airline in every way.