by Shawn Cumberbatch
Barbados has committed to investing millions of dollars more in LIAT as the regional carrier embarks on a major fleet renewal programme.
But as Prime Minister Freundel Stuart, regional colleagues from St. Vincent and the Grenadines, Antigua and Barbuda, and new shareholder government Dominica prepare to pump $46 million in new financing into the airline, they have instructed its management to cut “unprofitable routes” if the beneficiary destinations did not commit to financial support.
News of the additional funding, route ultimatum, and Dominica support emerged this afternoon at a news conference held after a LIAT shareholders meeting at Hilton Barbados.
Saying he was “satisfied” with how today’s talks went, Stuart said despite its own financial difficulties, Barbados could not afford to withhold support from the carrier.
This was so especially when CARICOM was the island’s third largest tourism market, and LIAT brought those visitors here. Barbados owns the single largest stake in the airline.
“Of course the average age of the LIAT fleet is about 20 years. LIAT has an enviable safety record, but we cannot push our luck too far in that regard, we cannot tempt the gods. So the time has come for us to refleet LIAT … over a period of time so that we can keep interest in LIAT as high as possible,” he said.
“Yes we have been going through very, very difficult times financially, budgetary constraint … are not a pipe dream they are a reality, but the other reality is that CARICOM is the third largest source market for Barbados’ tourism and it is LIAT that brings the tourists here and we cannot haggle over figures indefinitely and lose sight of that very stubborn reality.
“We also have to make sure that the airline remains viable and it can only remain viable if it is properly financed and Barbados therefore has had no difficulty committing itself to that course of action. So as the largest shareholder at the present time we felt it was our duty to live up to our regional obligations.”
LIAT CEO, Captain Ian Brunton, said the effort to renew the airline’s fleet was “out of the station”.
“We are definitely getting four starting somewhere between May and June of 2013, but we are looking to change the entire fleet and have 12 new airplanes by the end of 2014. There will be a mix of ATR 42s, which are 48-seaters and the ATR 72. Both types will be the new Dash 600s which are brand new, the first one was only certified about a year or two ago,” he told the media.
“So that with that mix of 48-seater and 68-seater airplanes we think we can fulfill our core network. The larger airplanes will also fulfill the denser parts of the core network and of course a larger airplane will help us to fulfill the expansion that we need.”
Chairman of the shareholder governments, St. Vincent Prime Minister, Dr. Ralph Gonsalves, said the $46 million was “not a lot of money” for the governments involved, but he also made it clear others not supporting LIAT financially could not expect continuous free service.
“There are some people who will say ‘Look you want us to join in and at the same time you are saying you will cut certain unprofitable routes’. Well, the unprofitable routes will be cut if you don’t join in; you either come as an equity partner, or you put market support for the routes that you want. It’s plain and straightforward,” he said.
“This is a free world, you can come and start an airline if you want, we can’t stop people. The only thing … we say is if you start your airline you start your airline within the framework of the CARICOM Air Services Agreement of 1996, which speaks to the issue of fair competition.
And while Chairman Jean Holder noted LIAT had cut its losses in half this year, Brunton said with the new planes the company was looking to either break even next year or earn a EC$7 million profit.
Gonsalves added: “We must not sell ourselves short, not because we have challenges. We have put into this because we consider it necessary and desirable and the rest of it will be long-term financing.”
“We have to get the new aircraft, … that’s the reality; that’s why we are doing what we are doing and we are not paralysed, we are taking decisions in an affirmative manner … going forward. [email protected]