A major investor in the failed Barbados-based airline REDjet has come out strongly against the idea of any new local private sector-led airline, saying such a venture would be “madness”.
But prominent businessman Ralph ‘Bizzy’ Williams also told Barbados TODAY he did not see a government-led airline being successful either, given government’s track record with various business ventures.
His comments were in response to reports that a proposal was recently put forward for Barbados to set up its own airline, with 10 planes and up to 350 permanent staff.
The venture was proposed to replace cash-strapped LIAT, in which the Government of Barbados is the principal shareholder.The document, which reportedly originated from LIAT, pushes for the establishment of a Barbadian carrier not burdened by LIAT’s financial and other baggage.
It said such a move would represent a “fresh start” as opposed to waiting for the “slow, painful and costly collapse” of LIAT – the only two options the proposal envisions.The document proposes a Barbados Air Carrier (Newco) be established with its own Air Operator’s Certificate (AOC) and route licensing authorization, effectively replacing the majority of existing LIAT services throughout the region and seeking to develop new markets.
Antigua and Barbuda’s Prime Minister Gaston Browne has described the move as “treason” and an act of hostility against his country which is the home base of LIAT whose staff is about half Antiguan.
In his assessment, Williams said it would only make sense setting up an airline in Barbados when there is “proper legislation in place” governing the fare structure.
The Barbadian business mogul said he could not imagine any individual or group of people to “be so absolutely crazy to invest one cent in a private sector airline to fly between the Caribbean islands” with the current legislation.
“With the existing fare structure, where an airline can change its fares willy-nilly up and down (and) is funded by taxpayers’ money, then you cannot compete with that with a private business, and government is not able to run efficient business,” Williams said.
He added: “We have seen it. Look at any government institution and see if it is profitable. They are very few if any at all.”
“No private sector airline will ever start up in the Caribbean and be run successfully until it is mandatory by the Civil Aviation [Department] for every airline operating in the Caribbean to declare its fare structure a year in advance for every month.“
So, in January, you would declare your fare structure through to December 31 and you cannot change it up or down except by a formula relating to the price of fuel,” explained Williams.
Williams said there was no way a private sector-led airline would be able to compete with “a government/taxpayer funded airline which can adjust its fares drastically to put a new start-up airline out of business even before it gets off the ground”.
“We have seen this happened three times now. It happened with the first efforts here in Barbados, the one that started in Antigua and it happened with REDjet. As soon as the new private sector [airline] comes on stream, the taxpayer funded airline . . . drops its fares to put the new private sector company out of business, and then raises its fares immediately after to higher than it was before. As long as that can happen, then you would have to be mad to invest money in a private airline,” said Williams.
In relation to LIAT relocating its operations to Barbados from Antigua, Williams said that was a move he welcomed but hoped that “the civil aviation authorities here will be more cooperative and switched on than they were toward REDjet”.
Approximately two years after it started operations in 2010, REDjet was forced to go out of business, putting about 90 people out of a job.When asked if he was prepared to invest in another airline in Barbados, Williams said “Definitely not. Not one cent of Williams Industries money will be going back in an aviation venture unless the regulations are changed”.
Meanwhile, another local businessman, Robert Pitcher, told Barbados TODAY it did not make sense setting up a new airline that would compete with LIAT.
“For Barbados to start its own airline, it would be at the expense [of taxpayers]. The Caribbean [route] that LIAT currently serves cannot take two airlines flying it. Both of them would lose money,” he said.
Pitcher, who previously predicted the demise of LIAT if the management structure was not quickly changed, said that having a competing airline could also mean that LIAT would “eventually die”.
Stressing that the current structure of LIAT was “wrong”, Pitcher suggested that the government of each island served by the regional carrier, should “proportionately put money” into its operations, “but not until the board is changed and management understands where we have to go”.