The struggling regional airline LIAT is threatening to stop serving countries that hurt its bottom line, while it wants those that benefit from its service to pay up.
Chairman of the shareholder governments Dr Ralph Gonsalves Wednesday warned the airline must not be treated as though it were show business, as he outlined a range of reforms over the coming months – including the possibility of staff cuts – to return it to profitability.
Having recorded a net profit of EC$5 million (Bds$3.7 million) up to August 2016, a dramatic EC$14 million (Bds$10.5 million) reversal is expected in the final four months of the year, with the final numbers projected to show an EC$9.2 million (Bds$6.8 million) loss.
Gonsalves said the airline would be cutting some “non-performing and non-profitable” routes and, without making a link, said three regional governments – St Lucia, St Kitts and Nevis and Grenada – had been invited to become “equity partners”, along with the current shareholders, Antigua and Barbuda, Barbados, Dominica and St Vincent and the Grenadines.
The airline, which employs 669 people despite a budget for only 630, currently operates 578 flights per week to 18 destinations, two of which are served by helicopter. It uses nine ATR aircraft, with a tenth expected next month.
“The review is being done at the board level, looking at the organizational structure and determining what is the optimal number of employees we should have going forward in serving the entire network,” Gonsalves said.
About a year ago St Kitts & Nevis Prime Minister Dr Timothy Harris said unless LIAT presented his government with a “convincing plan” it would not invest in the carrier, and recently the Grenadian leader Dr Keith Mitchell said his country was prepared to subsidize the airline’s service, but would not fund its operations.
Gonsalves himself had recently taken a strong stand against LIAT, declaring he was not prepared to put another red cent into its operations unless he started to see major improvements. His Dominican counterpart Roosevelt Skerrit had also complained about its service, insisting that “people are not flying on LIAT for free. We are paying”.
However, perhaps the strongest detractor in recent months has been St Lucian Prime Minister Allen Chastanet, who in July swore that not a dollar from his country would go into the carrier. Chastanet had also announced plans to encourage an open skies policy and introduce competition for LIAT.
Today, Gonsalves sent a strong message to critics to put up and stop treating the regional transportation issue as if it were entertainment.
“Tell me what is it you want by all means. If you don’t want to invest in LIAT, invest in a competitor airline. This is a free world. You can invest in what you want to invest in. The point is this, all you do when you invest, let us have a level playing field with everybody.
“Look, let us cut out the entertainment about the airline business. This is serious business for serious people. Discussing regional transportation is not part of the entertainment industry and we have had too much entertainment for too long on this subject and we must be serious about it because that is what keeps our region functioning . . . . And I want to encourage my colleagues without any rancour, but with the loving embrace of solidarity, for us to work together and get more governments involved in this thing and really make changes. Let them come in and make the change,” the Vincentian leader said.
Gonsalves repeated a previously stated promise to cut non-performing routes, along with efforts to “iron out some security issues” to improve turnaround time, greater investment in luggage and mail tracking technology, and staff training.
The chairman of the shareholder governments identified weak technology infrastructure, a smaller fleet, less-than-ideal ground handling systems and frequent illnesses among staff as some of the areas that needed urgent attention.
“We have too many cancellations caused by illness of flight crew . . . we have too many bouts of illness which results in cancellations. The main priority of the management is to stabilize the schedule by resolving operational challenges, take action to reduce crew sickness. [Management] will do this in a sensible manner and a sensitive way. You know they have to communicate with the workers, the pilots the professionals.
“A critical review of the schedule has to be fine-tuned, clearly LIAT needs to do fewer routes, but do what we are doing much better,” he said.
Gonsalves said “the popular criticisms that the politicians poke their nose in LIAT and running it to the ground” were untrue and it was the management that would decide on which routes to cut “within the policy that is laid down by the shareholders”.
The prime minister also revealed that Barbados, Antigua and Barbuda and St Vincent and the Grenadines had been asked to approve an additional EC$5 million for the airline, with Dominica being speared because it continued to struggle with the effect of Tropical Storm Erika.
The Caribbean Development Bank, he said, would be asked to support a study of an impact of proposed reduction in the taxes and to address “a long-term capitalization issue . . . and also to have more participation from other territories which benefit from the LIAT network”.
The airline’s budgeted revenue for 2016 was EC$318.8 million (Bds$236.8 million).