Significant progress has been made in the restructuring of state-owned island carrier, LIAT, Prime Minister Mia Mottley declared today, as she broke her silence on talks on its future.
But Mottley said the time had come for hard decisions to be made to ensure LIAT became a sustainable venture for all of its shareholders, including the Barbados Government, the airline’s largest shareowner.
Mottley said in the House of Assembly: “The open secret is that if a loss-making route gets cut, calls used to be made, pressure got put on the airline and management and the route reappeared. There are flights that LIAT has in recent months that had two and three, passengers, one passenger. That cannot continue.
“We believe that the time has come for us to take commercial decisions, while at the same time protecting the integrity of transport within the sub-region.”
As a result, she said Government had suggested there be a minimum revenue guarantee (MRG) to make it profitable to continue to service certain routes.
Implementation of the MRG is expected to affect flights and schedules as underperforming routes are dropped unless subsidised by the destination’s government.
The Prime Minister explained: “If the route is unsustainable commercially, if it drops below a certain load factor but you need that route to continue for all kinds of reasons, then pay for it anytime it falls before the load factor. But if you don’t pay for it, or it is not competitive or it is not earning, it has to go.
“I am happy to say that most Governments are beginning to move in this direction and to accept the model of the MRG as a serious model.”
She said the shareholder governments were also in the process of having discussions with LIAT employees, aircraft owners, the lessors and financiers in a bid to make the airline sustainable.
Mottley said: “We are not yet at the point where we want to be, but I can report substantive progress is being made. There will be hiccups, but the bottom line is that we feel LIAT as a brand is a credible brand and even if it works with other private operators on a code share in some instances, or if it has to sell two or three planes, that we can see our way forward so long as we make commercial decisions in a timely manner.
“It may mean that the structure of the board has to change, it may mean that other practices within LIAT may have to change, it may mean that sacrifices will have to be made by everybody, but we feel it is worth fighting for because we need to maintain transport within the sub-region.”