The financial state of regional airline LIAT is of such grave concern to Governor of the Central Bank of Barbados Cleviston Haynes, that he is worried that if the carrier goes under it could deliver a body blow to tourism.
The rising cost of air travel is being blamed for the country’s continued struggle to maintain visitor arrival numbers from the rest of the region, according to the central bank’s latest report.
As he delivered the country’s first quarter economic report card, the Governor eyed the high fares charged for inter-island travel – made up mostly of taxes and Government fees.
Up to March 31, while overall tourism arrivals grew by 2.2 per cent, arrivals from Trinidad declined by one-tenth and other CARICOM visitors were down by 4.6 per cent.
“In general, the regional market is grappling with the issue of travel cost,” said Haynes.
The Governor said LIAT’s ongoing troubles could further harm the country’s tourism performance and that of the wider region, but declared optimism that a solution is in sight.
The Governor told reporters: “The LIAT situation is obviously one that is concerning and I know that regional governments are in the process of discussion trying to find a resolution.
“Not having [the] regional airline impacts not only Barbados, it impacts all of the regional economies that depend on tourism.
“Our ability to move from one country to another will be severely impacted in the absence of [this] regional airline.”
There have been mounting fears that the island-hopping airline could go out of business if officials did not come up with a way to inject US$5.4 million in emergency capital.
Haynes said: “Such an airline has to be one that is economically viable. Clearly, our own financial situation and the financial situation of several of the other governments is not one in which one can continually have to inject funds into LIAT, and certainly Barbados has had to inject substantial amount of funds over the years in order to keep it afloat.
“I think the governments are really trying to find a more even approach to the financing of LIAT such that it can keep afloat and can continue to service the various islands.
Yet despite his concerns, Haynes said he remained optimistic that regional officials will come up with a viable solution.
“At this stage, I feel optimistic that we will find a durable solution to the regional air transport problem and therefore in that sense I anticipate that we will not be adversely impacted by a further fallout of regional tourism,” he said.
Airline executives and governments across the LIAT network are currently taking part in back-to-back discussions about the need for all the territories served by the airline to contribute to a minimum revenue guarantee model.
Barbados is the majority shareholder, with other major shareholding countries being Antigua and Barbuda, St Vincent and the Grenadines and Dominica.
On Monday, LIAT’s Chief Executive Officer Julie Reifer-Jones gave the assurance that despite the challenges facing LIAT it continues to maintain its full flight schedule.