Mottley told Parliament during her budget presentation on Wednesday, that the core elements of a new, sustainable model for the regional airline, are already clear and that the restructuring is expected to dramatically cut the airline’s cost to the Barbados taxpayer.
Mottley said “Year after year, Barbados has coughed up capital subsidies for the airline without requiring burden sharing. And year after year, losses and debts have piled up, pilots work less and less, and ticket prices rise and keep on rising, to the point that it is now cheaper to fly to Miami and even New York than to Antigua or Trinidad.”
She noted the difficulties involved in making LIAT a profitable venture, pointing out that there are “more government shareholders in LIAT than in any airline in the world. These include: Antigua and Barbuda, Bartbados, Dominica and St. Vincent and the Grenadines.
“Is it impossible to put in place a sustainable solution? Of course not. Nearly every government in the region subsidizes airlines delivering arrivals through a minimum revenue guarantee. Those airlines certainly aren’t losing money and there are few complaints about having to pay more to the airline if the fare falls or the seats go empty.
“And when we engage with CARICOM with our sleeves rolled up ready to do heavy lifting as a partnership, the fact is, we as a region can get things done.
Mottley told legislators that the open secret is, if a loss-making route gets cut, calls are made, pressure is put on management, and the route reappears. “There are flights LIAT now has that will have one passenger. A flight that any airline anywhere else in the world would cancel, but not LIAT.
“Pilots and other groups have contracts that let them get paid regardless of whether they work or not. And as debts have mounted, the airline has got behind on its bills and into what is a slow death spiral, just waiting for someone to move first and seize a plane.”
Recently, Prime Minister Dr. Ralph Gonsalves of St. Vincent and the Grenadines said in order to keep the airline in operation, some US$5.4 million in emergency funding was expected from the partners. At the same time, 11 destinations had been given until March 15, to respond to the airline’s minimal revenue guarantee (MRG) proposals.
Under and MRG model, it is likely that a few flights may be cut if the government is not prepared to fund them with a guarantee, Gonsalves said, adding that theoretically, several countries have no quarrel with the MRG.
Only recently, Antigua and Barbuda Prime Minister Gaston Browne government would be seeking parliamentary approval to declare the regional airline,which is has its headquarters in that country, an essential service.
Information Minister Milford Nicholas said that the Gaston Browne administration had decided to declare the airline’s operations as an essential service as a means of protecting its investment in the financially burdened airline and ensure its long-term viability.
The Antigua and Barbuda government also authorised a new EC$16 million (One EC dollar=US$0.37 cents) loan facility from the Barbados-based Caribbean Development Bank (CDB) to assist the airline in its restructuring efforts.
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