T&T Government To Remove Fuel Subsidy To Caribbean Airlines

PORT OF SPAIN, Trinidad CMC – On Monday, the Trinidad and Tobago government announced that it would terminate its subsidy to state-owned Caribbean Airlines (CAL), ending an issue that had been heavily criticized by other regional governments.

Finance Minister, Larry Howai, delivering the TT$61.3 billion (One TT dollar=US$0.16 cents) national budget, said that the subsidy, which was estimated at US$40 million last year, would come to an end from October 1 this year.

Howai told legislators that Caribbean Airlines Limited must move towards the adoption of a financially-sound business model for positioning the airline in targeted segments of the global tourism market.

“The new Board of Caribbean Airlines Limited has completed the first phase of a revised Business Plan for the airline to achieve financial viability. To this end, effective October 1 2013, I propose to discontinue the fuel subsidy which the airline currently enjoys.”

The fuel subsidy issue had been among the items discussed during the Caribbean Community (CARICOM) summit here in July, with St. Vincent and the Grenadines Prime Minister, Dr. Ralph Gonsalves, indicating then that the subsidy was a violation of the CARICOM rules.

In addition, Gonzales, who chairs the shareholder governments of the regional airline, LIAT, said they had agreed to provide a summary of a legal opinion to Trinidad and Tobago Prime Minister, Kamla Persad Bissessar, regarding the “unfair” subsidy as he insisted that the Antigua-based airline did not want a fight with Port of Spain on the issue.

Gonsalves said, as a result of the legal opinion given to LIAT, the shareholder governments had various options including taking the matter to arbitration, going before the tribunal of the Trinidad-based Caribbean Court of Justice (CCJ) as well as citing “rules of impermissible subsidies” under the articles of the CARICOM treaty.

“I don’t see how I can be asked to pay in LIAT $130, $140, $150 U.S. a barrel for fuel and CAL pays between $50 and $60 and you coming on the same routes with me. That’s unacceptable, it’s wrong, it’s unlawful. And I have the facts and I have the law on my side with this one,” he said then

In his budget presentation, Howai said that the subsidy given to CAL for the Tobago airlift would remain. “These factors have been incorporated into the business plan which I expect to receive on September 17, 2013. I have been assured by the Board of Caribbean Airlines Limited that the removal of the fuel subsidy will not impact the ticket pricing policy,” Howai told legislators.