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LIAT May Be Doomed; Burden Too Much For Just Shareholder Governments: Barbados PM

Barbados Prime Minister, Mia Amor Mottley. Photo credit: . BGIS.

LIAT May Be Doomed; Burden Too Much For Just Shareholder Governments: Barbados PM

BRIDGETOWN, Barbados, November 5, 2019 (CMC) – Prime Minister, Mia Mottley, said, last night, that regional airline, LIAT, is doomed if the burden of ensuring its survival continued to rest, only on the shoulders its shareholder governments.

Barbados is currently the largest single shareholder in the financially-strapped airline. Antigua and Barbuda — which earlier this year was seeking to purchase most of Barbados’ shares — along with Dominica, St. Vincent and the Grenadines and, to a smaller extent, Grenada, are the other governments with stake in the carrier.

“If you expect the three or four shareholder governments, alone, to carry the burden, then you will end up in trouble each time, because it means that at some point, they are going to make commercial decisions, because there is not a bottomless pit to service it,” Prime Minister Mottley said, when she appeared as a panellist at a CARICOM Secretariat-sponsored town hall meeting on ‘CSME – What’s in it for me?’ at the Errol Barrow Centre for the Creative Imagination, at the University of the West Indies, at Cave Hill.

“What we have done is to place the burden of LIAT only on the shareholders, without recognizing that routes cannot be sustainable, unless they are either financially profitable or economically desirable,” she pointed out.

Mottley therefore, reiterated the need for a minimum revenue guarantee (MRG) policy for the Antigua-based carrier.

Under the MRG, regional governments would guarantee the airline a set amount of cash, if the routes to their countries do not make enough of a profit.

“If it is economically desirable, then we need to be able have a minimum revenue guarantee, such that once the load factor of particular routes falls below whatever the agreed average is, governments who want to sustain those routes say, ‘I will pay the difference between the two’, as we are currently doing with American Airlines and with Virgin Airways in many Caribbean countries,” the Barbadian leader said.

Earlier this year, LIAT said it was in talks with various regional governments to try to implement such a policy, that would spread the airline’s financial burden among all the destinations benefitting from its services.

Mottley suggested that LIAT did not have to be doomed, however, if the right approach was taken.

“I believe we can solve the problem, but it is going to require us coming together and agreeing. And, in fairness, we tried to, but all of the stakeholders were not necessarily on the same page, earlier this year. I trust and pray that we can find the common ground for all of the stakeholders because, while LIAT 1974 Limited may not be a viable proposition, reasonable, affordable, reliable air travel is the prerequisite for the growth of this region,” she posited.

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