LIAT needs $ help again

TT is the latest Caricom country to sign on to the Multi-Lateral Air Services Agreement (MASA) but, the Prime Minister said Thursday, don’t expect cheaper air fare for a while.

“Cheaper is not what it’s going to be. The problem is cheap airfare is not likely to be in the Caribbean for quite some time,” Rowley said at a media briefing at the Piarco International Airport on his return from a Caricom Inter-sessional Heads of Government meeting in St Kitts and Nevis Thursday night.

MASA allows for a single airspace in the Caribbean, reducing the bureaucracy for airplanes flying across the borders of Caricom. It is part of the regional body’s thrust for a Caricom Single Market and Economy (CSME), and one of its aims is to reduce the cost of imports and exports by reducing the hassle of clearing airspace.

Now that nine countries have signed on, it can be provisionally implemented, according to a Caricom communiqué issued after the meeting. Heads also agreed that member states should review domestic taxes and other charges related to air transportation with the view to eliminate taxes that might have a negative impact on the demand for and provision of air travel.

From a TT perspective, Dr Rowley said, state carrier Caribbean Airlines Ltd (CAL) can now plan its business unfettered.

Rowley said Caricom was hoping to attract some kind of private sector funding for the air travel sector, and until the region reached that stage where there were economies of scale and sufficient demand to sustain the sector, intra-regional travel would remain, or even get more, expensive. CAL, for example, is a regional airline, he said, but it does not see the opportunity to have cheaper fares as its main revenue earning effort. “It’s a fact that travel in the region is expensive and being borne largely by taxpayers,” Rowley said.

Regional airline, LIAT, could be at risk of collapse because it is unable to create a sustainable revenue stream from passenger load only.

During the meeting, Rowley said, heads were informed that LIAT, which is integral for connections, especially along the Eastern Caribbean, needs a US$5 million cash injection within the fortnight if it is to remain in the air. “If LIAT ceases to fly I need not tell you the economic and other impacts that will have on region.”

TT, which used to have a significant shareholding in LIAT, now has a “miniscule” interest, he said, and as such, is not required to intervene, but other territories—Barbados, Antigua and Barbuda, St Vincent and the Grenadines and Dominica collectively hold a 94.7 per cent shareholding and will be required to find some way to honour that payment.

Rowley said, “I wouldn’t want to say (they asked) but our market is the region and whenever they get into any difficulty they would look to us. There is an understanding right now, though, that we are not in a position as we used to. Our generosity is not of the type when TT had surplus in the budget we could carry some (the region’s) cost. We are not a shareholder so we escaped the cash call but if LIAT collapses we are going to be affected seriously. LIAT is an engine of the economies of smaller islands.”

He said one of the problems was LIAT flew uneconomic routes that had to be heavily subsidised. If it is to continue, countries along those routes may be required to contribute to pay a fee not unlike what is paid to big airlines that fly into Tobago to guarantee continued service and revenue stream. Rowley said he was not yet sure if TT was one of those uneconomic routes. He also volunteered the services of CAL to assist LIAT in reducing costs to its maintenance operations.

He also noted a sub-committee on maritime transportation headed by St Vincent PM Dr Ralph Gonsalves, as an alternative to help with the region’s air travel woes. Among the options, an inter-island ferry, possibly even a fast ferry. TT shared its experience with running a fast ferry, including the fact that it was heavily subsidised. Caricom would be looking for private sector partners for the project, Rowley added.