Is LIAT 2020 set for takeoff?

Recent announcements by Prime Minister of Antigua and Barbuda Gaston Browne suggest that LIAT 2020 is set for its takeoff roll.

Speaking on the Browne and Browne show on February 17, PM Browne said regional shareholder governments of the now defunct LIAT (1975) Ltd and the Caribbean Development Bank have agreed to the sale of three aircraft to the newly formed LIAT 2020, paving the way for the launch of the new inter-regional airline.

Browne said his government will pay US$12.1 million to acquire the aircraft and spend another US$8 million to get them fully operational.

He said the new airline is being formed in partnership with Air Peace, a private Nigerian airline founded in 2013. Air Peace will invest US$60 million into LIAT 2020 and, as the largest shareholder, will operate the new airline.

Late last year, Browne said his administration was prepared to invest US$15-$20 million in the new venture. The new airline could launch its operations within 60-90 days.

Browne said between the government and Air Peace, approximately EC$200 million will be spent to improve air connectivity and strengthen the regional integration movement.

Browne's optimism about seeing a takeoff of LIAT 2020 within 60-90 days is overshadowed by compliance with the regulatory requirements for the grant of an air operators certificate (AOC) by the Eastern Caribbean Civil Aviation Authority (ECCAA).

The Antigua-based ECCAA provides aviation safety oversight for OECS members: Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis, St Lucia and St Vincent and the Grenadines.

On May 8, 2020, the FAA announced that OECS had been assigned an FAA International Aviation Safety Assessment (IASA) Category Two rating, because it does not comply with International Civil Aviation Organisation (ICAO) safety standards under the FAA’s IASA programme.

A Category Two IASA rating means OECS laws and regulations lack the necessary requirements to oversee air carriers in accordance with minimum international standards, or that civil aviation authorities are deficient in one or more areas, including technical expertise, trained personnel, record-keeping, inspection procedures or resolution of safety concerns.

Since 2020, ECCA has worked assiduously to resolve all the FAA audit findings and implement the 14 key FAA recommendations for the OECS to be upgraded to an IASA Category One rating.

ECCA is fully aware that any follow-up audits by the FAA will focus on its certification of new air operators.

For this reason, during consideration of LIAT 2020’s application for an AOC per the ICAO’s five-phase certification programme, ECCA will scrupulously ensure all its t’s are crossed and all i’s are dotted.

Under Antigua and Barbuda’s Civil Aviation (Flight Safety) Regulations, Schedule 9116, ECCA has to be satisfied that an applicant for an AOC is a citizen of Antigua and Barbuda.

Last year, it was announced that Allen Onyema, the founder of Air Peace, had obtained Antigua and Barbuda citizenship under the country’s Citizenship by Investment Programme.

By scrutinising Air Peace’s official shareholding, ECCA will be able to determine the extent to which the majority ownership of LIAT 2020 is vested in citizens of Antigua and Barbuda.

– Phase one: Pre-application, LIAT 2020 is required to provide ECCA with the names of people nominated to hold the positions of accountable manager, director of operations, chief pilot, director of safety, director of maintenance and quality manager.

The accountable manager will have to demonstrate that LIAT 2020 has the financial resources to meet the ECCA safety standards for flight operations and maintenance.

Individuals nominated to the required management positions are expected to have a thorough knowledge of LIAT 2020 company manuals, operating provisions, civil aviation regulations and the planned operations relevant to each position.

– Phase two: Formal application: all manuals about the planned operations must be submitted, together with the resumes of management personnel nominated in phase one.

– Phase three: Document evaluation: the resumes of people nominated by LIAT 2020 for management positions will be scrutinised to ensure that they meet the minimum qualifications and experience requirements prescribed by ECCA for commercial air transportation using the aircraft types listed in the pre-application form.

The procedures detailed in the manuals for compliance with the applicable civil aviation regulations will also be scrutinised.

– Phase four: Demonstration and inspection: LIAT 2020 will be required to demonstrate its ability to comply with applicable regulations and safe operating practices.

These demonstrations include actual performance of activities and operations, with the use of an airworthy aircraft under the observation of ECCAA inspectors. This includes, but is not limited to, on-site inspections and evaluations of aircraft maintenance procedures, equipment and support facilities.

– Phase five: Certification: on successful completion of phases one-four, LIAT 2020 will be issued with an AOC and operations specifications containing the authorisations, limitations and provisions specific to its operation.

A burning issue which affects LIAT 2020’s launch is whether Nigeria-based Air Peace has the financial liquidity to invest US$60 million into the airline.

According to Business Insider Africa, the International Monetary Fund (IMF) has cautioned that Nigeria's exchange rate might experience an additional 35 per cent depreciation this year. In its February 2024 Post-financing Assessment and Staff Report, the IMF said Nigeria's exchange rate might experience an additional 35 per cent depreciation this year that could lead to a massive surge in inflation, reaching a peak of 44 per cent. Owing to the absence of local production and the recent liberalisation of commodity imports, the exchange rate is expected to undergo further depreciation.

The IMF stressed that the current level of monetary-policy tightening is not adequate to reduce inflation to below 20 per cent.

Also, with a one-aircraft startup, LIAT 2020 will be very challenged to maintain schedule integrity and effectively compete with Caribbean Airlines, which now has first-mover advantage in the eastern Caribbean, with a far more expansive aircraft fleet.

Antigua and Barbuda must get it right this time with LIAT 2020.

If not, there could be an aborted take-off, similar to that of Antigua Airways.