Not flying fair
This has emerged at a time LIAT is reporting about $7.4 million in losses last year.
Prime Minister Freundel Stuart has delegated Minister of International Transport Richard Sealy to journey to the twin-island republic before month-end told talks with that country’s Prime Minister Kamla Persad-Bissessar.
This comes in the wake of a new legal opinion showing the fuel subsidy her government pays CAL is not only “subversive” of “several provisions” of the Revised Treaty of Chaguaramas, several provisions, but also CARICOM’s Common Air Services Agreement.
Additionally, Chairman of the shareholders grouping, St. Vincent and the Grenadines Prime Minister, Dr. Ralph Gonsalves, told the media this afternoon that LIAT’s management had calculated that CAL fuel subsidy advantage had cost LIAT US $10.2 million in revenues and 78,000 passengers over the last five years.
Stuart said “the competitive advantage being enjoyed by CAL as a result of the subsidy it enjoys is now up for discussion with the government of Trinidad and Tobago”.
Gonsalves, who will be leading the LIAT delegation to the upcoming talks with the Trinidad Prime Minister stated: “This is a serious matter… We have the facts on our side and we have the law on our side. We don’t want to fight Trinidad and Tobago, we don’t want to get into any confrontation with them but we have to have a sensible discussion on this matter.
“It is unfair and in our view, on the basis of a legal opinion that we have, it’s subversive of not only the Revised Treaty of Chagauramas, several provisions, but also the Common Air Services Agreement … and we have the evidential data about the loss suffered by LIAT as a consequence of the unfair competition by CAL on a number of routes.
“We agree that we will make available to the government of Trinidad and Tobago a summary of the opinion which we have received, a legal opinion, … and to make available also the facts concerning the extent to which LIAT has been disadvantaged as a consequence of the unfair competition arising from the fuel subsidy.
“Remember CAL pays about US $50 a barrel for their aviation fuel, while we pay in the region of US$120, it’s a big problem. You would appreciate that that being an important cost in the operation such a big discrepancy would create some challenges for us,” he added.
Persad-Bissessar was invited to today’s LIAT meeting here, but could not attend because of pressing matters at home.
As LIAT prepared to received the first of its new fleet by the end of the month, with all of the 12 planes from France expected by next year, Gonsalves also said it was time for the airline to get respect for the “donkey work” is was doing.
“Without LIAT this region can’t function and over the last 20 years some 30 airlines have come and gone… We must always remember really the airline which is doing the donkey work,” he said.
“In our region we are not as appreciative of donkeys as we should. We tend to prefer horses, they look more elegant, when they keep noises they seem somehow to be more attractive. But LIAT does the donkey work and we should appreciate the donkey work,” Gonsalves said.
“Let us start having an appreciation for this airline known as LIAT, which has survived and thrived for 57 years and when the history is properly written and recorded, … when the dust is settled a little bit, generations to come will applaud the efforts of those in government and in the administration of LIAT.”
LIAT CEO, Captain Ian Brunton, said the fleet renewal effort would cost an estimated $200 million, $140 million of which the airline hoped to source from the Caribbean Development Bank on a long term financing basis.
Both he and Gonsalves hoped last year’s financial loss would not be repeated this year and expected that with the 35 per cent reduction in costs expected from the new fleet LIAT would be making profits from next year.
“That loss for 2012 will hopefully be ameliorated in 2013. We were originally look to break even, the year hasn’t started as good as we expected as the market is still very depressed… We are hoping to have a fairly good figure at the end of 2013, if not break even a very small loss,” Brunton said. (SC)