Grenada to make financial contribution to LIAT

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The Grenada government Tuesday said it would be making a “cash contribution” to the cash-strapped Antigua-based regional airline, LIAT, less than a week after the regional shareholder governments urged Caribbean countries to contribute to the future of the island-hopping airline.

“We will make a cash contribution to LIAT this month and going forward we will pay LIAT additional funds based on load factor. Government’s decision is based on what was presented at the recently inter-sessional meeting,” said CARICOM Affairs Minister Oliver Joseph.

“LIAT is in a dire financial situation and that one-off contribution is to ensure that it continues flying so that cash contribution for March has nothing to do with the load factor,” he added.

The major shareholders of the airline are Barbados, Antigua and Barbuda, St. Vincent and the Grenadines and Dominica and Antigua and Barbuda Prime Minister Gaston Browne said that there are plans to encourage the governments of St. Kitts-Nevis, St. Lucia, Grenada and Guyana to become shareholders.

“There is a need for us to have a model of shared burden, recognising that from time to time LIAT would need some level of support. We have recognised that LIAT is making a significant contribution, not only in terms of the connectivity of people within the region, but even the airport taxes, the landing charges and so on that are earned by the various governments,” Browne said.

“Even if LIAT was to collapse, LIAT would have to be replaced. We must be in a position to move people within the region. So If LIAT collapses you will have to re-invent it,” he said.

LIAT Crew and Staff POS

Joseph did not say how much money the Keith Mitchell government would pump into the airline, adding that it will be based on a report from the airline’s board of directors.

“When we get the report from the board, we will decide how much we will contribute to that,” Joseph said, noting that whatever Grenada will contribute it will ensure survival in the short term.

Oliver said the government has requested the regional airline submit a formula to regarding its restructuring plans because that formula will be used to determine how much the contribution will be under the load factor arrangement.

Last week, LIAT’s chief executive officer, Mrs. Julie Reifer-Jones, acknowledged that while the company is facing severe financial problems would continue flying through the region with support from its principal shareholders.

LIAT currently operates 491 flights weekly across its network of 15 destinations.

Browne, said that the issue facing LIAT had been discussed at the Caribbean Community (CARICOM) inter-sessional summit held in St. Kitts last week.

“The Caribbean Development Bank did a study some time last year in which they concluded that the most expensive option to pursue is to allow LIAT to collapse because we would have to form a new entity. That is just more expensive than having a restructuring of LIAT,” Browne said.

The Trinidad and Tobago government last week said while it would seek to help the cash-strapped regional airline by possibly entering into an agreement with the state-owned Caribbean Airlines (CAL) regarding the maintenance of its fleet, Port of Spain would not be injecting cash into the airline.

Prime Minister Dr. Keith Rowley said the regional leaders were informed that LIAT is in serious financial difficulties, “meaning within a matter of a fortnight an injection of a minimum of five million US dollars is needed in order to keep flying.

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4 COMMENTS

  1. We must find away to reward citizens from Islands that financially support LIAT and penalize those that don’t. After all it is their tax dollars that keep LIAT in the air. Some kind of a special Discount when purchasing tickets. They could then settle all the discounts given with the respective Islands offset it with the advance the government put into the airline. That way the discount doesn’t hit the bottom line.

  2. I am happy that the Government of Grenada have come to the realization that to keep liat in the air is beneficial to the entire OECS and not just the shareholders country. I do hope the orther islands like SKB and St.Lucua step up .. on the other hand we cannot continue with the current model . That model of taxing an export and heavily to that must come to an end . If the issue is capacity then we need to put measures in place that can boost intra regional travel . The governments can start with removing all taxes on the ticket . When tickets are going for 350 USD from newyork to antigua and at the same time liat tickets going 400 USD antigua to Dominica. That is just insane . No justification for this especially where almost 50 percent of that 400 USD are taxes . This model just can’t continue. We have been going on and on doing same shit and every year we have to borrow to meet the loses of liat. So if we making 10 million on taxes , liat loses accruing to us is approximately 1.5 times that 10 mil. So what’s really the logic . While I understand that since the capacity is fixed., then demand for airline tickets is highly inelastic, and one would expect theoretically that increase ticket prices would lead to increase revenue. That simply has not been the case , in this case i do believe that we need to look beyond the seats as a product and instead to view the country as the product . So when one buy a ticket to antigua we need to consider the elasticity of demand for antigua ( vacationing in antigua) which given the number of available substitutes ( other vacation places of choice ) makes demand highly elastic. Hence a decrease in the price of vacation would see increase in revenue . The price of vacation starts with the price of the airline ticket . Most visitor before deciding on their vacation check first the cost of airfare. A lower airfare might just be the start of improving the competitiveness of our tourism product . This will surely encourage more visitors. Also there is a huge multiplier effect in the economy as more person visits , e.g. increase in vehicle rentals, hotels , restaurant. Supermarket , EVERY time that visitor spend government collect taxes so it not an entire lost to the government to remove the taxes on ticket. Also to boost intra regional travel its imperstive to increase the growth of our economies , so that the income of citizens eould increase . Moreover there are key sectors such as sports tourism that need to be revisited. Let’s say for example we had a Caricom semie professional football league, basketball league , volleyball league , added to the cricket . We could even invite the French island of martinis and Guadeloupe to be part of these leagues. Note only would we provide employment , but this would increase regional travel especially where fans may tend to travel with teams . This is the type of development we need in the region and only then would we see a viable liat . Strangke though a quick climpse of the tourism reveals a negative correlation between intra regional visitors and ticket prices . AS TICKET PRICES have soared over the years the numbers have been falling and the governments seems not able to realize that if we can increase regional travel this could play a significant role during summer where most hotel either closes down completely or reduce their operations.

    • The ticket price is fine. They need to cut back on the travel taxes. You buy a ticket for 150 USD. 50 ticket price. 100 USD taxes.

      I honestly want liat to shut down let’s see how these wicked govt gonna make it. Out of the dust something must rise .

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