Wednesday, September 18, 2019

Barbados: LIAT cost cuts inevitable

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Barbados Today:-As regional airline LIAT prepares to embark on its latest cost cutting exercise in another week, Minister of Tourism Richard Sealy has suggested that there can be no running away from the planned financial restructuring.

In fact, while comparing the operations of the Antigua-based regional carrier to those of the state-run Transport Board, Sealy told industry officials and members of the media here on Monday that the promised cuts were inevitable.

At the same, he suggested that it was going to be hard for LIAT to ever turn a profit, given its social responsibility to provide air transportation to the region.

“They are asked to service a lot of routes that are just not profitable. It is really the aviation version of the Transport Board in many respects and it is not an easy challenge when, as can happen, one of your aircraft is down for routine maintenance or some unanticipated reason,” he said, while highlighting problems with the airline’s fleet.

The minister of tourism also said he had “a lot of sympathy” for LIAT’s staff and management, but he emphasized that cutting, though difficult, was necessary for the carrier, in which Barbados is the major shareholder, to move forward.

“I think that what the team is attempting to do, by looking at routes that make more sense, by trying not to abandon the social element but recognizing that we still need to be as viable as we possibly can be.

“It is not going to be a profitable airline . . . and if you talk to anyone the most costly part of a flight is the landing and the take off. That is all LIAT airplanes do all day long – land and take off. So it is a difficult task, but a necessary one, and we will continue to look to see what routes we have to cut out and what areas we need to enhance in order to see that the airline will continue to be viable,” he said.

Earlier this month, the airline announced the first two routes that it will cut “as part of its efforts to achieve greater profitability and improved efficiency”.

Back then, LIAT said it would stop servicing the United States Virgin Island from March 1, when it ends flights to St Croix. The regional carrier also plans to terminate its St Thomas service on June 14.

It also intends to suspend flights between Guadeloupe and Dominica, but will introduce a return service between Antigua and the French-speaking island in the near future.

In the meantime, Sealy said his Government was eager to cut its overall subsidy to airlines which fly into Barbados.

He believes it will still be possible for the island to attract major air carriers even if it drastically reduces that amount, which could total as much as $30 million a year.

“We support our airlines to come here. We always have but we would like very much at a minimum,” he told the gathering at a media conference at the Lloyd Erskine Sandiford Centre, adding that Government’s intention was always one of “weaning itself off of the subsidy”.

“You eventually want to get to the point where you do co-op marketing initiative and that is what we hope for. Many of our mature relationships do not have subsidies; what we do is co-marketing and we work together,” he said.

“You have to work smart and not just pull out the cheque book for the first airline that come and say, ‘I want to fly to Barbados’.

“The other thing of course is to be so compelling in your offering that the demand for the destination can drive the airlift [and] that is precisely where we are trying to get and I am seeing glimmers of it,” he added.

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