IT WAS INEVITABLE that the shareholder governments of LIAT would have been forced to take some decisive action to salvage the airline.
So the announcement in Barbados last Friday that 180 employees would be cut was not surprising.
At a time when almost every LIAT shareholder government is broke or struggling in severe economic circumstances, it was surprising that the main backers – Barbados, Antigua and Barbuda, St Vincent and the Grenadines and Dominica – took so long to take the tough decisions required.
Caribbean governments have for too long propped up LIAT by injecting cash and then imposing stifling fees and taxes which impact on the carrier’s cost of doing business. These impositions also serve to discourage passengers.
LIAT must operate according to market constraints, with the major aim being that of meeting the demands of Caribbean people who are travelling in greater numbers. Admittedly, air fares in the Caribbean, and specifically those of LIAT, are not at bargain prices except for the occasional special deal. In fact, for many, they remain prohibitively expensive.
The airline industry is one sector where financial haemorrhaging can easily suck up untold amounts of cash. The examples across the Caribbean have been nothing less than burdensome, whether it be Bahamasair, Air Jamaica, Caribbean Airlines or LIAT.
The truth is, however, that LIAT cannot be allowed to fail since it would undermine the economies of too many islands within this subregion. Those who would suggest that a private sector alternative would soar in the skies need to be mindful of the track record of those who have ventured this route previously.
It is clear that a subsidy of some sort is required to help any airline planning to fly these routes.
What is clear is that LIAT must not be operated as if it were a government department. It is therefore necessary that its board of directors observe modern corporate governance rules, especially those that require a segregation of the strategic roles from those of the operational executives.
LIAT must work at becoming operationally and financially stable.
This means re-examining its business model and looking at successful low-cost airline operators to see whether their systems can be replicated in this region, as well as what partnerships and alliances can be established with other airlines within the non-English-speaking Caribbean.
The future viability of LIAT would also mean that it can begin to provide a return for its investors.
