ONLY HUMAN: REDjet subsidy a tough call
SHOULD REDjet, a privately owned business, be given a handout by Government?
This is the question the Freundel Stuart administration has to grapple with as the parties sit to negotiate the future of the airline and its request for a subsidy to keep flying.
Another question Government has to deal with is: If REDjet is given a subsidy now, would this open the floodgates for it to return if the business does not pick up?
A third question is: Would such a move signal to other private sector entities that if they run into difficulties they, too, can come cap in hand, begging for a piece of the public purse?
How Government handles the REDjet issue will send a strong signal to other entrepreneurs coming to do business here on what they can reasonably expect.
We say this because the impression given by REDjet, and to date not officially refuted, is that assurances were given which were not met or took too long to happen. And this is what cost the airline dearly and has contributed to its being in the position in which it now finds itself.
This certainly was implied in REDjet’s investor and director Ralph “Bizzy” Williams’ angry outburst last November 23 during a Chamber of Commerce luncheon at Hilton?Barbados.
He asked the guest speaker, former Prime Minister and current Opposition Leader Owen Arthur: “Do you think that LIAT should be protected at the expense of entrepreneurial activity such as REDjet?
“Do you think that efforts should be made to shut down and to sabotage an entrepreneurial act . . . something that was devised to reduce the costs of travel within the Caribbean?”
Williams stressed then that his issue was with the excessive delays from the Barbados Government, which was yet to give permission to the carrier to operate between here and St Maarten, Antigua, St Lucia, Grenada and St Kitts.
“It is not the problem with Jamaica and Trinidad I am referring to,” he said, alluding to the difficulty with getting a licence to fly to these two countries. “It is the problem with Barbados. Barbados has sabotaged (REDjet),” said the outspoken Williams.
Days later, Williams clarified his position, stating that he was not criticizing the political directorate per se, but rather the technocrats.
“I believe they decided that the politicians were wrong in designating REDjet as the national airline of Barbados, so the politicians had to wait on them to proceed; they are the ones who sabotaged us,” he stressed.
Giving an example of what he meant, he said the documentation from Trinidad was held up because local officials failed to take REDjet into their confidence and move speedily. He said had it not been for the intervention of Prime Minister Stuart in St Kitts at the CARICOM Heads of Government conference to get to the bottom of the issue, they would still be waiting on a decision on the matter.
In that interview, too, Williams said the $8 million invested for operating expenses in the airline’s initial months of business had to be used otherwise while waiting for permission to fly. And now that it had finally got the routes, the funds were exhausted.
Williams then declared that he and the Irish owners, Ian and Robbie Burns, were unwilling to put any more money into the venture as they were fed up with the way their investment had been treated by Government.
When this background to REDjet’s current difficulties is taken into consideration, the suspension of the flights seems clearly to have been in the works.
If, for the sake of argument, we accept that REDjet was the victim of broken assurances, is their request for a subsidy reasonable, and would it be in Barbados’ best interests? To answer this we have to look at their role vis-à-vis LIAT’s.
Reliably transporting people across the region for the last 55 years, LIAT functions like a quasi-state corporation operating for the common good. It does not turn a profit, but its role can be considered developmental.
By offering low fares, REDjet has been able to increase regional traffic to Barbados. This hike in arrivals has stimulated business and trade and boosted accommodation levels, especially in smaller establishments.
Another issue that must weigh heavily on Government negotiators is whether REDjet’s business model is feasible. Jean Holder, chairman of LIAT, is on record as saying that if REDjet can maintain its low fares, then pigs can fly. This suspension seems to prove him right.
A senior civil servant who worked in aviation for several years told me too that REDjet can never be a success because (1) the region does not have the population density to support such an initiative,
(2) the cost of fuel is high and
(3) the planes they are using are inefficient. This observation has also been made by others.
Our cash-strapped Government therefore finds itself weighing these hefty matters, mindful that if it does not assist the airline 90 jobs will be lost.
• Sanka Price is the editor of the WEEKEND NATION and SATURDAY SUN. Email him at [email protected]