Source : 268today.com
By Lesroy Browne
At least two of the four major shareholders of LIAT (Barbados and St. Vincent) have taken a decision to close and liquidate LIAT (1974) Ltd. Immediately and the Chair of the shareholder governments, Prime Minister Ralph Gonsalves has indicated that he has been in talks with a number of airlines and named six airlines including Caribbean Airlines, One Caribbean, SVG Air, Inter Caribbean Airways, Air Antilles and Silver Airways to fill the void that will be left by the closure of LIAT.
Although it is possible for the combined efforts of the six carriers named to offer services that will ensure air services that will ensure air services exist to / from all of the points currently served by LIAT, Dr. Thompson Fontaine, who is a former International Monetary Fund (IMF) economist has advised that “the notion that LIAT can successfully be over by six airlines is “problematic” and he has also suggested that whoever takes over LIAT may have to eventually increase the cost of travel.
The cost of travel is indeed likely to increase between some territories as in the absence of an interline or bilateral agreement between the carriers, travelling on two separate carriers to get to an intended destination will necessitate the purchase of two separate tickets and that will normally result in a higher overall fare. There is also the possibility of missed connections for which no carrier would be liable and of course there will be the inconvenience of having to clear checked baggage and having it re-checked every time there is a change of carrier at an intermediate point.
LIAT undoubtedly needs ‘fixing’ and the idea of a reorganization at this time may be viewed with a high level of skepticism, since LIAT needed fixing for years; however, just like a car, which has to be in a stationary / parked position to effect an engine change or a makeover so too LIAT needed to be parked or ‘paused’ to effect the requisite reorganization. COVID-19 has provided the ideal conditions for a LIAT reorganization. No airline has been immune to the effects of the pandemic and the entire airline industry has been affected financially.
An ‘abrupt’ closure of LIAT when some of the carriers named by Prime Minister Gonsalves to fill the void left by a LIAT liquidation are also in financial difficulties may be a case where LIAT could be pulling the rug from under its feet to give other carriers the rug to stand on. The carriers in the region are all ‘circling’ the LIAT network like vultures; but the efforts to fill the void by some carriers that never had a published schedule and have plans to operate to new markets might expose them to a level of competition not experienced before and might exacerbate their fragile financial situation.
Their efforts may prove to be wanting.
COVID-19 has presented an excellent opportunity for a new approach to regional air transportation. The pause in operation should be used to create closer cooperation in a ‘shrinking’ Caribbean market. Synergies are required to reduce the cost of providing air transportation in the region and a stronger cooperation between Caribbean Airlines and a reorganized LIAT be another option for consideration.
An immediate closure of LIAT may in a very short time result in regional air transport being worst off.