LIAT‘s commercial passenger services have been grounded since March when countries closed their borders to stop the spread of COVID-19. The carrier said its services will remain suspended until June 30th, due to the continued impact of the pandemic.
This week, LIAT’s second largest shareholder, the Government of Antigua and Barbuda reiterated that the airline’s financial situation is dire and will need help to continue operation post COVID-19.
In an open letter David Evans a former LIAT CEO, shared this desired for Caribbean leaders to bail out the airline and its need for a bailout package, He said:
“I hesitate to join the ranks of LIAT’s many armchair critics whose countless words of wisdom over the years appear to have had little discernible impact on the fortunes of the struggling regional airline.
However, I have come to praise Caesar not to bury him. I cannot help but be enormously impressed by LIAT’s role in providing life-line services during these desperately difficult days.
The repatriation flight from Cuba and other critical cargo flights are an example of LIAT at its finest and underscore its huge value to the region. I applaud all the LIAT staff involved in those missions.
The post-COVID world we knew just a few months ago, and with the airline industry facing the greatest crisis in its 100-year history, it too is facing fundamental change. And will most likely emerge smaller, leaner, and less complex across virtually every dimension.
I wonder therefore whether this may be a once in a lifetime opportunity to address the structural weaknesses of the Caribbean aviation industry.
The fact remains that it is inordinately difficult for LIAT and other regional airlines in the Caribbean to make money on a commercial basis. Most are hugely under-capitalized, with small source markets, sub-optimal fleet and networks, short flight times, which create high maintenance costs and inefficient crew utilization, high government taxes relative to the total fare, and not least of all, the important so-called critical dimension of many routes.
These factors all combine to create a perfect storm and deliver none of the economies of scale enjoyed by airlines in major markets.
Many people over the years and indeed in recent weeks have put forward the concept of pooling aviation resources across the region, but this concept has always foundered on the rocks of not so enlightened self-interest, whether commercial or political.
I hasten to ass that this state of affairs is by no means unique to our region. Island communities across the world wrestle with the challenges of community versus self.
I do not believe that the creation of some centralized supra-regional carrier is the answer. There are several airline grouping formats that all deliver significant benefits to their constituent airlines, ranging from the marketing, alliances (Oneworld, Star), through equity positions (Qatar Airlines, Etihad) to the holding company structure of the International Airlines Group (IAG).
Whatever format is appropriate, and I personally lean towards simplicity in this regard, it ought to permit the constituent airlines to enjoy the benefits of joint purchasing power across areas such as fleet acquisition, fuel, maintenance, a common loyalty programme, and back office systems.
But importantly, the constituent airlines maintain their own brands, which have great value in their home markets and maintain employment opportunities. In a suitably immunized antitrust environment, and with a critically important common sales and reservations platform that allows interlining within and outside the region, the ability to coordinate schedules and right-size aircraft to individual markets would produce a far more coherent and appropriate network of services than the disjointed and uneconomic one we see today.
None of this easy to achieve and would require enormous political will, together with some innovative strategic and financial thinking.
CARICOM stands out as the obvious body under whose auspices such a project might be delivered and indeed CARICOM’s Regional Transportation Commission has endeavoured to address this very issue.
CARICOM’s member and associate member states include the majority of airlines operating within the region, and together with the financial and academic associate intuitions of CARICOM, there must be a commonality of interests to support an endeavour, which fully aligns itself with the stated objectives of the Community.
If ever there was an opportunity to pull together for the benefit of the people of our region, it is now. Carpe diem!”