CARICOM dodges
real LIAT issue
By George Alleyne
Caribbean L 12 ife, March 15–21, 2019 BQ
With LIAT facing a cash crisis that
could shut down the airline, Caribbean
governments are in a series of meetings
aimed at saving the lifeblood regional
transport system, but they appear to be
skirting around the main issue — their
taxes that make air travel costly.
Reports are that unless LIAT gets an
immediate injection of $5 million this
island-hopper plane service that connects
these tiny islands will go under,
so Chairman and Prime Minister of
St. Vincent and the Grenadines, Ralph
Gonsalves, has over the past week led
several meetings of prime ministers
whose countries depend on the service
the most, and unions representing
staff.
In spite of its service to most Caribbean
islands on the southern end
of the archipelago from Antigua and
Barbuda — 491 flights across 15 destinations
weekly — only Barbados, Antigua,
Dominica and St. Vincent have
shareholder ownership in this airline
that almost by itself connects people of
the region.
Based on the little revelations in
reports coming out of the meetings,
the thrust appears to be getting governments
of countries benefitting from this
service to fork out some cash towards
the airline, and convincing unions that
staff should take a pay cut, or at least
not demand increases for a while.
Along with the current shareholders,
other major beneficiaries of LIAT Guyana,
Trinidad, Grenada, St. Lucia and
St. Kitts and Nevis are being targeted
for monetary relief. Efforts are also
afoot to convince these non-shareholder
countries to contribute by purchasing
ownership of the vital airline.
Grenada has already promised some
money, Guyana and St. Kitts and Nevis
have been silent.
Trinidad said a flat no, and instead
wants a feeder relationship between
LIAT and its national air carrier, Caribbean
Airlines, in which they complement
each other on air routes services.
But amidst all the hang-wringing
statements from regional leaders,
reports coming out of the talks indicate
that the prime ministers and other
officials are ignoring the proverbial elephant
in the room, the exorbitant taxes
with which their governments burden
LIAT’s airline tickets.
Leaders appear bent on pursuing
low-hanging fruit such as curbing compensation
for airline staff as a cost-cutting
measure.
In 2018, some while before LIAT’s latest
crisis, the Caribbean Development
Bank conducted a study of what this air
service needs to remain viable and concluded
that among crucial changes is
St. Vincent and the Grenadines
Prime Minister, Ralph Gonsalves.
Photo by George Alleyne
for regional governments to surrender
their punitive taxes on the service.
“The existing key shareholders
should convert CDB debt to equity; all
regional governments should convert
air transportation taxes owing by LIAT
to equity; and governments should fund
annual transition costs on a mutually
agreed formula commensurate with the
financial benefits LIAT is delivering
to them today,” the Barbados Nation
newspaper quoted in an excerpt from
that CDB report.
Another newspaper, Barbados
TODAY, reported on the frustration
of CDB President, Warren Smith, that
regional governments are ignoring the
most important recommendations of
the report.
“I must confess that I am disappointed
that those recommendations have
not been taken on-board in the way in
which we had anticipated they would
have,” Smith said.
When the tax structure on LIAT’s
tickets is examined, the CDB president’s
dismay at regional leaders is easily
understood.
For example, a return flight from
Barbados to Guyana at the end of March
2019, for a two-week stay in that South
American CARICOM country costs
$243.85, of which $135.85 goes to taxes
and fees.
The apparent unwillingness of CARICOM
governments to relinquish their
exorbitant taxes on intra-Caribbean
travel brings into question their commitment
to regional integration.