Regional taxes spiking airfares – Gonsalves

Prime Minister Dr Ralph Gonsalves says that fluctuating regional taxes on airline tickets is one of the factors contributing to high airfares.{{more}}

Dr Gonsalves, who is the Caribbean Community’s (CARICOM) lead prime minister on air and maritime transportation said the taxes paid on airlines tickets varied widely from country to country and was one of the factors to be considered in the regional debate on the high cost of air travel in the aftermath of the LIAT/Caribbean Star commercial alliance.

He noted that between 40 and 50 per cent of the ticket price for travel from Barbados to St Vincent and the Grenadines was taxes and add-ons paid to the Barbados government, while the reverse trip only saw about 20 per cent taxes being collected here in St Vincent.

Additionally, he said, user fees such as departure tax, had also increased in some territories and this factor was calculated in airline tickets in some countries.

However, Dr Gonsalves reiterated that the pricing system practised by LIAT and Caribbean Star Airlines before their move towards a merger was cut-throat marketing which was not profitable or sustainable.

He said that LIAT lost EC $50 million (US $18 million) while Caribbean Star lost EC $80 million (US $29 million) last year as they tried to undercut each other for a larger share of the market, but the fares now reflected the true cost of air travel and what was necessary for the airline to break even.

Meanwhile, the Prime Minister said regional airlines were to advance talks on functional cooperation even while ruling out the immediate feasibility of forming a single Caribbean carrier.

He said the carriers – Air Jamaica, Caribbean Airways and LIAT – held very fruitful talks towards increased cooperation during the 22nd Council of Trade and Economic Development (COTED) meeting which concluded Monday.

“It was felt that we should address the issue of functional cooperation on those items which are necessary and desirable among the various airlines, including several specific matters,” Gonsalves said.

He listed some of the possible areas of cooperation between the carriers as insurance, questions of routing, purchasing, inputs and machinery for the airline business, along with the sharing of counter space. (KJ)