May 17, 2013

Resolution must be found between LIAT, CAL – PM Gonsalves

The fuel subsidy granted to Caribbean Airlines (CAL) by the government of Trinidad and Tobago violates the obligation of that country under the multi-lateral agreement concerning the operation of air services with CARICOM and the revised Treaty of Chaguaramas.{{more}}

This is according to the legal opinion sought by the heads of government of LIAT shareholding territories, in relation to the provision of a fuel subsidy to CAL.

“There are several breaches for which we can seek different courses of action,” Prime Minister Dr Ralph Gonsalves said at a press conference earlier this week.

Among the options are to go to arbitration under the air services agreement for breach of the fair competition requirement of that agreement, or lay a claim at the Caribbean Court of Justice (CCJ).

“Our complaint can be lodged in the CARICOM complaints commission, which will investigate and sanction CAL for what we consider to be anti-competitive business conduct,” the Prime Minister said.

He reiterated the statement made earlier that he was not seeking a confrontation with Trinidadian Prime Minister Kamla Persad-Bissessar, but said that they were looking to have a good discussion.

Gonsalves said that he had been hoping that Trinidadian leader would have attended the LIAT shareholders meeting last Friday, May 10, in Barbados. Gonsalves said Persad-Bissessar had expressed an interest in attending, but was unable to make it because of other pressing matters.

He said that he was hoping to travel to Trinidad later this month to discuss a set of issues with that country’s leader, ahead of the ministerial meeting on air travel, scheduled to be held here on May 29.

“There are several issues that we would like to air with the prime minister of Trinidad and Tobago,” Gonsalves explained.

He said it was agreed by the shareholders that a summary of the legal opinion would be given to the Trinidadian government.

The Vincentian Prime Minister explained, for example, that during the period 2008 to 2012, LIAT’s fuel bill amounted to US$106 million, whereas that of CAL amounted to US$44 million.

Also, the average cost of a barrel of fuel during the same period for LIAT was US$127; that of CAL averaged US$53.

It was also noted that CAL operated on routes which compete with LIAT and according to management officials, along with the fuel subsidy issue, it was estimated that CAL drew in 78,000 passengers from LIAT, which amounted to a loss of US$10.2 million.

“This has gone on for too long and we have to have a resolution; we are looking for an amicable solution in this matter,” Gonsalves said. (DD)