LIAT requests minimum revenue guarantees from  stakeholders by today
Prime Minister Dr Ralph Gonsalves
March 15, 2019

LIAT requests minimum revenue guarantees from stakeholders by today

Today is the deadline given to 11 regional territories to respond to a request from regional airline LIAT for a minimum revenue guarantee.

Earlier this month, the regional airline also asked eight countries to contribute to a total of US$5.4 million to an emergency fund, with the aim of keeping its planes in the sky.

And a meeting was held on Monday afternoon in Barbados among shareholder governments, airline management and trade unions that represent LIAT workers to discuss the way forward.

The request for a minimum revenue guarantee (MRG) from countries served by LIAT is part of an amended restructuring plan which was endorsed by shareholder governments, following a meeting in St Vincent on March 9.

Gonsalves, who is also the chairman of the shareholder governments said that LIAT’s original restructuring plan is in tatters and no government outside the four shareholders (Barbados, Antigua and Barbuda, Dominica and St Vincent and the Grenadines) responded positively with any offer of funding to advance the original proposed plan.

“This amended restructuring option calls for a burden sharing approach including all stakeholders, labour, lessors of seven of the aircrafts, suppliers and financiers. It involves too the introduction of a minimum revenue guarantee (MRG) model from all countries served by LIAT, to be made effective from 2019. If there are unfavourable responses from the various territories served by LIAT, and from the unions in respect of certain proposals, the shareholders may consider further options, including reducing the number of aircraft or even starting a new company,” Prime Minister Dr Ralph Gonsalves said in Parliament on Monday.

He added that LIAT was prepared to expand its code sharing with other airlines on particular routes currently served by the regional airline.
And if a country wants a particular flight that is not financially viable for LIAT, then that country will pay a guarantee for its operation, like they do for international carriers.

“Caribbean Airline, the national airline of Trinidad and Tobago is scheduled to meet with LIAT regarding functional cooperation between both airlines. It is to be noted that St Vincent and the Grenadines has 52 departures per week. Several of the flights into and out of St Vincent and the Grenadines are underperforming, as is the case in every other country,” he said.

Gonsalves said that letters have been sent to 11 territories regarding the MRG model and the deadline to respond is today, March 15.

He added that the management of the regional carrier predicts that a draft MRG from 12 countries – Antigua, Barbados, Dominica, Grenada, Guadeloupe, Martinique, St Kitts, St Lucia, St Maarten, St Vincent, Tortola and Trinidad – will yield US$16 million annually.

Gonsalves also said on Monday that the four main shareholders; Barbados, Antigua and Barbuda, Dominica and St Vincent and the Grenadines, as well as Grenada have committed to contributing to the emergency fund to deal with the immediate challenges faced by the airline.

But the governments are seeking a revision of the figures.

“LIAT’s request for emergency funding of US$5.4 million which the shareholders, I’ve indicated have asked to be refined, is based on the percentage of flight departures per week,” he explained.

The percentage, Gonsalves said is reflective of eight countries that the airline travels to. And the five main countries were collectively being asked to contribute US$4.1 million, which is more than 75 per cent of the emergency funding.

He said Antigua had 69 flight departures per week, which is more than 17 per cent of the departures across the eight countries. They are being asked to contribute US$960,310.

Barbados has the most departures per week; 116, and is being asked to contribute US$1.614 million while Grenada has 35 departures per week and is being asked to contribute US$487,113.

The prime minister said that in St Vincent and the Grenadines, there are 52 departures per week, which accounts for 13.4 per cent of the flights among the eight countries. And LIAT management is asking this country to contribute US$723,711.

And Dominica, who has 25 departures per week is being asked to contribute US$347,938.

Gonsalves added that no other government of the eight potential contributors have committed to contributing as yet.

These other countries are Guyana, St Kitts and Nevis and St Lucia.

“The other three targeted countries immediately are Guyana, with 21 departures a week, 5.4 per cent of the total. The asking is US$292,268. St Kitts; 28 departures per week, 7.2 per cent of the total; they have been asked to provide US$389,691. St Lucia; 42 departures per week 10.8 per cent of total of these 8 countries, they’re being asked to provide US$584,536,” he said.

Gonsalves said that other countries, including Trinidad and Tobago were not included in the request because they have opposed contributing any emergency funding.

“There are some people who are in love with problems…I happen to be in love with solutions. Air transport in the region is in a state of flux and change. We must not be dinosaur like and reject adaptations …and inertia in the face of challenges is a menace to progress,” Gonsalves said.