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The ATR Story by LIAT

Submitted by M.R.Thompson Quote from Barbados Nation Newspaper of June 27, 2013… “LIAT, with the partial backing of some Caribbean governments, is enhancing and transforming its fleet, with 12 new aircraft over the next two years that will cost investors US$100 million.” This very simple but not fully explained statement got me in the market for…

Submitted by M.R.Thompson
LIAT TO UPGRADE TO 11 ATRS over two years
LIAT to Upgrade  to 11 ATRs over a two year period

Quote from Barbados Nation Newspaper of June 27, 2013…

“LIAT, with the partial backing of some Caribbean governments, is enhancing and transforming its fleet, with 12 new aircraft over the next two years that will cost investors US$100 million.”

This very simple but not fully explained statement got me in the market for an ATR72, pretty cheap if you can buy 12 aircraft for $100m, that’s only $8.3m per aircraft. I think I’ll take a dozen at that price myself. A new ATR 72 500/600 model sells for $18 to 23m, used 10 year old aircraft still demand some $12m each.

Where did LIAT find such a good deal on these ATR72’s or is there some very creative book keeping promoting this exceptional deal. Creative booking is really a Caribbean political area of expertise. As LIAT is an airline owned by various countries citizens some questions should be asked to explain this seeming unrealistic purchase price.

Personally I’d expect to see the already ridiculously high LIAT fares increase significantly to support this purchase and maintain the bloated LIAT workforce.

Just some REDNECK thoughts.

61 responses to “The ATR Story by LIAT”

  1. Adrian Loveridge Avatar
    Adrian Loveridge

    David,

    The SVG Prime Minister may want to go to all the places he mentioned, BUT then there is the reality.
    The maximum range of the ATR72-600 is 891 nautical miles (1,025 miles) but if full, the maximum average speed would be restricted to 275 knots.

    Assuming you would want to operate from the islands with the largest population and best connecting flight potential (ie: Barbados) then consider the following, showing MILES distance:

    Barbados – Kingston – 1,192 miles
    Barbados – Port-au-Prince – 925
    Barbados – Panama – 1,380
    Barbados – Manaus – 1,115
    Barbados – Belem – 1,258

    Then consider the maximum loaded speed, pilots hours, possible crew overnights and aircraft utilisation.

    The Q400 (Bombardier) is capable of a maximum loaded range of 1,014 miles at an average speed of 360 knots.
    I assume that the SVG PM is fully aware of the type of aircraft ordered and its limitations?

  2. Adrian Loveridge Avatar
    Adrian Loveridge

    FLYING TIMES (non stop IF technically possible) from/to Barbados:

    Kingston – ATR72 – 3.77 hours – Q400 – 2.87 hours
    Port-au-Prince – ATR72 – 2.93 hours – Q400 – 2.23 hours
    Panama – ATR72 – 4.37 hours – Q400 – 3.33 hours
    Manaus – ATR72 – 3.53 hours – Q400 – 2.69 hours
    Belem – ATR72 – 3.98 hours – Q400 – 3.04 hours

  3. David Avatar
    David

    @Adrian

    In fairness to Ralphie have a look at this link. LIAT maybe examining a code sharing arrangement.

    http://www.antiguaobserver.com/liat-commences-expansion-talks/

  4. millertheanunnaki Avatar
    millertheanunnaki

    @ David | June 29, 2013 at 9:28 AM

    The assumption is made that the airline’s excessively high overheads (administration costs) have resulted in the need for excessive subsidies over above what is required to keep the operations functioning at a minimum level of efficiency given the constraints and operational environment of the business.

    This assumption is based on old historical financial and management accounting data about administrative costs and not the other “pure” or strict operational costs like separate and duplicating user charges at each landing site. As was said earlier there are other ‘uncontrollable’ cost elements like fuel and lease payments that should be removed from the analysis as to why LIAT is so ‘cost burdened’.

    We will need to see current financials to see if the situation with the abnormally high administrative costs has gotten worse overtime or has improved vis-à-vis other cost elements.

  5. David Avatar
    David

    @Miller

    You have already opined that in the case of LIAT it performs a public good as well. Given that LIAT has 3 main shareholders (Barbados, Antigua, St. Vincent) BUT serves several islands in the Caribbean who do not contribuite substatially in a financial way; sure you must factor in the equation?

  6. Adrian Loveridge Avatar
    Adrian Loveridge

    David,
    you will notice I stayed away from Caracas because Conviasa operates an all jet fleet. Same could apply with COPA on any code sharing for Panama and if you even mention Caribbean Airlines possibly code sharing on Kingston, then you have to think about their fuel subsidy advantage.
    Who’s left?

  7. millertheanunnaki Avatar
    millertheanunnaki

    @ David | June 29, 2013 at 10:46 AM |

    And that is why the fares to those non-shareholder destinations need to be bumped up to reflect the “true” cost of operating to those destinations.
    It cannot be perceived as a public good in those non-contributing destinations if the non-shareholder citizens/taxpayers are not contributing to the costs of operations, inefficient or other wise.

  8. David Avatar
    David

    Some maybe tickled by the following:

    http://bajan.files.wordpress.com/2013/06/liat.jpg

  9. fragile80 Avatar
    fragile80

    @ David

    The clip is very funny. It reminds me of my recent trip. When we got to SVG from Barbados, someone came to announce that the pilot and crew were m.i.a…We had to disembark and go through security checks again while we waited on the crew to appear. The crew eventually showed up and said that they had to take their maximum rest possible/due from the previous evening.

    Good thing they were well rested and on the ball because no one thought to refuel while we were waiting for the crew, and we had yet another delay…

  10. David Avatar
    David

    @fragile80

    There are many stories which LIAT generate but when the dust is settled it is the only bird in the air.

  11. David Avatar
    David

    Congrats to PM Stuart and other shareholder Caricom heads for putting the matter of LIAT forceably to T&T and Caricom. It is time LIAT started the fightback:

    PM: LIAT a major concern Prime Minister Freundel Stuart. (FP) Sun, July 07, 2013 – 12:08 AM
    PORT OF SPAIN – Barbados is so concerned about the future viability of regional carrier LIAT that it sought legal advice on whether its heavily subsidized competitor Caribbean Airlines (CAL) was following CARICOM rules.
    Speaking to the media at the start of the final day of the 34th regular CARICOM Heads of Government conference at the Hilton Hotel in Port of Spain, Prime Minister Freundel Stuart said with Barbados the largest shareholder in LIAT, its future was of “great concern to him”, especially in light of the fact that CAL was being subsidized by the Trinidad and Tobago government.
    “Now what has happened in recent times is that against the background of the Revised Treaty of Chaguaramas and its provisions, it has emerged that CAL has been buying its fuel at $50 per barrel, while LIAT has had to buy its fuel at upwards a $100 a barrel.
    “In other words, the government of Trinidad and Tobago is subsidizing CAL for the purchase of its fuel and is competing with LIAT on regional routes. As far as we are concerned, and we have discussed it at many LIAT meetings, that is competitive behaviour and it’s against the spirit of the revised Treaty of Chaguaramas, and we have been engaging the government of Trinidad on that issue,” he explained. (BGIS/BW)Please read the full story in today’s SUNDAY SUN, or in the eNATION edition.

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