The Adrian Loveridge Column – LIAT Restructure or Not!

Writing about LIAT at this time seems almost like a lesson in futility, especially when you consider it’s now some 45 years since the formation of LIAT (1974) Ltd, by the present owners and 63 years since the initial formation of the airline.

My first involvement with the airline dates back to the days of Court Line and flying some of my first groups as a tour operator on their pastel pink, yellow and violet Lockheed 1011 Tri-Stars out of Luton airport.

Court Line Aviation acquired LIAT in 1972 as part of its long haul strategy, supplying them with BAC 111 series 500 jets, ironically the only non-turbo propeller aircraft the Caribbean airline was ever to operate.

Court Line ceased trading on 15th August 1974, with the parent company together with its subsidiaries, Clarkson’s Travel Group and Horizon Travel, owing over GB Pounds 7 million, to more than 100,000 holidaymakers.

LIAT (Leeward Airlines Air Transport) escaped the bankruptcy, but the BAC 111’s were reclaimed and 11 Caribbean territories stepped-in to save the carrier, replacing the jets initially with de Havilland DHC-6 Twin Otters. Later, Dash 8-100’s with increased passenger capacity were introduced.

Of course, this is only history and here we are nearly five decades later trying to figure out, if or how, a reliable sustainable regional carrier can survive and flourish, without vast amounts of taxpayer’s monies propping it up, or endlessly queuing at an ATM cash-flow lifesaver.

Let us for a moment look at it from a slightly different perspective.

According to Statista, described by Wikipedia, as one of the most successful statistic databases in the world, hotel occupancy across the Caribbean averaged just 63.7 per cent in 2018, the lowest level for the last 7 years. There are naturally mitigating circumstances, like the devastating knock-on effects of a series of hurricanes and tropical storms, putting a vast supply of rooms out of use.

But conversely, it appears that those visitors destined for damaged resorts and destinations, were seemingly not converted in large numbers, to other non-affected territories within the Caribbean.

Frank Comito, the CEO of the Caribbean Hotel and Tourism Association recently quoted there are ’80,000 vacant hotel rooms every night’ across the region and ‘filling just 10 percent of those rooms would inject nearly US$2 billion into the Caribbean economy’.

Another area maybe that we have not yet fully appraised, is the impact of a increasing secondary lodging sector, which includes Airbnb and Where-to-Stay type alternatives to traditional hotel accommodation.

Our Government has yet to report on how successful the registration, and licensing of these properties has been, together with exactly how much has been raised through the newly imposed ‘shared accommodation levy’, which could now finally help support the marketing of Barbados.

To a certain extent our climatic conditions largely determine demand in most of our major markets, producing two distinct seasons.

If we wish to fill more of those empty rooms outside a few summer festivals, then a strong, affordable and reliable regional air carrier is not an option, it is a necessity.

Let us hope the recent announcement by the Prime Minister and proposed reduction of Barbados taxpayer’s shareholding in LIAT, leads to a commercially viable restructuring of the airline, but many will remain highly skeptical especially when you consider where the majority of passengers join or transit.

18 comments

  • Vincent Codrington

    What is a commercially viable regional airline? If the airline industry was easily commercially viable would not the private sector get involved? Do not the GoB give subsidies direct and indirectly to airlines into and out of Barbados? World wide do we not witness the perennial closing and amalgamation of airlines? Obviously it is not an easy business to manage.

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  • Is my Maths wrong??? Quoting from your article: “Frank Comito, the CEO of the Caribbean Hotel and Tourism Association recently quoted there are ’80,000 vacant hotel rooms every night’ across the region and ‘filling just 10 percent of those rooms would inject nearly US$2 billion into the Caribbean economy’.”

    So…. 2000,000,000/8,000 = 250,000 per room per year or 250,000/52 = $4,807 per room per day.

    Does the average visitor really spend that much per day to stay in the Caribbean???

    Note that “room” includes all costs of the visitor.

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  • peterlawrencethompson

    @ks
    … $2,000,000,000/8,000 = $250,000 per room per year or $250,000/365 = $685 per room per day…

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  • ….my bad….$4,807 per room per WEEK

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  • LIAT: Leave Incorporation Any Time
    OPINION BY Patrick Hoyos June 10, 2019


    Long ago and far away, possibly in a distant galaxy, times were much simpler. With little a-doin’ in our island paradise, we would sit around and try to come up with ways to “burn” the region’s airlines for their lousy service.

    BWIA, among many other new “names”, stood for Better Walk If Able,” and LIAT stood for “Leave Island Any Time”.

    I could sit around here today trying to remember some of the others, but they were all equally corny.

    Today, we could re-dub Liat “Leave Incorporation Any Time”, which is what I hope Barbados will do sooner rather than later. Why hold on to ten percent when we couldn’t change the airline’s direction with 52 or 49?

    I could never understand why Owen Arthur hastily assembled the leaders of a few other islands back in 2003 to announce that Barbados and their governments were borrowing money from the Caribbean Development bank to give Liat this whole new lease on life, with Barbados of course taking the lion’s share of the investment.

    We all knew that as long as Liat was headquartered in Antigua, it would be business as usual. Jobs for Antiguans, paid for by Barbadians.

    That is why it is nice sometimes to be under an IMF programme. You know, we would love to continue on this journey into the abyss with you, but, well, the IMF just won’t allow it. I mean, were it left to us, we would be there for you, Antigua and Barbuda.

    In her statement to Parliament last week, Prime Minister Mottley alluded to the huge gap between Barbados and the rest of the shareholder governments. The Cabinet, she said, had agreed to negotiate the transfer of most of its shares in Liat (1974) Ltd. to Antigua & Barbuda, thus giving up its role as the largest shareholder in the regional airline.

    She noted that Barbados had moved from being a minor shareholder prior to 2003, with just over eight percent of the company to today’s stake of just over 49 percent, and at one time in 2013 holding a majority stake of just over 52 percent. We had more than shouldered our share of Liat’s burdens over the years, she said, which of course no one can deny.

    In her statement, which was actually a masterclass in diplomatic-speak, Ms. Mottley (I am paraphrasing) said that as the largest single shareholder there was only “so much” that Barbados could do at this time given its precarious finances, so given the inability of Barbados to do for Liat in the next five to ten years what it did in the same period previously, the Cabinet had decided it was time for Barbados to “step back” and allow other governments to give their proposals a chance.

    You could just imagine the emotion of that moment at Cabinet, with not a dry eye in the room, as the ministers regretfully decided it was time to stop trying to save Liat.

    Now it appears that a white knight may be saddling up his worthy steed to come to the rescue of the airline. Ladies and gentlemen, I give you – Sir Richard Branson! (drum roll, please).

    In early May the Antigua Observer reported that Lionel Hurst, Gaston Browne’s chief of staff, said discussions had been held with Sir Richard to enlarge Liat’s fleet to include jet aircraft.

    Hurst said Sir Richard had proposed investing “several million dollars” and would lease jets to fly from Fort Lauderdale to Jamaica, Haiti, Antigua and Barbados. The whole idea was to enlarge LIAT, rather than shrink it, by flying to destinations outside of the region, as there were not enough passengers to make LIAT profitable within the Caribbean.

    But as they say, there’s more!

    At the end of May the Antigua Observer reported that Prime Minister Browne had said his government was making provisions for the expansion of LIAT through the leasing of the old VC Bird terminal building at Antigua’s airport, which should help to reduce the broke airline’s operational costs.

    And you thought the Liat carcass had no meat left on its bones.

    He told the newspaper he believed that “we can revamp LIAT in such a way and to restructure it in such a way, for it to become profitable,” or to reduce its losses significantly.

    Now, I for one just hate it when reality rears its head and just spoils a lot of lovely daydreaming. Ms. Mottley told Parliament on Tuesday that the Barbados government did not believe Liat could do what was needed under its current structure. The airline’s continued losses had made it difficult for the airline to keep its head above water, and studies had shown that the company needed significant restructuring in terms of new models for its governance, operations and finances.

    And in language headed straight for the diplomatic hall of fame, the prime minister said that while Barbados had been “persuaded” by those studies, other shareholders believed there were “better and different ways to secure the viability of the airline,” and the Barbados government accepted that “there is no unanimity on this issue.”

    So the government accepted that if other shareholders wanted to try different models for making the airline viable they should be given the chance.

    Personally I would have no problem with getting out of Liat completely, if only to provide justification for my new and clever name for the airline.

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  • World Bank praises Flow, LIAT and Massy Group praised for risk mitigation strategies
    June 9, 2019

    During the recent Caribbean Risk Conference at the Errol Barrow Centre for Creative Imagination, telecoms provider Flow, regional airline LIAT and the Massy Group were all given credit for their hurricane preparedness. \

    Ming Zhang, Practice Manager at the World Bank, told representatives of the companies during a panel discussion that the bank was confident that businesses were treating disaster preparedness as a priority.

    “There’s a lot of sophistication in what you are doing, and I think other sectors and companies can learn a lot from you,” said Zhang.

    In 2017, the Atlantic hurricane season became the costliest ever recorded with damage totalling over US$299 billion.

    And while high-intensity storms will continue to pose a threat to economic output in the Caribbean, more and more companies are building redundancies into their daily operations, he noted. Mr. Zhang facilitated a panel discussion that included Jenson Sylvester, Country Manager of Flow Barbados, Julie Reifer-Jones, LIAT’s Chief Executive Officer, and Brian Reid, Manager of Health, Safety and Environment at Massy (Barbados) Limited.

    Mr. Sylvester, said “Risk mitigation is one of the pillars of our business, so we’ve consciously built our data centres outside of the hurricane belt in countries such as Curacao, Colombia, Panama and Miami.”

    He said Flow had built and tested an effective disaster recovery plan since the ability to communicate would allow countries to recover quickly after a disaster.

    Ms. Reifer-Jones said LIAT, which serves the eastern Caribbean, always monitored the progress of storms in order to ensure the safety of its aircraft, staff and passengers. She also said the airline was in the process of further bolstering its data systems.

    “The last time we had to significantly reroute aircraft our data systems, including our passenger information systems, did not fully work as there were gaps and breaks. The building of redundancy, however, requires resources, and that is one of our challenges at LIAT,” she said.

    Mr. Reid said the Massy Group, one of the Caribbean’s largest conglomerates with businesses across the region, had organised its logistics and distribution channels to be resilient.

    “When there is an impact to our supply chain, we look to see what products we can maintain and where we can source products from different locations. This is something we are always looking at,” he said.

    CAPTION:

    Flow’s country manager Jenson Sylvester makes a point during the World Bank’s recent ‘Understanding Risk Conference’ at the Errol Barrow Centre for Creative Imagination.

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  • Piece the Legend

    @ Mr Loveridge

    You said and I quote

    “…If we wish to fill more of those empty rooms outside a few summer festivals, then a strong, affordable and reliable regional air carrier is not an option, it is a necessity…”

    Noticeably absent from your commentary is

    (1) the necessity for a cleaner destination

    (2) the necessity for more affordable rooms (such as those AirBNB are providing

    And most importantly

    (3) the critical need for less crime ridden environments where they are stabbing guests

    As usual it is easy to blame the otherness of an Airline as being thd source of the problem as opposed to focusing on the real issues.

    Do you remember when, as part of a package to a guest, you used to sell tickets to the islands for $98 ! RETURN FOR DAY TIME EXCURSIONS?

    I do! Commissions were fantastic.

    Fact is, there are several elements to this problem of a flailing tourism product, some of which we are just victims of, and others which we are perpetrators of the crimes

    But it serves our agenda to point our fingers at others since, if you do so long enough, none will point them at us.

    Like

  • Piece the Legend

    @ the Honourable Blogmaster your assistance please with an item here thank you

    Liked by 1 person

  • Although Antigua & Barbuda currently own 34% shareholding in LIAT, it seems as if successive Antiguan political administrations are of the opinion A&B owns the airline.

    One of PM Gaston Browne’s election promises was for A&B to secure the majority shareholdings in LIAT. Perhaps that’s why he has continued to reject every proposal so far, to restructure the airline.

    It’s also obvious he seems to be more concerned with securing the employment of those 700 people working at LIAT in Antigua….. at the expense of the other shareholder territories taxpayers.

    I’m happy the Mottley administration accepted the offer from PM Browne for A&B to take up most of Barbados’ 49.4% stake in LIAT…………. thereby transferring the airline’s debt burden from the backs of Barbadian taxpayers to Antiguan taxpayers.

    LIAT’s current operating structure and financial difficulties do not make it an attractive investment option. As such, I would have preferred if Mottley had given up the entire shareholding to A&B and adopt an attitude similar to that of her St. Lucian and Kittitian counterparts, PM Chastanet and PM Harris……..

    ……… to insist there has to be a significant restructuring of LIAT and the airline subsequently demonstrates some level of financial viability before investing in it.

    Liked by 1 person

  • @Artax

    The 10% is probably meant to demonstrate committent to the Caricom project.

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  • There has been a shooting on one of the island’s pleasure crafts.

    http://www.nationnews.com/nationnews/news/240198/shooting-boat

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  • Piece the Legend

    @ Brother Hants

    What de ole man do you?

    I he’s talk bout de crime issue that is mysteriously missing from this one track blog AND JUST SO YOUCOME AND PLOP DOWN A CRIME & SHOOTING?

    People here are blished to believe that the 9 of us are talking to each other offline AND SHARING WHAT OUR STRATEGY OF DIGITAL HIGH TREASON SHOULD BE!!!

    Cause you do know that us talking about all these shoutings, EVEN HISTORICALLY, is considered to be consorting with “THE ENEMY “ of Barbados

    And that is destabilization and sedition AND IS A LOCKUP WITH NO BAIL CRIME!!!

    De grandson promise de ole man a new machine about a month ago BUT HE WAS BUSY so I ent get it yet

    But as soon as I get it, I going start wid some more Biopics & Stoopid Cartoons to assist with the Agard Unjust 10 year Incarceration SNAFU

    So just give me a few.

    He tells me it is a firewall Beast with HyperVirtualizations up de Kazoo so I he’s waiting.

    Den We On!!!

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  • After court line left LIAT continued to operate the Avro 748 fifty seater. The dash 8 replaced the Avro around the late 80’s early 90’s.

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  • PUDRYR

    After reading your June 10, 2019 1:35 PM and June 11, 2019 6:19 AM contributions, I’m curious as to what are your intensions or what you’re attempting to achieve by pursuing this line of argument?

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  • In light of the Mia’s promise to build a string of new hotels stretching from Hastings to Bridgetown, there are more than a few lessons for Barbados (some of which we are already learning the hard way) in this documentary:

    Thailand and the Fallout From Mass Tourism:

    Ten years ago there were 20 million fewer tourists. Today’s mass tourism has both social and ecological consequences. Most of the Thailand’s popular tourist resorts discharge untreated sewage into the sea, and plastic waste ends up in the water. This is killing off the fragile coral reefs along the coast. The countless hotels and restaurants mainly serve fresh fish, so fishing boats are using giant trawl nets, which are also destroying the coral. The internationally renowned marine ecologist Thon Thamrongnawasawa from the University of Bangkok says 77 percent of Thailand’s coral reefs have been severely damaged. Meanwhile, the locals in popular tourist resorts hardly benefit from the huge numbers of holidaymakers at all. They work for the minimum wage and are often pushed out by guest workers from neighboring Myanmar, who are willing to work for even less money. Small local restaurants lose out when the big tour operators take their guests on all-inclusive excursions. The filmmakers first visited Thailand a few years ago, shooting enchanting footage of the still intact underwater world in many places. Now they are back there again to look at the consequences of unrestricted tourism – both above and below the waterline.

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  • @Green Monkey

    There is the example of Spain.

    Mia also made an interesting announcement in England, a Rihanna museum is coming?

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  • How can any one takes Mia words in all seriousness
    She has yet to deliver on those gloriuos campagain promises
    Furthermore barbados does not have an adequate sewer systems to accommodate the large quantities of sewage from additional hotels
    Furthermore her words ring hallow in a country burden with debt whose first commitment is to paying off its debt
    Mia is a blow hard blow gad out her backside

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  • Why LIAT will always only attract customers who don’t have no other choice ie: a monopoly situation….. check out this ticket breakdown from Bdos to Grenada (return):

    Departing Flight:BGI – GND (Web Saver)
    1 Adult$ 65.00 USD
    Taxes and Fees: $ 120.74 USD

    Returning Flight:GND – BGI (Web Saver)
    1 Adult$ 65.00 USD
    Taxes and Fees: $ 81.06 USD
    Total
    $ 331.80 US

    LIAT collect $ 130 USD

    Greedy Governments collect $ 201 USD

    Like

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