Adrian Loveridge Column – Covid 19 and LIAT

It would appear that our citizens and residents will first have the option of travelling within the Caribbean, as and when Coronavirus restrictions are lifted.

As we are now in the traditional prolonged softer summer season, it also appears to be more logical that our tourism planners and policymakers will focus, at least part of their efforts on promoting this opportunity.

As airlift possibilities within the region are extremely limited and LIAT has so far indicated they will not resume commercial passenger services until at least 30th June 2020, here again comes the crunch.

As we have witnessed for decades, LIAT has drifted through various degrees of cash flow crisis, management turmoil and insolvency issues, seemingly unable to survive without massive taxpayer support. At the same time, most Governments within the region have increasingly levied what many consider deterrent taxes and surcharges on their airline ticket prices, making it cheaper, in many cases, to fly to Canada or the United States.

So if we, as a country, or other states within the region are remotely hoping that Intra-Caribbean travel will at least lead the charge in returning to some sort of normality in arrivals numbers, then the status quo will have to change. Our Government will have to weigh-up the fact that if people cannot be enticed to our shores, that they will not collect VAT and other taxes on hotel or other accommodation, rental cars, restaurant dining, shopping, attractions and activities etc, for those visits.

The predicament for the administration will be if they really wish our crushed tourism industry to recover in the least possible time, will they forgo at least some of the multiple taxes currently applied?

Of course, it’s not just about returning tourism to viability, but restoring employment to an acceptable level in the foreseeable future, with the additional taxes and national insurance contributions that brings.

According to recent reports the World Bank has approved loans of US$159 million for a series of Caribbean Regional Air Transport connectivity projects.  This included concessionary financing of $13 million for Dominica, US$17 million for Grenada and US$45 million for St. Lucia with a maturity of 40 years including a grace period of 10 years ‘to improve regional capacity’ and ‘facilitate connectivity and support countries during the COVID-19 recovery phase’.

Will these incredibly generous borrowing terms, at least partially relieve financial pressures on these Governments and enable them to reduce airport and departure taxes?

Airline pundits have also been calling for radical reforms of LIAT over the last decade or more and for a company that has been so reliant on taxpayer’s monies for almost an eternity it seems almost incredulous that their accounts have not been made public for 40 years.

Perhaps this is the opportunity to finally restructure the company, without regional political interference preventing the installation of management that could ensure its long term viability and survival. Unless this happens, just the concept of developing the true potential of intra-Caribbean travel and restoring past arrival numbers will remain a distant pipe dream.

17 comments

  • Harry Van Huis

    Countries that are trending to zero cases should open up to each other and allow commerce and tourism with no restrictions for Covid 19. As long as all of these countries take a similar stance and still restrict travel from countries that have not met this requirement.

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  • @Adrian

    “Intra-Caribbean travel will at least lead the charge in returning to some sort of normality in arrivals numbers, ”

    Intra-Caribbean travel will never come remotely come close to supporting Caribbean countries tourism business as any significant GDP earner. One thing you have correct is, if tourism in these countries are to become somewhat profitable then all levels of government needs to reduce/eliminate TAXES. This socialistic approach to funding programs is regressive to economic development, especially when attacking your primary Forgien GDP earners.

    As the saying goes, YOU CANNOT GET BLOOD FROM A STONE.

    ADRIAN it’s time to rethink your tourism philosophy, maybe it’s a DYING/DEAD PROGRAM.

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  • As I have mentioned previously on another blog, some Caribbean territories have been offering ‘travel specials’ to encourage regional travel.

    Bay Gardens Resorts in St. Lucia, for example, have been advertising an initiative called “Caribcation,” designed ‘exclusively for CARICOM island neighbours.’ Unfortunately, despite this travel promotion, the SLU government remains adamant about not investing in LIAT.

    I’ve also seen advertisements from Grenada, Montserrat, Saba and St. Eustatius..

    Additionally, SVG’s PM Gonsalves said as a means of encouraging regional travel, he was prepared to reduce departure tax by 50%, “for a period not exceeding 6 months” and which would only be applicable to CARICOM passport holders traveling within CARICOM. Gonsalves also said he spoke with head of the SVG Tourism Authority, Glen Beache and the president of the SVG hotel association, suggesting they offer specials on accommodation.

    If the heads of CARICOM states were really interested in promoting unity and intra regional travel, they should look at the idea of reducing travel fees and taxes, as well as hotel or guest house rates for CARICOM nationals.

    Simple microeconomics law of demand suggests, as prices decrease, the quantity demanded increases. For example, let’s assume at current airfares LIAT has an average of 20 people travelling from SVG to GND. Then, reduced airfares should see the number of passengers increase to 40 or maybe even 50.

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  • You will have countries in the region trending zero COVID cases that are about to open ports to commercial traffic, then what?

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  • Vincent Codrington

    Artax at 9:33AM

    And who will make up the deficits in these SOEs. Those taxes are allocated to the financing of the airports. They are not punishment fees . They are cost recovery charges.

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  • Adrian Loveridge

    IF there are ‘cost recovery charges’ then WHY are the same criteria not applied to cruise ships and their passengers?

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  • @ David

    Have you read Antigua’s Opposition Leader Harold Lovel disagreed with the position adopted by PM Gaston Browne in handling the situation regarding LIAT?

    He said “Browne should have used more moderate language in his pronouncements on the matter.”

    David, have you noticed Browne’s overall approach to this issue? Read what he has been saying and his ‘open letter’ to the heads of LIAT’a shareholder governments. You’ll realise he has been displaying an “inexplicable, poisonous, destructive, hateful form of behaviour,” similar to what has been described as the “Bajan Condition.”

    Perhaps he’s suffering from a mild form of the ‘disease’……… the ‘Antigua Condition??’

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  • @Artax

    Yes, following closely. Also his calling to a talk show on last Saturday is a must listen. The childrens have come home to roost

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  • @ David

    “The Vincentian prime minister again acknowledged Antiguan prime minister, Gaston Browne’s efforts to save LIAT and said that what was being done in terms of looking at alternative air transport is in no way meant to oppose what anyone else wants to do.”

    https://searchlight.vc/searchlight/news/2020/07/07/im-not-getting-into-side-show-theatre-over-liat-gonsalves/

    Also:

    https://268today.com/local-news/st-vincent-based-airline-one-caribbean-could-start-regional-flights-by-next-sunday/

    If there are actually over 30 regional airlines, I believe they would be more than adequate to fill the void left by LIAT if it was liquidated.

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  • @Artax

    You have not bought into Gaston Browne’s position that the other airlines are rinky dinky?

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  • Is Gaston Browne the man who tried to bully UWI into opening a campus in Antigua or else he would open his own University?

    What goes around comes around

    https://barbadostoday.bb/2020/07/08/pm-points-finger-at-barbados-saying-country-determined-to-close-liat/

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  • “You have not bought into Gaston Browne’s position that the other airlines are rinky dinky?”

    @ David

    Referring to something as “rinky dinky,” means it’s inconsequential, amateurish, or of generally inferior quality.

    LIAT is also a ‘rinky dinky airline,’ but had an advantage over other regional airlines because it was continually subsidized by the taxpayers of its shareholder islands. If not for that advantage, LIAT would have gone out of business long ago.

    Do you realize now the other shareholder PMs seem no longer prepared to finance the airline’s operations, it is demise is inevitable?

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  • @Artax

    Browne will get no sympathy from the blogmaster.

    >

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  • @ Sargeant

    I blame Mia Mottley. She should have sold ALL of Barbados’ shares in LIAT to Antigua.

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  • An publicly listed interisland airline, public being as listed on the stock exchanges, could be viable. It would also provide an investment opportunity for individuals.

    Unfortunately, the matter of governmental interference is what would make this a waste of time. Who would be directors, at exorbitant fees, who would be CEO etc? Then, whose cousin or niece would get to work there.

    This means that the only solution is a privately owned, funded, operated airline. The caveat is that the owners will not stand for interference by governments. They have profits to make.

    Open the air routes to a maximum of five carriers. Let them work out who can service the routes profitability yet at a reasonable price for travellers.

    Unfortunately again, I know that this will never work because of the self serving approach of the various island governments. They will not want to keep their hands out of it. So this will go round and round forever, with travelers being shafted in service and price and the islands each remaining in their own little cocoon.

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  • Listing a company on the stock exchanges will not appeal to Caribbean people in much the same way other companies are currently not well traded and have been delisting.

    >

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  • PILOTS APPEAL
    TEN CHALLENGING THE ANTIGUA’S COMPANIES AMENDMENT ACT
    by Emmanuel Joseph
    A senior Barbadian LIAT pilot today gave the Antigua and Barbuda Court of Appeal formal notice of his intention to challenge a recent High Court decision to block a class action suit against his employer.
    Acting on behalf of nine other disgruntled LIAT pilots, Captain Neil Cave filed the notice of an application for leave to appeal the August 11, 2020 decision of a High Court Judge who had blocked the suit lodged by Captain Cave in a ruling that some lawyers warn could have serious implications for anyone flying on the regional airline.
    On the same day the case was scheduled to start, the judge had agreed with LIAT that the trial could not proceed because the new Antigua and Barbuda Companies Amendment Act 2020, prevents absolutely any form of legal action being taken against LIAT.
    In the court document filed today, it was noted that the judge had deemed the trial automatically stayed by virtue of a petition for a rehabilitation order lodged by Antigua and Barbuda Prime Minister Gaston Browne.
    But the pilots have submitted six grounds on which they are relying to support their appeal against the High Court decision.
    One ground suggests that the judge misdirected herself and committed an error of law in concluding that the combined effect of the automatic stay granted to LIAT on July 20, 2020 and the provision of section 564 (1) (a) of the Companies (Amendment) Act prevents the High Court trial from going ahead.
    Another ground contends that the judge again misdirected herself and committed an error of law in determining that the claimants fall under the ambit of “creditors” for the purpose of the same Act.
    The pilots are also arguing that the judge’s decision to stop the trial has caused severe prejudice to the applicants and intended appellants considering the matter to be determined involves significant sums of money for the pilots and has been in the court system for more than five years.
    The pilots are suing LIAT for deducting more than EC$5 million from their salaries without their authorisation and illegally lodging it in CLICO International Life as pension.
    The ten pilots have also informed the Court of Appeal that the judge’s recent ruling has denied them access to the High Court in a civil matter for a fair hearing within a reasonable time as provided for in section 88 of the Antigua and Barbuda Constitution.
    Another ground is that the leave of the court to appeal the judge’s decision is required pursuant to the Court Procedure Rules.
    The sixth ground argues that the pilots have a good prospect of success in their appeal.
    Before blocking the case, the High Court was expected to determine the legality of LIAT’s management decision to lodge about EC$5 million in CLICO International Life Insurance as pension for the pilots.
    “Our contention certainly is that pension funds were lodged illegally into a CLICO scheme by LIAT management.
    No authorization was given to deduct our salaries and place these monies, approximately EC$5 million into CLICO,” the Barbadian pilot stated.
    “We contend that the placement of these funds into CLICO under the guise of a pension where a trust deed or plan rules have never existed, constitute a criminal offence under Section C 34 of the Antigua and Barbuda Labour Code,” the commercial flyer had told Barbados TODAY.
    The senior pilot noted that aviation carries with it certain inherent risks and unforeseen circumstances that arise from time to time.
    He further expressed fears about the implications considering that LIAT operates through multiple territories including Barbados.
    “I am extremely concerned that for someone who has respect for the rule of law, that citizens of these countries have no legal recourse as a result of the new Antigua legislation.”
    Earlier, Cave had raised a question within the context of this new law.
    “What happens, God forbid, should a person or persons suffer an injury as a result of an accident while this stay exists. As a result of this new law, they can’t even file a claim. The bottom-line is that my lawyer has advised that the interpretation raises serious legal questions, including potential constitutional issues,” he stated.
    (emmanueljoseph@barbadostoday.bb)

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