KINGSTOWN, St. Vincent, CMC – Prime Minister Dr. Ralph Gonsalves has acknowledged that the fuel surcharge recently imposed by the regional airline, LIAT, “has caused some pain” for passengers, but says it is necessary in order to help the cash-strapped airline receive revenue in order to continue operating.
LIAT announced mid-August that the fuel surcharge is based on mileage and that passengers will be charged US$12.50 for a one way trip of up to 150 miles; US$17.50 for a one way trip of between 151 to 300 miles; and US$20 for a one way trip above 300 miles.
Gonsalves told reporters that LIAT’s fuel cost in 2010 was EC$10 million (US$3.70 million) more than 2009 and this year will be EC$26 million (US$9.6 million) more than two year ago, if fuel prices remain as they are.
“When LIAT had to put on the fuel surcharge, we hear a lot of complaints but it is something we had to do. If we didn’t take the step to put on the fuel surcharge, the losses for the year would have been entirely unsustainable,” Gonsalves said.
He said that LIAT does not have the 50 per cent fuel cost subsidy that the Trinidad-based Caribbean Airlines (CAL) gets from the government of Trinidad and Tobago. LIAT lost EC$21 million (US$7.7 million) in revenue during the first six months of 2011 as passenger revenue fell faster than operating cost.
Gonsalves, the airline’s chairman, who attended a shareholders’ meeting in Barbados last week, said that non-shareholder governments need to understand the economic importance of the airline to the region. The three shareholder governments are St. Vincent and the Grenadines, Antigua and Barbuda and Barbados.
“(Non-shareholder governments) have to realise that they’ve got to provide us with market support,” Gonsalves said, adding that LIAT’s flying to some of these destinations is not profitable.
Gonsalves said that in 2010, LIAT spent EC$20 million (US$7.4 million) in fuel and landing fees of three million servicing these unprofitable – “social” – routes.
“We can’t continue like this. And the other governments have got to understand. They’ve got to understand the facts of life,” he said, noting that while some of these countries say they will get their own airlines, the region has already had experiences in this regard.
“Remember, a lot of airlines have come and gone. They (did not) last as long as Miss Janey fire. They come under private sector, state sector, state and private sector. As they come they go,” Gonsalves said.
“And they come with all sorts of advantages. They batter LIAT’s bottom line, but LIAT has to still be there like the faithful mother-in-law who takes care of your child at home while you gone out. But always there to do the drudgery, always there to be giving the helping hand,” he added.
Gonsalves said that LIAT would be focusing on fleet renewal; streamlining the structure of the airline, including staffing to get the right skills; reduction in government taxes; ensuring that the airline has the relevant technologies, and focusing on LIAT as a commercial entity.
