Geopolitically investigating the flight plan for Caribbean Integration: The Case of LIAT

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Dr. Kai-Ann D. Skeete

Given the Caribbean’s natural geography, air transportation is a critical component of our regional infrastructure. The Caribbean is heavily reliant on air-transportation to provide connectivity which is fundamental to sustaining economic growth in a region highly dependent on trade in goods and services, especially tourism. However, several CARICOM leaders have chosen not to rally behind LIAT and fail to see the importance of LIAT to the successful functioning of their economies.

As I write this, the region is in unchartered territory and is battling with what geopolitical strategists call wildcard events. Wildcard events are essentially the improbable events likely to take place within any given year. Although highly unlikely, in forecasting the likelihood of risks for the upcoming year or period, it always remains in the back of the mind. Usually, for us in the Caribbean, it is the occurrence of a devastating natural event whether it be a hurricane, earthquake or severe flooding. Geostrategic foresight talks about how we should study the future. This article seeks to examine the future of LIAT Airlines using the geostrategic foresight methodology of assessing the probability, plausibility, possibility and preferability of a Future LIAT as the number one mode of transportation for intra-regional travel.

What is the probable LIAT future?

A probable LIAT future is simply a ‘mirror of the past’ where it is business-as-usual within which the select Caribbean territories will continue as the principal shareholders of LIAT and will continue to struggle to maintain a basic profit margin. As primary shareholders, they will ensure that LIAT predominantly services their main destinations to ensure a steady supply of tourists and goods.

It is noteworthy that 11 out of 14 CSME Participating Member States are LIAT Shareholders. These include the Governments of Barbados, Antigua and Barbuda, St. Vincent and the Grenadines, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, Guyana, Trinidad and Tobago, Montserrat and Jamaica totaling 96.4% of total shares.

The other 3% shareholders are Antigua Commercial Bank, Antigua Barbuda Investment Bank, ACB Investment Co. Lt, Antigua and Barbuda Workers Union, BWIA West Indies Airways Ltd, Caribbean Airways, HKH (Antigua) Ltd, Leeward Islands Aeronautical Engineers Association, LIAT Staff Provident Fund, National Commercial Bank of Dominica, National Commercial Bank of Grenada, Joan B. Slack, State Insurance Corporation and St. John’s Co-operative Credit Union.

What is the plausible LIAT future?

In the plausible future, LIAT will decide to service those majority shareholder government destinations and relegate the non-majority shareholders within the Caribbean to once a day or every other day service. However, it is hoped that destinations across the region should not be penalised because they have small populations and low demand/passenger volume. An analysis of airline profitability drives this demand and the analysis is usually determined by passenger volume, average fare and operating costs. However, there needs to be a removal of the winners and losers in regional integration but instead an approach that focuses on the greater good and collective security of all.

What is the possible LIAT future?

Due to consistent and competitive pressure from several regional and international carriers LIAT’s core network is persistently eroded. For the international carriers, their operating costs make their fares more attractive since they operate from bases/home destinations with lower taxes as a proportion of the fare. This usually results in the cost of a trip to a Caribbean destination equivalent to that of an extra regional destination such as Miami.

As a possible future, LIAT could be completely disbanded and not replaced because of its limited profitability. Rather, for intra-regional connectivity, Caribbean citizens would be forced to transit through Trinidad and connect via Caribbean Airlines or through Miami and connect via American Airlines. At this point, Caribbean Governments would have neglected their obligation to ensure accessible, affordable, consistent airline connection linking hub airports to the wider world.

What is the preferable LIAT future?

The value of the LIAT network is its connectivity. All CARICOM territories should be equitably supporting LIAT to increase connectivity to the participating territories and should result in a reduction of shareholder taxes within tickets. It would be remiss of the author not to mention that Caribbean Governments pay International Carriers to visit their destinations if a minimum load is not achieved. In this preferable future, the author wishes to suggest that Caribbean Governments create an enabling environment for LIAT by creating a similar arrangement. Thus, for those Caribbean destinations with limited passenger volume, governments interested in maintaining LIAT connectivity should be willing to pay if a minimum load is not achieved.

In the future, LIAT has to immediately be sustainable and this author recommends following the Demasian logic of widening and deepening simultaneously by investing in bigger carriers and expanding to offer intra-regional trade route destinations such as Kingston, Jamaica; Port-au-Prince, Haiti and even Belize City, Belize. In lieu of immediate expansion, LIAT could consider code-sharing with other regional carriers to supply these routes, or partnering with Caribbean Airlines (CAL) so that there may be no duplication.

For the risk takers among us, LIAT could consider expansion similar to Virgin. Recently, Virgin expanded from Airlines to a Cruise Liner. LIAT should consider expanding its services and create a Leeward Islands Sea Transport (LIST) to provide reliable, consistent, affordable service to those closer destinations which would reduce the cost of fuel, operating costs and the maintenance of airlines. It is at this juncture that a LIAT financing structure should be amended with less Government involvement and increased Private Sector involvement.

Introduction and expansion of additional revenue streams to add to the cargo services of LIAT Quikpak which the researcher has found to be a faster and reliable service for intra-regional movement of packages with door-to-door delivery within 1 to 2 days maximum. Introduction of new cargo services could include the speedy delivery of food and other human products.

In the future, all regional organisations and businesses with a regional presence should be committed to deepening regional integration and commit to utilising Caribbean resources first. Thus, when travelling within the Caribbean, the first choice should be LIAT. In support of this, LIAT should reintroduce its loyalty/reward programme and cater to the whims and fancies of some business travellers.

In 2020, in the face of an ongoing crisis, now is not the time for the Caribbean Governments to consider a future without the LIAT connecting the CARICOM Full and Associate Member States on a daily basis. The Caribbean requires an efficient air transport service in the form of LIAT and perhaps the introduction of Leeward Islands Sea Transport (LIST) would allow for fair, equitable, transparent transportation options for the CARICOM traveling public.  In this current climate, it is absolutely clear that the region needs to focus on alternatives to regional transportation centered around LIAT which remains a vital service for Caribbean integration, communication and connection.

(Dr. Kai-Ann D. Skeete is the Trade Research Fellow at the Shridath Ramphal Centre for International Trade Law, Policy & Services of The University of the West Indies, Cave Hill.)