Guest Editorial: Shake up or sell LIAT


It was once assumed that every country or region should have its own airline since in many ways, it was one of the symbols along with its flag, national anthem and currency to define a country.

For Barbados and the Organisation of Eastern Caribbean States (OECS), LIAT has been that standard-bearer in terms of an airline. But, this carrier has for too long been plagued with on-time reliability and staggering debts. This situation is a true carbon copy of many failed national airlines across the world.

Political interference, over-staffing, management and trade union issues, the types of planes bought or on lease, and uncompetitively high airfares have all contributed to the problems of LIAT over the years. The lessons learnt clearly suggest that governments in Barbados and the OECS have no reason to continue in the airline business given their abysmal failure.

A dedicated airline is, however, critical to Barbados, the OECS and Guyana, given the importance of air transportation to the economic, social and cultural development of these nations. This situation is made even more critical given the very limited opportunities to move people by the sea in this region.

As a majority shareholder in LIAT, the Barbados Government, which is in the throes of enforced economic reform, should add the airline to its privatisation plans.

Admittedly, many private airlines operating the same routes as LIAT have ended in failure over the years, but the countries involved cannot be disinclined to rid themselves of the airline – at least, majority interest.

The problem with LIAT is that it has had numerous turnaround plans often with a “developmental agenda”, but which have all been failures. We believe a restructured LIAT should have at its apex airline efficiency and commercial performance. It needs to have a board of directors and management appointed primarily on merit, operate routes, charge prices and make seats available purely on commercial consideration and market demands.

It is evident that an airline in this region needs an international partner which has mastered the operational efficiencies of the airline industry which is both capital and skills intensive, yet often only provides razor-thin margins.

We believe that more competition will lead to lower prices and more visitors, even in the face of high levels of taxation by governments. Getting the right partner with access to investment funds will involve complex negotiations which are outside the skills set of the political directorate.

The Barbados Government needs to have someone with the right technical expertise to champion this initiative and also to get the tourism sector involved. Such an advisor can guide LIAT shareholder governments through the privatisation and reform processes which can be both complex and tricky.

We cannot afford to continue wasting public money in this airline, which is why it must be dealt with decisively. Restructure LIAT, or liquidate it.

– Barbados Nation


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