Probe conducted into legality of LIAT taxes

CASTRIES, St. Lucia: Tourism and Civil Aviation minister, Senator Allen Chastanet, is investigating whether regional airline LIAT has been collecting taxes illegally.

Chastanet said last weekend that he was concerned LIAT’s current price structure is hurting travel between Caribbean countries and questioned the Antigua-based airline’s claim that the level of taxation by regional governments was contributing to its high fares. A report on the issue is expected to be released in three weeks.

Chastanet said he met with the Air Licensing Committee for St. Lucia and asked for a review of the taxes, noting that some of them could be illegal. As an example, he pointed to two fuel surcharges, instead of one, on a single flight.

Chastanet said the St. Lucia Air and Sea Ports Authority wrote to LIAT months ago, asking that one of the taxes be removed but, so far, there has been no change.

“We’re really calling on this region to do a full examination and our report, due in three weeks, will determine whether these taxes have been charged erroneously and we shall then make a decision on how we deal with it,” Chastanet said.

Chastanet also said LIAT should make some sacrifices, just as other carriers have.

“Given the competition we have internationally and the adjustments we are seeing people make, in terms of airlines lowering their fares, hotels lowering their room rates, governments reducing taxes, making all kinds of efforts and concessions to try to encourage businesses to grow, we have not seen a similar pattern here in the Caribbean,” he said.

“LIAT has benefited from a major cash injection from three countries,” Chastanet said, referring to the shareholder governments of Barbados, Antigua and Barbuda and St. Vincent and the Grenadines. “The leases on several of the planes have been written off by the Canadian government. They have no debt to carry and they are getting planes cheaper than they could be getting at any time.”

Last week, LIAT’s acting Chief Executive Officer, Brian Challenger, said the carrier was struggling financially and counting on a good summer to boost declining passenger numbers.

Chastanet said, however, if – given the airfares it is now charging – the carrier was struggling, it doesn’t bode well for the airline.

“I am not against LIAT. What I am against is the policy of holding onto something that has proven it is not sustainable. When LIAT was under competition it lost money and refused to change. All the competition has long been eliminated yet, now, many years later, no one is able to identify one plan as to how LIAT is going to bring down its operating cost,” Chastanet said.

LIAT has had a monopoly on intra-regional travel since it purchased the assets of its competitor, Caribbean Star Airlines, in October 2007.

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