ST. JOHNS: Leeward Islands Air Transport (LIAT) has agreed to challenge the Government of Trinidad & Tobago for providing “unfair” subsidies to Caribbean Airlines (CAL) while at the same time pushing for closer linkages with the T&T-owned and operated entity.
Chairman of the LIAT Shareholder governments, St. Vincent & the Grenadines Prime Minister Dr. Ralph Gonsalves, said LIAT has formulated a legal opinion that would be presented to Trinidad & Tobago Prime Minister Kamla Persad-Bissessar.
“We will make available also the facts concerning the extent to which LIAT has been disadvantaged as a result of the unfair competition,” said Dr. Gonsalves.
Gonsalves said that CAL pays US$50 for a barrel of aviation fuel while LIAT pays US$120.
The subsidy to CAL is expected to be discussed later this month when Gonsalves meets with Persad-Bissessar in Port-of-Spain.
LIAT data states the airline spent US$106.1 million on fuel between 2008 to 2012, while CAL spent US$46.4 million. The average cost over that period for LIAT was about US$127 a barrel as compared with US$53 for CAL.
LIAT stated that it lost 78,000 passengers as a result of the subsidies provided to its competitor.
“The revenues we would have lost as a result of that unfair competition would be US$10.2 million,” said Gonsalves.
Despite denouncing the T & T subsidy, LIAT Chairman Dr. Jean Holder doesn’t think the disagreement will affect LIAT’s ability to negotiate closer relations with CAL.
“The fuel subsidy doesn’t appear to be doing a great deal to help CAL but it can do a great deal to help LIAT,” said Dr. Holder.
He said the talks toward closer cooperation did not come from LIAT “but from the people of the Caribbean”.
Holder said the airlines that have survived around the world are those which have formed alliances with others.
However, Gonsalves expressed caution about the possibility of a merger between LIAT and CAL.
“We have to date a little first before we can get married,” he said.