After losing millions in what was considered “a competitive environment”, LIAT was forced to increase air fares, says chief executive officer Mark Darby.
In a Press release issued yesterday, he said LIAT had increased its fares by $20 since October last year before merging with Caribbean Star, mainly because the company was losing millions because of the region’s extremely high maintenance costs.
“The fares in the market today are appropriate and realistic as far as our costs are concerned,” Darby stated in the press release. “Overall, our fares are realistic, given where our costs are today.”
The CEO stressed LIAT was forced to battle with exorbitant maintenance costs for its 12 aircraft, with a quarter of its budget going to fuel consumption alone.
He added that LIAT was forced to deal with special circumstances which affected its fleet, like Sahara dust, and volcanic ash from Monsterrat, which allowed an engine life of only 3,000 to 4,000 hours of flight time, compared to 8,000 hours for similar planes used elsewhere in the world. He said the merged company would also be willing to start dialogue with regional governments regarding ways to improve viability, even though they have been subsidised by the governments of Barbados, Antigua and St Vincent and the Grenadines.
“At the moment we provide most of the territories we serve with a very good level of connectivity, with little or no cost involved,” Darby pointed out.
“There needs to be a realistic approach to how our routes are funded and how a particular island’s needs are met in terms of air service.”
According to the CEO, LIAT would not require a monopoly to be viable in the region.
“LIAT does not need a monopoly. Competition is fine; but it has to be balanced.
“What we are concerned about is foreign airlines coming in and choosing to fly only on the profitable routes,” Darby stated.
“If we could shrink LIAT to half its size today we could make super profits.
“We could set the airline to the size where it provides a good range of service across the operating day, week, and year and break even.”
He said this could be achieved by flying only on the profitable routes, however “we do not believe that approach would satisfy the region’s needs”.
“As a result, it is not fair for foreign airlines to choose the profitable routes and leave the low-earning routes to LIAT,” he concluded. (BA/PR)