In 2007, when Prime Minister Ralph E. Gonsalves, decided to revive LIAT by striking a deal with the competition Allan Stanford and his airline The Caribbean Star which was slowly forcing LIAT out of the Caribbean skies. What the shareholders and LIAT management fail to understand was: to eliminate the competition was not enough to make this airline which has a history of falling into debt a viable entity.
Today; after having the major and minor shareholding entities pumping money into this enterprise on a regular basis, after four year of LIAT holding an inter island monopoly, where the people of the region were held hostage by this airline and were forced to pay exorbitant air fairs for short trips between the island. One would you thought, after having such a protective monopoly for so long, that LIAT would be standing on its own and standing strong; however, the air carrier still manage to end up in the red.
It was interesting to hear Ralph Gonsalves in a press conference crying about the Trinidad based airline Caribbean Air Line (CAL) trying to force LIAT out of the skies. Unfortunately; the share holders of LIAT is depending on protective clauses in the treaty of Chaguaramas and the Multilateral agreement which was sign some fifteen years ago: in 1996 and not on ensuring the correct management policies are put in place and LIAT's managers run a cost effective, profitable, well managed enterprise that will be able to compete under any competative environment.
It is most strange and can be sum up as poor business practice, within this global-economy and a free market, which is geared towards internationally tearing down all protective walls that give business entities special protection. That leaders of independent nations and competitors in this open global market would be investing their scarce national resources into such a poorly manage venture as LIAT.
It will be interesting to know, what was the annual, financial obligation, of the main share holders of LIAT and what was the actual contribution made to this entity; which have has about thirty plus years of indebtedness. It will also be interesting to know, the total contribution that was made to this troubled airline in the last fifteen years.
Like every commercial airline that flies the skies, the operational cost, of which fuel and labor cost take up the bulk of their operational expenses, must first be lowered if the airlines are to be profitable. It is critical, before anymore good money is pumped into LIAT, the main share holders and management of LIAT must fist do several things, the primary of which should be:
• To find some oil entity that will be willing to sell the company large volume of oil, at a very cheap price, it may even mean opening a subsidiary company, which will be responsible for purchasing such oil in large quantity, refine the product and offer the same at retail to shareholding states for public and in some cases commercial use. Thus LIAT will benifit from economy of scale and in the process access a market that has a vested interest in seeing the enterprise survive.
• they must work on making the labor force more efficient and the employ automotive system as much as possible to reduce the utilization of manual labor in getting the processes functioning. Automation reduces human errors, increases efficency, and has a long term cost effectiveness that will aid in reducing the operational cost of the airline.
• Make management and supervisors more accountable and have them play an intricate role in cost cutting.
These three steps should aid in making the company more operational and financial viable, which will prepare this entity (LIAT) to be privatized and place on the open or stock market.
