Bracing for impact

I have been seriously contemplating, for some time now, to write this article about what I perceive to be the hidden facts about my beloved airline LIAT.

This article is intended to give a viewpoint on what I think is the present state of affairs and hopefully will stimulate public discussion.

The Caribbean people have a vested interest in LIAT and should demand more accountability based on the premise that no group of politicians should use precious state funds or guarantee large loans to be invested in a poorly run airline. At the end of the day we the people would be the ones saddled with the debt.

The airline at the moment appears to be in a state of disarray. It seems not only stunned by the advances made by the two major competitors in the Caribbean arena, namely REDJet and Caribbean Airlines, but also unable to market itself to stimulate travel in this challenging economic time.

Consumers are now more conservative with their hard-earned money and even though they are desirous of recreational travel to another island, they would like value for money.

LIAT has to understand that at this point in time they have to use all avenues available to try and reach out to customers in an effective manner.

What I have observed is that most of the company’s advertising dollars are being spent in Barbados. This is quite evident on the large LED TV screens on Broad Street and at every major sporting event, from beach volleyball to cricket, by the number of LIAT flags and banners on display.

On the other side of the spectrum as I drive down the Uriah Butler Highway in Trinidad, a country with a population of 1.3 million, I see a faded LIAT billboard that is over six years old. I think this perception of posting all your products on a website and expecting to attract business is way insufficient.

In my humble opinion, you must capture the consumers’ imagination using radio, television, newspapers, flyers, email, text messages, BlackBerry broadcasts and billboards; then direct them to the website for more details on the products. Not everyone goes home from work and as a ritual logs on to www.liat.com.

In my travels around Guyana, where the economy seems to be doing the best as compared to its Caricom counterparts, I see no sign of LIAT advertising.

Luckily for LIAT, REDJet has suspended operations and may even face complete closure. At least for the time being, LIAT does not have to worry about the attack coming from that front on the battlefield.

The management of LIAT appears to lack the skills required in this ever-changing airline industry to either deal with the current issues facing the airline or the ability to put forward a proper business plan to deal with future projections forecast by IATA or IAG.

This is quite evident by the comatose state the LIAT management team displayed by its inability to respond effectively to the recent onslaught brought on by the competition.

The strategy at the moment appears to be the political approach where the Caricom Prime Minister responsible for aviation in the region, Dr Ralph Gonsalves, cries down other regional governments for not investing into LIAT or seeking to take legal action against CAL for breaching some regional treaty agreement by displaying unfair practices in the marketplace.

Come on Mr PM, not only is this campaign time-consuming but it is a gamble. LIAT charges that CAL benefits by buying fuel at a pre-arranged price, or fuel hedging, a practice that has been around for some time in the airline industry.

CAL may not be paying its fuel bill and airport charges on time in Trinidad, but at the end of the day it is a government owned airline and this is similar to the subsidy provided by many government-owned airlines around the world such as the Emirates national airline.

LIAT has benefited from a debt write-off of over $100 million of debt from the Canadian Development Bank, a loan of US $60 million from Caribbean Development Bank and waiver of landing fees and debt forgiveness by several Caribbean countries.

LIAT management’s failure to come up with ideas to stimulate travel and rebuild customer confidence in the airline is palpable.

The insecurity caused by frequent threats of industrial action from the several trade unions representing the hundreds of LIAT workers across the region distracts the management from focusing on the main business of the airline.

The continued skirmishes in the public forum can only result in eroding consumer confidence in the airline. It is imperative that the shareholders address this constant state of mistrust between employee and employer so that a harmonious relationship can be developed and productivity heightened.

LIAT needs to get itself ready for the real battle that is yet to come from the Trinidadian-based airline CAL. They are acquiring new aircraft and have modified their business plan to island hop all the way from Piarco to the Virgin Islands.

On the other hand, LIAT is now trying to complete its fleet renewal study and then has the task of securing funding for its final choices.

LIAT also faces a critical delivery timetable for new aircraft. It will take two to three years for delivery of the aircraft that it is considering. This means that if LIAT were to walk into Bombardier Canada or Aerospatiale France tomorrow with a check for US $100 million to purchase five or six aircraft, the earliest that you and I could be flying around on these planes would be summer 2014.

One can always make the case for leasing versus purchasing but as the demand for a particular type of aircraft increases so do the lease costs and the security deposits.

Then we must decide if the aircraft to be acquired are intended to maintain LIAT as a regional carrier or whether we should get planes that can connect the continents to grow the airlines revenues.

While the company is working on final choices and seeking funding, the current Dash-8s are becoming increasingly more and more expensive to maintain.

This fleet renewal study should have been completed since 2008 when LIAT took over five Dash-8s from Caribbean Star and the cost of maintenance doubled. A stitch in time saves nine.

Morale in LIAT is at an all time low and the recent decision to outsource the cargo operations is seen as another disruption of the industrial environment.

Employees appreciate that some decisions must be made to create a viable company, but as one of the union leaders said recently such decisions seem mainly to come at the expense of lower level workers.

If the challenges that LIAT faces are not addressed expeditiously it will only be a matter of time before I say to the travelling public for the first time in my entire aviation career, “brace for impact.”

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