CDB to Govts: Create right environment for efficient air travel

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(Barbados Today) – It is still early days, but one of the main funding partners behind the financially-troubled airline, LIAT, is proposing that several key changes must be made to the aviation business in the region.

In fact, President of the Caribbean Development Bank (CDB) Dr Warren Smith told Barbados TODAY he believed there needs to be a multi-faceted approach to improving the aviation industry in the Caribbean, which would include changes to governments’ airport taxes and efficiency concerns.

“I think there is a lot of work that needs to be done not only in relation to coming up with a new mechanism, a new entity to serve the region, but I think there is also a lot of work to be done in the business environment in aviation,” said Smith.

He explained: “Our countries need to address the issue of taxation on air travel. We also need to look at the way in which we move people through our airports – in many instances there is a lot of work that needs to be done. It needs to be more user-friendly and you need to be able to have connectivity that is not as painful as it is today. That is part and parcel of the solution. So it is a multi-dimensional challenge as far as aviation is concerned in the region.”

Smith was speaking against the backdrop of recent moves by LIAT’s shareholder governments to save the island-hopping carrier from going under.

At the end of last month it was announced that LIAT would be liquidated and a possible new entity should be launched.

And following uncertainty over the past few weeks, major shareholder governments – Barbados, Antigua and Barbuda, St Vincent and the Grenadines and Dominica – reportedly reached an agreement that could see the airline flying again by the end of October, albeit, without Barbados and St Vincent and the Grenadines as shareholders.

Following a virtual meeting on Monday, Antigua’s Prime Minister Gaston Browne said “The interventions were heard and we came to the consensus that we should sell the three planes that are owned by LIAT and charged to the Caribbean Development Bank.”

LIAT currently has several outstanding loans with the CDB.

Asked to comment on the development, Smith was careful not to mention the loans or whether the bank was prepared to pump more funds into the airline, but simply said “The matter is in the hands of the Caribbean shareholders.”

He added: “The region needs efficient and effective air transport. We are islands. We are an archipelago. So for us to be able to actually have an effective intra-regional economy, there is no question that we are going to need to have effective air transport and sea transport among others,” said Smith.

“It is early days. The shareholders have to sort out their business. From the standpoint of the Caribbean Development Bank, we have been very supportive of the regional aviation system and I think we have done our job.”

He said so far, no government or private sector entity has approached the CDB for assistance in setting up a new airline.

With LIAT still facing the possibility of liquidation, shareholder governments are expected to move swiftly to put a “reorganisation” plan in place.

It is then hoped that shareholder governments will negotiate with creditors to bring down the airline’s debt or to bring liabilities and assets to “some form of balance and at the same time come up with an operational plan, which will see a very lean LIAT, especially during this period of COVID-19” Browne had indicated.

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