How will LIAT’s situation impact local tourism?

The future of regional airline LIAT seems to grow grimmer with each day. Recently the Prime Minister of St. Vincent and the Grenadines, Ralph Gonsalves, warned the airline might be forced to shut down to make way for another. Antigua and Barbuda Prime Minister Gaston Browne downplayed the warning, assuring that his government would not allow such a thing to happen. This week saw the main shareholder governments of Antigua and Barbuda, Barbados, Dominica and St. Vincent holding more meetings, and the St. Kitts and Nevis government announcing it would provide EC$1 million in emergency funding. 

This comes on the heels of the establishment of an advisory committee in March to consider proposals from LIAT. In that same month, the Grenada government also contributed EC$1 million. In the midst of all this uncertainty is the firm stance by Prime Minister Allen Chastanet that his government would not be providing financial support unless there are fundamental changes. But with the airline serving as a major carrier for visitors to Saint Lucia, might the prime minister find himself spitting at the sky?

The regional tourism market plays a crucial part in the overall growing industry, consistently ranking in the top three markets for stay-over arrivals, alongside the United States and the United Kingdom. Figures from the Central Statistical Office indicate that from 2009-2015, total stay-over arrivals were 278,491; 305,937; 304,639; 306,801; 318,626; 338,158 and 344,908.

The Caribbean region came in third after the UK, with 60,183; 53,938; 35,279; 56,067; 37,465; 55,484 and 62,745 respectively. In 2016 and 2017, total stay-over arrivals stood at 347,872 and 386,127. The Caribbean surpassed the UK in those two years, bringing in 67,226 and 76,349, while the UK had 64,514 and 72,580.

Officials from the Saint Lucia Tourism Authority declined the STAR’s request for comment on the situation. Meanwhile, the Saint Lucia Hotel and Tourism Association’s Chief Executive Officer, Mr. Noorani Azeez, says that with LIAT being the main carrier of regional visitors, the airline plays a critical role for the island’s number one sector.

“We are concerned,” he acknowledged. “For us, LIAT is a carrier that facilitates a number of visitors to the destination from the regional market, and this is a key market for our tourism industry in Saint Lucia. There are a lot of small and medium accommodation entities who benefit from that strong regional visitor arrival market, so there would be a ripple effect of that carrier going under. These properties can least afford to have long periods without occupancy.”

While that may be the case, he is not blind to the airline’s struggles. He said that while the solution to LIAT’s problems is not clear-cut, there is merit in Chastanet’s position. The fact that the airline is once again in financial straits, he says, should cause regional governments to rationalize clearly what LIAT’s purpose should be. He believes Caribbean governments need to take a careful look at how they encourage and nurture the free movement of goods and services among the various islands. “If that’s the ultimate aim, perhaps we need to look at how we can attract more players into the market, thereby allowing market forces to dictate who survives and who doesn’t.”

In a press statement on Monday, LIAT indicated that despite the challenges, it will continue to operate its daily flight schedule. The release noted that ongoing discussions with governments about a Minimum Revenue Guarantee Model “have been slower than anticipated.” Still the company remains hopeful.