The LIAT – Caribbean Star commercial alliance took effect from 1st February 2007. it is said that the main reason for the merger is that both airlines were losing money competing against each other.

LIAT was formed in 20th September 1956 and was sold on a few times over the following two decades. It was bought in the 70s by 11 Caribbean governments to save it from going bust. In 1995 it was partially privatised to stop it going bust again. Historically LIAT has been a loss-making airline; poor management coupled with being owned by governments has been the core problems of LIAT.

It is a false assumption to believe the merger of LIAT is the answer to cash flow problems.

Some advantages of the merger monopoly.

The new airline becomes a monopoly and not a merger. In the short-term the new airline will benefit from an increase in airfares. Merger is unlikely to be a success.

The new airline can shed about one third of office and ancillary staff.

Push up load factors to fully operate all its aircraft to increase cash-flow.

Increase flights to say one every hour and often more connecting flights within the Caribbean.

Why, in my professional opinion, I think the merger will not solve the new airline’s cash-flow problems.

The main weakness of LIAT from its inception is that LIAT has been managed as an airline and not as a business.

Government financial involvement / part ownership is an omen to lose money and not to make a long-term profit.

Too many decisions makers at the new airline. The new airline is likely to be driven by price of airfares rather than by efficiency.

Unless the merger is managed competently as a business by 2010 the government would be back to square one of having to pump more money in to the merger.

Signed……………………………….
Ivan O’Neal BSc(Hons), MSc, MBA, Leader and Co-founder of SVG Green Party

cc:        Hon. Prime Minister                 
            Hon. Leader of the NDP
Media