St Vincent PM accuses CAL of trying to drive LIAT out of business, calls it violation of CARICOM rules

Prime Minister Dr Ralph Gonsalves of St Vincent said Tuesday Trinidad and Tobago’s national carrier, Caribbean Airlines (CAL), will be creating unfair competition for LIAT if it goes through with its plan to expand services into the Eastern Caribbean.

Works and Transport Minister Jack Warner spoke last week about a possible merger with various airlines, including LIAT, to make CAL the airline of the Caribbean. LIAT has denied that there are merger plans.

Warner told Parliament Cabinet had been advised that CAL's fleet upgrade is “the first step in attaining the vision of premier region placement in an intra-regional network...to replace the operations of LIAT 1974 Limited."

Gonzalves told reporters, “I find it very strange that officials from the government of Trinidad and Tobago and CAL could be talking about LIAT as though they own it, that they will come into the Eastern Caribbean and it is only a matter of time that they take over LIAT.”

CAL is buying nine 68-seater Turbo Prop aircraft from the European manufacturer, ATR, for US$200 millio as part of its expansion plans. Delivery of the planes are to begin in October 2011 to replace the airlines current fleet of five Dash-8 300 aircraft.

Gonsalves was speaking following a meeting of principal shareholders of the regional commuter airline. 

He said if CAL moves to compete with LIAT it will violate CARICOM rules agreed by the Heads of Government in the Revised Treaty of Chaguaramas and the multilateral treaty signed by Heads of Government in 1996.

He said the treaties clearly address the issues of fair competition, the establishment of tariffs and subsidies and the interests of LIAT must be protected based on those provisions.

“If somebody wants to come into this region and take out LIAT from the air and replace it with a monopoly based outside of the shareholders of this sub-region, there is a problem.

"And bear this in mind, while we have to pay US$102 a barrel right now for aviation fuel CAL they pay US$50 dollars because they are subsidized by the government of Trinidad and Tobago…The Trinidadians call it a hedge; it is a not a hedge, it is a subsidy.

"Let us call the animal by the name that it is. So you want to come into my space with subsidized fuel and take me out of the air…and at the end of that you will then decide at what price you will charge and which services you will have?...Well that is not permissible,” he said.

“I have no problem with competition for LIAT; none whatsoever. In fact I can’t stop another airline coming in on the basis of the multilateral treaty but you have to come in fairly. You have to come in with fair competition. If you are interested in us doing something together we have to talk,” he added.

Gonsalves said CAL has already started test runs but has not communicated that to him or any other regional leader. He is St Vincent's Minister of Civil Aviation as well as the prime minister with responsibility for air transport within CARICOM’s quasi Cabinet.

LIAT and CAL had talks in January 2010 on working together and Gonsalves said that is still possible. However he wants it done in the spirit of cooperation and not takeover.

“I did not sign on to the revised Treaty of Chaguaramas to be somebody’s colony or somebody’s metropolitan centre. That’s not the bargain which we made, so I want to put down my marker very clear on this subject."