Former Grenada PM supports CAL's expansion into Eastern Caribbean

Former Grenadian Prime Minister Keith Mitchell disagrees with the Prime Minister of St Vincent and the Grenadines, who is firmly opposed to any expansion by Caribbean Airlines (CAL) into the region to compete with the regional shuttle airline, LIAT.

Last week, Dr Ralph Gonsalves criticised CAL for its planned expansion saying the Trinidad and Tobago national airline would be acting contrary to the rules of the Caribbean Community (CARICOM) with respect to fair competition.

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

St Vincent is one of the principal shareholders in LIAT. Gonsalves was speaking following an emergency meeting of shareholders to discuss declining revenues and cutbacks in service. The trimming began in Trinidad where LIAT closed its offices on January 28, referring clients to travel agents and LIAT's website.

Gonsalves told reporters that LIAT may cease service to some destinations that are not profitable and it may have to send home more employees. He added that some countries in the region don't give LIAT the same opreferential treatment as other airlines. And he was hostile to CAL's plans.

In reaction, Mitchell has said he believes an expanded service by CAL will not only benefit the people of the region but can significantly benefit LIAT.

“Historically, competition has brought out the best in many organisations, forcing them to go beyond mediocrity. We have seen the results in most cases to be improved services at lower cost and the growth of the organizations,” he said.

“While many may look at this new development as a negative I believe it is extremely positive. I believe it is great news for the people of the region and will play a significant role in facilitating the implementation of the CSME,” the former Grenadian leader said.

He said the lack of adequate competition has hurt LIAT and caused its services to decline although shareholder governments have invested significant resources. He blamed it on LIAT's monopoly status.

LIAT is under pressure to reduce airfares and improve service. That pressure is even more intense now with plans by CAL to move into the regional market and news that the new Barbados-based Redjet will also enter the market offering bargain rates.