KINGSTOWN, St. Vincent – Cash-strapped regional Airline LIAT is actively exploring its legal options to redress what it says is unfair competition from Trinidad and Tobago’s Caribbean Airlines (CAL).
Prime Minister Dr. Ralph Gonsalves, chair of LIAT’s shareholder governments, said at a media briefing this week that the airline intends “to challenge the subsidy which Caribbean Airlines has been given by the government of Trinidad and Tobago” — its sole shareholder.
“We can’t have Caribbean Airlines competing with LIAT on a footing, which is not fair. We must be on the same footing,” said Gonsalves, who is the CARICOM and Organization of Eastern Caribbean States lead spokesperson on air transportation.
He said that CAL pays a subsidized price of US$50 a barrel for aviation fuel while LIAT pays between US$110 and US$120 a barrel.
It is just not right. It is wrong,” Gonsalves further stated.
He said the subsidy was similar to Trinidad and Tobago selling fuel to its manufacturing sector – at cheaper rates than to countries that import that fuel. This gives Trinidad “a decisive advantage” in the manufacturing sector, leading to “trading not on a level playing field,” Gonsalves said.
He said the Revised Treaty of Chaguaramas, which established the CARICOM, and the Air Services Agreement among the members of the regional bloc, address issues such as the CAL subsidy.
“We know it is established that CAL gets a subsidy, a significant subsidy from the government of Trinidad and Tobago. I think they call it a fuel hedge. A subsidy by any other name is still a subsidy. It doesn’t matter what you call it. So that is an important issue, which we have to address very seriously,” Gonsalves said.
“We have been talking about this thing too long. It is time for us to use the juridical institutions of the community to address problems, which put us in a disadvantageous position where we ought not, according to the Treaty, according to the agreement, be put in a disadvantageous position,” Gonsalves further said.
“That is our view, but we have to have it substantiated by legal opinion and then we take the necessary action,” he added.
Gonsalves said that LIAT shareholders would prefer to have the situation settled through political discourse.
“But if they cannot so be settled, we have to go and assert our rights in the way that citizens can assert their rights whenever they feel they have them and they are being disadvantaged.”
LIAT’s decision to sue Cal comes as Devant Maharaj, Transport Minister in Trinidad and Tobago said last week that the airline would “continue to aggressively pursue markets in all territories in the Eastern Caribbean”.
Maharaj said he would await any pre-action before commenting on the possible lawsuit.
“I shudder to think that any board under my remit would breach any law and that includes CAL,” he, however, said.
St Vincent and the Grenadines, Antigua and Barbuda, and Barbados currently control the majority stake in LIAT, which lost US$46 million last year, US$26 million more than in 2010.