Minister of Tourism and Civil Aviation John Maginley has played down the threat posed to LIAT by low cost carrier Redjet and said he is more concerned about competition from Caribbean Airlines.
The Barbadian-based Redjet, which is promising fares below US $10, recently received the go ahead to fly into Jamaica and Trinidad and Tobago.
“My main concern is not really Redjet. My main concern is Caribbean Airlines and Air Jamaica and the subsidies they get in fuel,” Maginley said.
“Redjet won’t get that subsidy. Redjet will have to pay the same cost structure that LIAT pays for fuel so LIAT will be better able to compete over time with the Redjets of this world.”
The civil aviation minister said Trinidad & Tobago’s practice of offering “subsidised” fuel to its national airline is responsible largely for the company turning a profit and creates an unfair playing field.
However, regarding Redjet, Maginley praised the low cost model that it has brought to the Caribbean region.
“It will make airlines become more efficient. People will operate better and in general, low-cost carriers tend to operate about 33 per cent on average below legacy carriers so people can look long-term to paying a little bit less,” Maginley said.
Former director of LIAT and retired pilot Patrick Ryan also said the introduction of Redjet is welcomed despite the potential for competition with LIAT.
“I think LIAT needs competition and the only time I’ve seen LIAT become very effective is when they have competition,” Ryan said.
“I have serious difficulties and challenges with LIAT’s business model. I feel they are doing a lot wrong and there is a lot of room to be twisting their business model around, Ryan said.
The former director of LIAT said the airline’s practice of making multiple stops is a practice he would like to see changed.
“The model needs to be re-examined. You won’t get away with it completely but it is my feeling if you have a passenger and they make more than one stop to get to the destination, you have probably lost money. You have bottlenecked it and you have lost money,” Ryan said.
(More in today’s Daily OBSERVER)