The Caribbean needs radical change at LIAT
Last week our hospitality consultancy organized a visit by potential developers to the Eastern Caribbean. The participants on the trip - from UK, China, Trinidad and St Lucia - all experienced significant delays or cancellations on LIAT flights. I have traveled regularly with LIAT throughout the Caribbean for over sixteen years but recent events represent a new low point. The challenge of convincing investors to consider tourism developments in those islands, which are served primarily by LIAT, is now onerous indeed.
Gregor Nassief’s recent open letter to the LIAT board of directors has already catalogued the airline’s worst ever performance over the last three months and called for management heads to roll. This solicited a response from LIAT’s chairman, Jean Holder, which addressed virtually none of Mr. Nassief’s points and seemed only to confirm the level of delusion in the highest ranks of LIAT management. Having received a worthless and self-serving response, Mr. Nassief has since called directly for Dr. Holder’s resignation.
In his initial response to Mr. Nassief, Dr. Holder refers to the “track record” of the current company leadership and so I felt the need to clarify the true meaning of those words. One dictionary provides the following definition: “Track record: (1) The best recorded performance in a particular track-and-field event at a particular track. (2) The past achievements or performance of a person, organization or product.” The definitions seem to suggest some degree of excellence, a million miles away from the performance delivered to its customers by LIAT!
Patience with LIAT is now at an end and senior figures in the hotel and tourism industry across the region are quite legitimately questioning Dr. Holder’s strategic and financial track record as Chairman of LIAT since 2004. They are equally entitled to evaluate Captain Ian Brunton’s track record, firstly, as former CEO of Caribbean Airlines and his departure from that company and, since 1st August 2012, his track record as CEO of LIAT. Captain Brunton has been responsible since that date for forward planning and day-to-day operation of the airline. Therefore, he must have been closely involved in the recent scheduling of LIAT’s aircraft acquisitions/disposals program and the associated crew training – the apparent root causes of the recent appalling performance.
Yet Dr. Holder’s response to complaints asks us to believe that the current LIAT senior management team is the best available, with no possible alternatives. No criticism of Caribbean management, as such, is implied here - the performance of a previous British CEO at LIAT, also hired by Dr. Holder, proved to be very unsuccessful and short-lived only a few years ago.
Furthermore, LIAT’s PR and marketing efforts are generally recognized as being amateurish and without ready international appeal. Therefore, the airline is likely to continue serving primarily an indigenous regional market. However, inter island tourism has decreased by approximately 60% over the last seven years - due largely to ever increasing LIAT fares, which are arguably the consequence of minimal competition for LIAT in the region. A value for money proposition and effective marketing are paramount now in attempting to rebuild inter island air travel volume and, with it, levels of inter-island tourism.
While LIAT’s market undoubtedly presents specific challenges, including high airport taxes, much might be learned from the business models of cost efficient airlines around the world, such as Jet Blue, South West Airlines, Easy Jet and Ryan Air. Without an increase in volume of passengers, it is difficult to see the financial logic for LIAT’s new larger expensive aircraft flying the airline’s current thin routes with high-cycle/short flight operations.
The very urgent need for fresh strategic thinking and increased professionalism in management systems at LIAT is self-evident. As many governments in the region are clearly reticent about making equity investments in LIAT, is that not further proof that they too have little confidence in LIAT’s business strategy and management? There appears little chance of private sector investors ever backing the current regime based on their existing “track record.”
Robert MacLellan is Managing Director of MacLellan & Associates, the region’s leading hospitality consultancy since 1997. He is a Fellow of the Institute of Hospitality, a Member of the International Society of Hospitality Consultants and has a Masters Degree in International Hotel Management.