LIAT’S 2012 Strategy Plan Now BADLY Damaged in 2013

Submitted by Robert MacLellan
Ian Brunton, CEO LIAT

Ian Brunton, CEO of LIAT

On 28 August LIAT’s CEO, Ian Brunton, talked to Caribbean media and finally acknowledged in public some of the real facts behind the airline’s chaotic operations over the last three months. He also described LIAT’s worrying current financial position, in the same month that the airline has taken on a US$65 million loan from the Caribbean Development Bank to fund new aircraft.

However, it was reported that Mr Brunton has refused to have an investigation to hold people accountable for the recent chaos at LIAT. Instead, he said he will organise a “post mortem” (an unfortunate phrase) on what went wrong and use this to reward staff who have performed well during the crisis. Those who “dropped the ball” would be identified for “counseling or better training”.

This statement represents an unbelievable level of arrogance on the part of LIAT senior management and conveys gross disrespect for its customers! Ignore the widespread calls across the Eastern Caribbean for senior management resignations or dismissals at the airline. Instead, LIAT institutes some counseling and better training – presumably, for middle level and operative staff only? No personal responsibility accepted or culpability acknowledged on the part of LIAT’s Chairman, the CEO or the Director of Commercial and Customer Experience – all of whom have presided over three months of disastrous operations across the Eastern Caribbean and an equally disastrous public relations / communications exercise.

Ignore the huge inconvenience and, in some cases, trauma caused to a high percentage of LIAT’s customers consistently over three months. Ignore the great damage done by LIAT’s management to the general economy of the Eastern Caribbean and to prospects for future inward investment. Ignore the negative impact on the region’s reputation as an international tourism destination. Ignore the damage done to LIAT’s management / staff relations. Ignore the potentially fatal damage to LIAT’s own future viability.

Most people agree that the Eastern Caribbean desperately needs LIAT but, going forward, LIAT desperately needs directors and senior management who will take responsibility and who can drive a “low cost airline” strategy that will truly serve the region and not stagger from one financial crisis to another. Success at LIAT is not just about new larger aircraft, future success is about running a marketing led business, with higher passenger volumes and an efficient cost structure.

The latest LIAT management focus appears to be on better future complaints handling, rather than on more useful market research as to what LIAT’s current customers, and potential customers, need and how much they are prepared to pay. With that data, LIAT can strategise how to deliver the right service at the right price to their larger market that existed several years ago. This may involve the airline reverting to code sharing some routes with other Caribbean carriers because the LIAT route network, as currently operated, is not viable without a substantial increase in overall traffic. Across much of the world, airline passenger numbers are rising strongly but at LIAT they have dropped.

In the 2013/14 financial year, LIAT is increasing its already substantial debt by at least US$65 million dollars and yet Mr Brunton reported a 10% (US$30 million) decline in 2012/13 revenue against 2011/12 results. He further stated that company expenses, related to stranded passengers during LIAT’s recent busiest summer months, will have wiped out profits for that period this year. Clearly, this will have a harsh negative impact on LIAT’s 2013/14 results and will likely necessitate a significant early re-write of last year’s strategy plan and the related medium term financial projections for the airline.

The point is LIAT’S PROBLEMS ARE NOT OVER YET. A continuation of the current LIAT management style will not increase revenue, will not attract new equity investors and is not going to achieve the positive financial results necessary to cover the airline’s future higher levels of debt service, associated with funding the new aircraft. That vicious circle in LIAT’s historical business model needs to be broken now and, as recent events so clearly prove, this can only be achieved with fresh new expertise at board director and senior management level.

Notes.

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.
For further information contact Robert:

(1) 758 285 4964 or robert@machospitalityconsultants.com
www.machospitalityconsultants.com
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90 responses to “LIAT’S 2012 Strategy Plan Now BADLY Damaged in 2013

  1. If respective LIAT destinations want to run the airport infrastructure as a profit centre we will continue to have a problem. There must be an agreed baseline metric and this s only part of the problem.

  2. millertheanunnaki

    @ ac | September 8, 2013 at 4:11 PM |

    OK Mr. ac or friend of the real ac, the TB is different from LIAT. So how come the government allows the TB to face serious competition from private sector players like ZRs and minibuses?

    How would you describe the ongoing cannibalization of the TB by outsourcing some of its major functions such as maintenance?

    The next deal on the market is the leasing of buses from the private sector with the stipulated requirement or provision to operate (by private sector) these buses on major routes for a ‘concessionaire’ fee.
    This would leave the TB as shell of an agency responsible for the allocation of licences to operate routes. We can see a rather ‘clean’ merger of the TB and the Transport Authority

    Bush Tea has proposed an alternative model based on the COOP. What have you to offer as an alternative to the current fiasco involving political tribalism?

  3. The only way the coop model can work if one considers the vagaries of the LIAT market is if those routes which are likely to be profitable are made to subsidize those which will struggle to be profitable. Shareholders are on record to suggest that LIAT is not in the business to make profit, they will take a breakeven position. Such a model would call for a level of appreciation of the situation at hang, in other words, LEADERSHIP!

  4. millertheanunnaki

    @ ac | September 8, 2013 at 4:52 PM |
    “There is a role for government. That role is in regulation for safety and to promote competition.”

    Hello, ac’s friend:
    Your case for the privatization of LIAT and for an open (but regulated) skies policy is well put.
    It’s a pity that, with your expertise in “accounting, finance and business management”, you are incapable of seeing the application of a similar model of private sector ownership and operation (but with State regulation) for local mass transport as prevails in many parts of the world.

    But the main question to you is if you are prepared to argue a similar case for the GAIA with the government retaining a minority share but full regulatory powers regarding safety and national security.

  5. @Miller

    Why must you pull the discussion to local?

  6. millertheanunnaki

    @ David | September 8, 2013 at 6:01 PM |

    Because there is no regional equivalent to LIAT as a business model other than CAL to compare the effectiveness of the argument for State(s) ownership versus privatization.
    There is no party politics being assumed here.

  7. @ David
    The only way the coop model can work if one considers the vagaries of the LIAT market is if those routes which are likely to be profitable are made to subsidize those which will struggle to be profitable
    ***********
    Credit Unions are COOPS. Which other area of business had better performance in Barbados in the last 30 years?
    Are these not comprised of members – some of whom are successful, and some who will struggle to make do…? It is an unbeatable business model.

    Don’t mind Miller with the shiite talk about socialism……to some people COOPs will never be recognized as viable business models for Barbados – because their boards tend to be too black and independent.
    …and YES politicians do tend to gravitate to these organizations….like Irene, James P and others…..but look and see how long they last…..only COOPERATORS feel comfortable long term….

  8. Privatization is just code talk for encouraging the Government to hand over state assets to private clubs which operate along the lines of the Cattlewash and Bath cliques.

    These entities BELONG to the people of Barbados and if the brass bowl government cannot get them run, then they should simply hand them over to the PEOPLE whose sweat and blood paid for them…often with hard earned pennies…
    THIS CAN BE DONE BY CREATING COOPERATIVES COMPRISED OF ALL CITIZENS WHO WANT TO JOIN…WHICH CAN ASSUME OWNERSHIP.

    Bushie is TIRED of hearing Miller, Arthur and the Mallet clone Mascoll with this shiite talk about selling off the people’s HARD EARNED silver….
    …imagine the bajan people paid to sent these brass bowls to university to come back and sell them out…..back to the same plantation class that old bajans worked DECADES to escape.

    Miller STFU do!
    What privatization what?!

  9. millertheanunnaki

    @ Bush Tea | September 8, 2013 at 8:02 PM |
    “and YES politicians do tend to gravitate to these organizations….like Irene, James P and others…..but look and see how long they last…..only COOPERATORS feel comfortable long term….”

    Is Maxine McClean included in the “others”? There are some in the woodwork waiting to come out too.

    BTW, Bushie, would you have approved the purchase of that part of the CLICO business that the Public Workers’ Credit union took over to help DT’s friend?
    So Bushie when is the COOP going to make a bid for the Transport Board to stop the government from selling to Simpson?
    Don’t you think that UCAL was the perfect COOP?

    You think the COOP could handle the proposed cane sugar industry?

  10. Every single issue has to be denominated by DLP/BLP.

  11. Honest conversation about Liat PT2 Stephen Joachim

    An open skies policy is one that calls for the liberalization of the rules and regulations of the aviation industry. This will create a free market for the airline industry and will promote competition. This policy must be adopted at the regional (OECS and Barbados) level and preferably CARICOM level.
    I promised in the last programme to begin addressing the arguments for maintaining the status quo of government ownership of LIAT. The first argument I usually hear when I suggest that LIAT be privatized or killed is “but we won’t have any air transport”. This is said by people who have given no thought to the subject and/or do not understand how the competitive marketplace works. Assuming, and this is the critical assumption, that we have an Open Skies policy, which simply means an open competitive marketplace where the same rules and regulations apply equally to all entities, then the first thing that will happen is that existing airlines will expand (this likely includes SVG Air and Mustique Airways). The second thing is other individuals and Companies will get into the airline business. How do I know this? Because we have seen it in Europe and North America. I have evidence for my position.
    The second argument is, “we tried competition before with Carib Express and Caribbean Star and they both failed”. They failed because LIAT continued to “compete” while receiving government subsidies or “investments”. We are currently told that LIAT competes on some routes with Caribbean Airlines (CAL). We are told that this is unfair competition because the government of Trinidad and Tobago provides cheap subsidized fuel to CAL. However, we hear very little of the fact that LIAT continues to receive heavy subsidies from their government “investors”.
    The third argument is that air transport cost between the small islands of the OECS is by its very nature is unprofitable and therefore some destinations would not be serviced in a competitive market. So I then ask which markets? There are not many markets in the OECS that are smaller than Union island, Bequia or Canouan. These markets are served by two private airlines.
    The fourth argument is that private airlines will raise prices and make flying unaffordable to most people. Is flying LIAT cheap and affordable to most people now? Lets assume that private airlines do start to charge more than LIAT does. Lets go further and assume they begin to gouge the general public. Then what? Well its actually quite simple. In a competitive marketplace, other airlines (or people) will begin to fly these hugely profitable routes. How will these new entrants gain passengers? They will lower prices to compete. This competitive process is normal in most of the rest of the economy and normal in all competitive airline marketplaces in the rest of the world.
    I think have addressed most of the major arguments for government maintaining LIAT with taxpayers money, our money. Millions and millions of wasted dollars that could be better invested in health, education or infrastructure. When will we stop this insanity?
    Let me also repeat: there is a role for government but it must be limited to regulation for safety and to ensure a fair competitive environment.
    We have an economy to build. LIAT is an obstacle to that process. We have tried the government ownership route for too long!!! We must admit failure and move on. .

  12. And u miller get up in here telling ac to leavee well alone. ac dare not speak evil of the sacred cow driven by the self serving interest of those in the tourism industry even if it means that LIAT who have demonstrated over the years to be nonprofitable should still continue to fly and fly literally at taxpayers expense until all the wheels fall off.

  13. millertheanunnaki

    @ ac | September 9, 2013 at 8:42 AM |

    Now that you have gone back to your ‘old own writing self’ would you be prepared to see the return of Redjet to the skies but with a change of name to Calypso Airways?

    The shareholder governments of LIAT just backed a large loan from the CDB to replace the carrier’s fleet. Who will pay back the loan if LIAT falls from the Caribbean skies?
    We agree with your friend’s argument that one of the more attractive options for making LIAT serve a more effective purpose is to privatize the damn thing. But who would want to invest in airline in a region so politically disjointed with nepotistic administrations? Why not focus on the existing HQ problem where the airline’s political interference, managerial incompetence and serious cash haemorrhaging are blatantly manifested.

    An alternative is for the shareholder government’s to swallow their pride, put aside the huge political egos and bring in a management team from overseas to run the airline.

    You would be surprised how fast that airline would turn around once foreign managers (preferably white) are “running’ things. The plantation mentality among Caribbean people especially in Barbados is still alive and flourishing.

  14. And yes u don.t have to agree with ac. many of the same points the article makes were said by ac. however u miller choose to dismissed them as nonsense now to find your self somewhat reluctantly agreeing with the article.. all decisions past and present to do with LIAT are driven by self servings exploits who knows how to play the system for their own interest nothing to do with country no matter how it hurts and pains the taxpayers and the tourism sector are the biggest players of them all

  15. Yes the bajan mentallity can be easily infuenced once the word FREE is injected ..the other carribbean island 11 of them with a lower literacy rate had the vision and commonsense to realise that an enterpise such as LIAT was too big to handlem. but one must give them credit they are savvy enough to drink and eat from the trough of the big three shareholders without putting in a dime . So much for intelligence among the three investors However political expediency took priority. everything else could wait.

  16. millertheanunnaki

    @ ac | September 9, 2013 at 12:43 PM |
    “..however u miller choose to dismissed them as nonsense now to find your self somewhat reluctantly agreeing with the article..”

    You are back with your lying ways. Just like the time you said you went to St. Lucia and later “outed” by David of BU as a pathological liar?

    Now bring evidence by quoting extracts from my contributions to the LIAT issue where I said you or anyone else were talking “nonsense” regarding the privatization of LIAT.
    The issue here is whether there will be willing buyers for the airline given its current financial mess and high level of political interference into its administration and operations.

  17. the longer these govt continue to prop up this doomed airline ,the less likely they would be a buyer or any kind of buyer when LIAt comes crushing down, the movers and shakers in the tourism industry should be ashamed of selling this asinine idea under the guise of benefitting the tourism industry to the three govts who bought it hook line when all they were looking out for what was benefical for themselves. i wonder how these people sleep at night,most notably is the silence coming from the likes of Adrian who might have been part and parcel with his tourism matters articles in touting the purchase of LIAT .

  18. Several emails reaching BU suggest CEO of LIAT Brunton has resigned.

  19. however the elephant is still standing in the room that being a financially crippled airline. the question being asked, how does the shareholders and probably new management correct that problem. CEO burton can be replaced ,however the nuts and bolts needed to keep this airline from freefalling are missing, Burton is a casualty through no fault of his own, In the wrong place at the wrong time, if reports are True..

  20. millertheanunnaki

    @ David | September 15, 2013 at 6:25 PM |

    We should not be surprised. He has taken the fall for the recent fiascoes the airline suffered. The bad international press from customer letter, the PR attack on Sir Richard’s and most telling the CPL confusion in the midst of massive equipment failure.
    But the politician’s have as usual found the whipping boy to hide their nasty involvement in the day-to-day management of that beleaguered airline.
    So when is Jean Holder going to leave the scene, permanently?

    That airline will never succeed as long as politicians have a say in the direction and management of it. The next CEO would most likely be another politically chosen lackey.
    Why not bring a white man with a brand new management team from the UK or Canada or even Australia? Or maybe we can get Alvin or Bushie to run the damn thing.

  21. @Miller

    We need to see changes to the Board as well.

  22. Common sense is not common

    Ian Brunton could afford to resign if and that is an IF his getting those french designed plane which was rejected by CAL now to be passed off to Liat means a big french bonus.Oui,Oui!

    I wonder how big his cut is..

  23. Given the structure of LIAT a major procurement decision had to be approved by the Board of Dorectors after some kind of tender process. Even if Brunton was able to influence the process the final decision was not his.

  24. millertheanunnaki

    @ Common sense is not common | September 17, 2013 at 2:09 PM |

    If Ian is involved in any kickback scam he could have only done it with the collusion of the Board; and especially the Chairman who is a Bajan and the Barbados government’s representative.
    Would you agree, Commonsense or is this a case of a smart Trickidadian by the name Ian taking gold coins from the Paris Fountain?

  25. David,
    The decision to purchase the ATR’s was taken long before Ian Brunton became the CEO. Contrary to what “Common Sense” said.

    As a Dem, they like to hurl accusations at others but my mother always told me that people judge you by their own standards, not yours!

  26. Common sense is not common

    Agree Miller.I am hearing some are not happy with that choice.As major shareholder the government need to tell us more about how our money is being spent on this fiasco called Liat.

    Prodigal I feel embarass for you sometimes.You must be a very unhappy person.You seem to eat,and drink DLP.

  27. I expected you to respond just as like you did. Don’t feel sorry for me, feel sorry for yourself. My life is complete, it is awesome. I am so blessed!

    I forgot that no one can touch your wicked incompetent party.

  28. I have been giving my two cents worth on the long serving,tired,waste of time executive management of LIAT and the political inteference especially at the Antigua headquarters.As far as I recall and I saw the names of the Barbados Board representatives,Jean Holder was not a Barbados rep.There was a PS Mz Gabrielle Springer-Taylor and a banana farmer Trevor Mayers from the constituency of the dead king of St John.I cannot recall the third member .
    Barbados should not have put over a $100 million in LIAT.Never,never!!They will not get any ROI unless and until there is a political and economic union of these small Caribbean States and everyman pay according to his demand for services of the carrier.The Leeward and Windward Islands including Barbados is a grouping of mini nations divided by a common language and separated by an airline called LIAT.Battles are lost by armies which turn up late.Money is lost by LIAT run by an army of occupation which ensures the carrier turns up late.Our taxes are hard at work in LIAT.

  29. How many ac’s there got in here … I pick up three already, and the one in Arizona ain’ even get back yet …

  30. Common sense is not common

    Prodigal

    Did you see my DLP party card while you were busy working in the opposition office?

    It is fine to be supportive of a party of choice but you seem obsessed with anyone who does not fall for your BLP propoganda.

    My family and I are busy ensuring that we hold our own in these wicked economic times.Party cards are not for the likes for people like us unlike others who seem to breathe and have their being in party membership.If the cap fits ……..

  31. Free market theory DOES NOT WORK in miniscule markets like the Caribbean. The most classic example of this is the result of the CSME experiment in Barbados:- Big fish swallowing up all of the other fish and domination by one or two power brokers that are quick to make bottom line decisions that literally f#ck countries up …!

  32. As a responsible person, you should not believe what CCC comes on to BU and says when he announced and you believe that I am a person who works in the Opposition office. I would be delighted if that person would come on BU to dispel the myth.

    As for you saying that I am intolerant of anyone who does not believe in the BLP, I can say the same of you, you are intolerant of anyone who does not believe in the DLP or who deigns to criticise this incompetent government. If you are honest, you would admit that the DLP is incompetent and lied to the people to win an election.

    Do you expect people to be happy with this? For your information, I am not a card carrying member of the BLP, I just support the party. So can I ask you to stop labelling me?

  33. Here we go again. Gabriel both political parties have been subsidizing LIAT. This is not a political issue per se. What are the options? We know that the market cannot reasonable support a pure free market scenario.

  34. Common sense is not common

    Prodigal

    I am not going to be in any tit for tat with you,but you could cut the crap pretending that you are not Mia’s assistant Pat and that you are not a former candidate for St Joseph.

    I told you already that I admired a lot about you but I am getting turned off by your style of nastiness and rumour mongering.

    Support your party same as CCC and AC support theirs but please don’t allow others to make you into a petty,bitter individual.

    Remember politics has a very limited shelf life so make friends with all, cuss the Dees when you feel like, but be fair and reasonable and give them praise when they deserve.

    Or can you not find the strength to do that?

    See I can agree with Miller and with CC,I can agree with Gabriel and with AC,it is all about issues and not personalities Prodigal.

    Enough of that for now,have a good evening.

  35. millertheanunnaki

    @ Prodigal Son | September 17, 2013 at 4:16 PM |

    Same thing here, Prodigal. The miller has been fingered for all sorts of people from Peter Miller to Peter Simmons to Kerrie Symmonds to OSA woman to Jerome X.Walcott to even Mia woman.

    The problem with them is that the intellectual tag team Prodigal & Miller is a thorn in their dangerous deceitful destructive lying incompetent backsides. We shall always blind them with the light of Truth.

  36. Amen, miller. You have my back and I have yours! It is a free Barbados and people are free to believe what they want!

  37. Just don’ you be talkin’ Free market mumbo jumbo for essential services …!

  38. @Commonsense is not common

    How can you expect others to take you seriously if you yourself betray one of the tenets upon which we debate. BU is an anonymous blog for those who want to be.

  39. Common sense is not common

    David/BU

    Your point is well taken.

  40. I saw a comment above and had to respond to it. The comment was that an expenditure of such a size as the lease of the ATRs could not have been approved without the final decision of the Board.

    I agree with that, but I do not agree with the inherent assumption that the Board knew what it was doing in that approval process.

    Brunton was a pilot for BWIA and became a lawyer (don’t ask me how, when or why). It is my theory that by arrangement Brunton was “fired” from CAL and put out as bait for LIAT. The shareholders swallowed it, and he arrived at LIAT as a Trojan Horse with a mandate from T&T to do as much damage as he could so that Trinidad could buy it for a song and do us all the ultimate favour to “take the burden off our shoulders”.

    This theory is supported by the fact that the CEO position at CAL he was “fired” from on Nov 27, 2010 is still unfilled, and was only just advertised – almost three years to the day after he was “terminated” – my goodness, coincidentally just after he resigned and ran away from LIAT. and is now “available” again.

    (Take note: If Brunton returns to the CAL CEO position, I will claim that as living proof of the LIAT Trojan Horse Project.)

    So Brunton has the intelligence, knowledge and experience to know that you can make statistics prove anything, and that you can easily bramble a Board of ignorant self-made country people with almost any presentation if they had no clue what you were talking about in the first place.

    In other words, to the Board Brunton IS the expert…and they would, should and could have just taken his word for it. Certainly the “aviation expert” Chairman would not have known the difference.

    If there was a Board composed of intelligent aviation people who knew the difference between an aileron and a rudder, I would accept that here was an intelligent decision made after they had done their own research and were all genuinely satisfied it made sense.

    But the LIAT Board – the majority for Barbados, anyway – are all political appointees, self-made loyal Party men who may know their own business but diddly squat about aviation – except perhaps Trevor Mayers, who was involved in an ancient DC3 money-losing cargo operation Carib West which eventually went bankrupt back in the 1960s – and is totally irrelevant as far as LIAT is concerned.

    Did I mention another coincidence – that the same aircraft Brunton got LIAT to order are the ones CAL is operating now and replacing their Dash-8s with? My point is that if CAL were to take over LIAT, there would be a common fleet. How convenient.

    I have been around Caribbean aviation since about 1970, and I swear this is the first time I have even had the slightest feeling that LIAT is about to fail. My prediction – from the inter-island inside information that I know – is that LIAT will be irrelevant in about 5 years, maximum 10.

    I wish it were otherwise, but my sense of the future is seldom wrong.

    Finally, now that Brunton has scurried back to Trinidad to re-apply for the CAL CEO position, I wonder how long it will take for T&T or CAL to propose a merger, take-over or purchase of LIAT?

    Hmmmm…

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