Regionals Update: Caribbean consolidation effort under way

 - August 11, 2008, 9:31 AM

Struggling Caribbean regional airline Liat and fellow money-losing international carrier BWIA will form the basis of a new West Indian airline under a plan by four island governments to stem the tide of red ink that habitually covers their balance sheets. The plan calls for the governments of Barbados, Antigua, St. Vincent and Tobago to form a new holding company under which Liat and BWIA would still operate as separate entities, but share common government ownership. The governments hope to convince other airlines to join the consortium, although top regional competitor Caribbean Star has declined the invitation, as has Air Jamaica.

Based in Antigua, Liat for many years served as the quasi-official regional airline of the Eastern Caribbean, opening in 1956 with a single Piper Apache and evolving toward today’s fleet of de Havilland Dash 8-100s and -300s. However, competition from the likes of Caribbean Star, established by Texas billionaire Allen Stanford some two-and-a-half years ago, and a variety of smaller enterprises has driven yields to historic lows, prompting the region’s more concerned governments to grant Liat interest-free loans and bailout packages.