The Caribbean is different: regional theatre of the absurd (January 4, 2014)

“Fasten your safety belts!” Those words could spell the end of a wonderful Caribbean vacation and the start of a near-nightmare swirling in the airline industry’s equivalent of the Bermuda triangle. I was reminded yesterday that I do not have to weather the storms that are brought on by flying with LIAT (aka “left in another terminal”, “lost in-between Antigua and Trinidad”, or other variants on the acronym).liat-300x180

Yesterday, a friend mentioned that “LIAT broke down in St. Kitts….so we’re stuck indefinitely now!”, then “12 hrs and counting and cannot reach home yet…thanks LIAT!!!” Passenger reviews show LIAT to be one of life’s hated organizations. It hit one of its recent low points this past summer, epitomised by a now-famed letter from a passenger. The passenger noted: “I was intrigued that we were allowed to stop at not a lowly one or two but a magnificent six airports yesterday… And who wants to fly on the same airplane the entire time? We got to change and refuel every step of the way!” It ended “So thank you, LIAT. I now truly understand why you are ‘The Caribbean Airline’. P.S. Keep the bag. I never liked it anyway.”

The Wikipedia page on LIAT pays it few compliments: “LIAT has a very poor reputation among both locals and visitors to and from the Caribbean Islands. Their flights often operate irregularly, with inconsistent arrival and departure. They may depart even if all ticketed passengers are not on board. Baggage is often misdirected or not loaded entirely. They are known for having very poor customer service, late departures, flights cancellation and their staff is thought by some to be surly and unhelpful.” No endorsements, there.

During 2013, the then-CEO, Capt. Ian Brunton, apologised for what he described as a ‘meltdown’ around a re-fleeting exercise, with LIAT changing aircraft from Dash-8 types to ATR-42 and ATR-72 types. The troubles, which stranded thousands of passengers across LIAT’s 1,300 miles of network, started in early August and continued for two months while LIAT struggled with crewing both types and deliveries of the new aircraft. Problems were compounded when an engine of one of the new aircraft took a week to be replaced, and one of the new aircraft was chartered to the Prime Minister of Taiwan in the middle of the debacle. The CEO blamed the numerous flight delays and cancellations on “unscheduled maintenance … crew shortages … bad weather … airport limitations … obtaining licences for operating our new ATR aircraft … Tropical Storm Chantal … strong surface winds … unfavourable weather conditions … airport limitations … and runway lights”. Did he miss anything? Capt. Brunton resigned from LIAT, effective on October 1, 2013.

One of the key shareholder governments acknowledged the real problems, when St. Vincent PM Ralph Gonsalves stated: “LIAT was terribly disappointing to the people of the Caribbean over the summer… It is a difficult airline to manage; and it is an airline which is not a financial proposition, but one which is socially and economically necessary.”

So, As I ponder flying with Caribbean Airlines soon, I give thanks that it’s not going to be with LIAT.

************************

Joking aside, the region will be grateful to LIAT for its efforts to help islanders affected by the recent floods in the Eastern Caribbean, where they are working with the Red Cross to move food supplies.

VAT is your problem?

The Bahamas is standing at the top of the Caribbean version of the luge run

: it’s planning to introduce a value added tax (VAT), from July 2014. I’m not holding my breath. It’s been talked about and hovering in the air for a while. Most Bahamians are frothing at the mouth, incensed that their lives are about to be upturned, and prices hiked. The papers have been full of articles from the business sector that higher prices and administrative burdens and more will herald the death knell of the economy.

Experience from countries that moved from tax-free status to VAT should be an example. The UAE had plans to be the first Gulf state to introduce VAT in 2008. Then, things slipped, and slid, and twisted and turned, and now the plan is to introduce the VAT there in…2014. My understanding is that the Gulf Cooperation Council countries were not ready, for what should be a unified tax system. Whatever the reasons, six years on and VAT is still off the table.

Bahamians need to understand what the tax really means, but that may take more than what the government plans to do by bringing in experts from the New Zealand government, due in January 2014.

I watched a very clear PowerPoint presentation prepared last November, that set out many of the important points:

  • Current tax system unbalanced and overly reliant on customs and excises
  • VAT preferred as superior to sales tax in terms of efficiency and collections; replacing some Customs duties and excises
  • Poor culture of tax compliance; business records-keeping poor
  • Government needs raise B$200 million; proposed rate (15%) high to help correction of fiscal gap

The problem is that most Bahamians wont see or read this little primer. A lot of hand-holding is needed and much talking at the very basic level, and in language that is plain and simple.

I spoke with a couple of senior citizens today about VAT. One, a retired lawyer, thought it was too burdensome for most of the small economic agents, like the ‘little man selling conch salad’, who would not be competent to comply with the reporting needs. Another, a retired nurse, was focused on what and who would be exempt. Now, these are two caring and intelligent people, who keep themselves well-informed. I showed the presentation. They are at least better informed about the principles.

Bad preparation is often at the root of bad implementation. I wonder if The Bahamas is setting itself up to fail.