LIAT is facing growing pressure to restructure its business due to the impending entry of Eastern Caribbean Express into a market overcrowded with financially struggling regional carriers.

St Lucia-based Eastern Caribbean plans to make its debut early next year, backed by Air Jamaica. The carrier, bolstered by local political support, intends to operate an unspecified number of 37-seat de Havilland Dash 8 and Shorts 360 turboprops.

The two mostly likely airlines to be affected by the start-up, of the 10 competing for market share, are local operator HelenAir and Antigua-based LIAT. Eastern Caribbean's impact "is going to be widely felt throughout the Caribbean, which at best is growing by 3% per annum. Someone is going to have to give up traffic", says a local airline executive.

LIAT has appealed to local island governments for financial help, but has received little response. St Lucia, which claims LIAT owes it $1.6 million in ticket taxes and airport user charges, has publicly backed Eastern Caribbean.

Trinidad and Tobago-based BWIA International Airways has tried unsuccessfully to offload its 29.9% holding in LIAT, after efforts to co-ordinate services were politically scuppered. BWIA instead plans to expand its own Dash 8-300 regional turboprop fleet. "The problem is BWIA is seen as being for the benefit of Trinidad, not the Caribbean," says a local airline source.

Speedwing, British Airways' consultancy, was recently called in to advise on LIAT. It is understood that the consultancy made three recommendations to LIAT's private Antiguan owners - either shut the carrier down, financially restructure it or seek government subsidies.

The airline has opted for the second course of action, but faces some difficult decisions. The hardest is cutting the size of LIAT's 963-strong workforce and bringing it into proportion with its three Dash 8-300s and nine -100s, two of which are being withdrawn.

Source: Flight International