ST. JOHN’S, Antigua, April 01, 2011 – Regional airline LIAT said Friday that the decision to close its City Ticketing Offices (CTOs) was taken against a background of the need both to cut costs and to adapt the Company’s business model to a changing economic and technological environment and, in particular, to promote the use of web-based and telephone bookings.
Chief Executive Officer Mr. Brian Challenger noted that the airline industry is undergoing a shift from traditional distribution models towards a greater focus on the web as a sales and information channel.
He said that LIAT’s distribution strategy has been modified to correlate with increased web bookings due to the growing number of customers using the internet.
“The closure of CTOs is central to cost reduction strategies with all airlines. This move is aimed at reducing LIAT’s overhead costs and consolidating a new distribution strategy that is consistent with the available technology,” Mr. Challenger said.
“As the Company moves forward with this plan, it is taking advantage of studies which have been carried out or are in train in the areas of institutional strengthening, information technology, route development and strategic planning,” the LIAT CEO added.
He explained that over the past two years, LIAT, like many other companies both regionally and internationally, has not escaped the impact of the global economic crisis.
“In addition to operating in an environment of escalating costs, the Company’s financial performance has also been negatively impacted by increased competition on traditional LIAT markets and extremely high fuel prices.” Mr. Challenger said.
“Fuel prices have increased from US$40 per barrel in 2008 to US$90 per barrel in 2010 and are forecast to be US$112 per barrel in 2011. More than half of the losses incurred by LIAT in 2010 were directly due to the spike in fuel costs.”
Based on these and other factors, Mr. Challenger said LIAT had to implement cost reduction initiatives in order to ensure its viability going forward.
He said that LIAT’s Management had been charged with developing a programme to ensure that all statutory and collective bargaining commitments and procedures are met for the affected workers; and that the company expected to work closely with its workers’ union representatives to facilitate the processes relating to closure of the CTOs.
The LIAT CEO said that throughout the process, the workers’ representatives were kept informed by way of correspondence and meetings of matters relating to the CTO closures, the latest of which was held in Barbados on Tuesday March 29 with the Company’s Chairman, and representatives of the Board of Directors and management.
At Tuesday’s meeting the Company spent a great deal of time sharing with employees’ representatives the real challenges going forward in respect of both current and capital costs and the unlikelihood of any bailouts by governments. It shared with them not only the need to cut costs but to restructure its operations and change aspects of its business model in line with current business practices.
The unions understand the decision to close the CTOs which will result in an estimated EC$3 million in annual savings for the Company.
Also at the meeting, LIAT’s Chairman, Dr. Jean Holder proposed, and it was agreed by all, that regular meetings be held with the Consultative Body which was set up on the recommendation of LIAT’s Shareholder Prime Ministers in 2009. Such meetings would be used to share ideas about how both sides can work together to strengthen LIAT and ensure its survival.
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