[Grenada, Carriacou] SVG Air Considering Pulling Out Due To Taxes

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[Grenada, Carriacou] SVG Air Considering Pulling Out Due To Taxes

Unread post by bimjim » Fri May 17, 2019

https://www.thegrenadainformer.com/news ... e-to-taxes

[Grenada, Carriacou] SVG Air Considering Pulling Out Due To Taxes
Rawle Patterson
Thursday, 16 May 2019

After years of invaluable service to Carriacou, the St Vincent and the Grenadines Airline (SVG Air) has been operating its nine-seat aircraft at a huge financial loss and this is the main reason why the 19-seater, desperately needed to increase traffic to and from the Lauristan Airport has remained grounded.

However, according to the founder/Managing Director of the airline Paul Gravel, this issue could easily be solved towards the benefit of passengers and the island as a tourist destination once the current government erases the number of high taxes and fees they are asked to pay every time the aircraft services the Lauriston (Carriacou) and the Maurice Bishop International Airport (Grenada).

Speaking to Informer’s Inside Carriacou and Petite Martinique from his office in Barbados, Gravel pointed out that for years he and his management team have been meeting with successive governments to try and get them to understand that for the airline to operate at a break-even or a profit, they must erase the financial grip the airline has been undergoing when servicing the route.

He said that the Carriacou to Grenada and vice versa route is being sustained and subsidize by the wealthy passengers who travel between St Vincent and its Grenadine islands.

“If we didn’t have those clients then the price would have been maybe three times what passengers are now paying to fly between Carriacou and Grenada and I know it’s very few people who would be able to afford this,” said the general manager.

The fee is now $160.00 one way.

Gravel added that he was scheduled for a Tuesday meeting with government officials including Minister for Carriacou and Petite Martinique Affairs to try and get them to better understand and appreciate the hardship the airline is enduring in order to keep it in operation.

“Even when we run a full flight from Grenada to Carriacou and vice versa, we are doing so at a loss,” said the general manager.

He said that since 1999 when SVG Air bought and took over the failing Airlines of Carriacou, at that time they were flying Twin Otters and at that time the price was controlled and the fare could not have been increased.

Pointing out that Lauriston Airstrip is designed to accommodate a Twin Otter, Gravel pointed out that LIAT was the first to land a Twin Otter aircraft and that up to about the late 1990s they were passing through Carriacou with those aircraft.

“LIAT had to pull out because of the low ticket prices against the cost of operating those flights. They got out so we kept in the business with the three aircraft we purchased from Airlines of Carriacou,” he pointed out.

He said that the business never grew while the price of fuel, oil, surcharge and everything, which the aircraft require to run went up.

The managing director pointed to the history of the operation, the number of aircraft and the 165 persons employed across the countries they operate.

Drawing a comparison with Saba, Anguilla, St Marteen and St Barths he said that they fly just about 100,000 people a year, while they only move about 12,000 between Grenada and Carriacou and vice versa annually.

However, he explained that they have been trying to impress upon the current and previous governments that Grenada should be the gateway for the southern Grenadines; it should be the major hub and it’s not.

“We have been trying to convince them to do this but have been encountering stiff and stubborn resistance,” added Gravel.

The challenge he explained to run a 19-seat aircraft between Grenada and Carriacou is simply because all of the wealthy people are only travelling among the St Vincent Grenadines.

“The moment we take a passenger from Carriacou to Union Island there is an extra US$80.00 the government charges for each passenger, which destroys the viability of us trying to put on a 19-seater to help subsidize the Carriacou passenger rate,” he added.

Gravel reiterated that until this tax is removed it would be impossible for them to run the 19-seater as it would be ridiculous to sell tickets at the current price.

He is suggesting that there be four flights daily from Grenada wherein the first and last with the 19-seater arrive in Carriacou and return to the mainland while the other two in the mid-morning and afternoon go up the Grenadine islands.

“This will be subsidized by the passengers who are going to the high-end villas and resorts in the St Vincent Grenadines.

“Without this, we cannot cross-subsidize a 19-seater for Carriacou,” he reiterated. We make absolutely nothing operating four flights from Grenada to Carriacou and vice versa. We are just spinning top in mud, as we are earning nothing so we might as well just pull out.

“In 1999, gas was US$2.00 per gallon now it has gone to US$10.00 per gallon. Added to that these aircraft are not well support by the manufacturer so sometimes an aircraft sits four to five months waiting for some little part that it requires to fly. They become hanger queens, which you cannot make money with,” he further noted.

He said that in Antigua and Montserrat they are well supported because there, they are aware of the cost to fly the aircraft and the importance of the service to those destinations.

“They know it costs us more to fly than we are actually collecting,” added Gravel

However, he said, in Grenada ts different.

“We get absolutely no support from Grenada. I spend $45,000.00 a month on landing fees and rental fees at the Grenada Airport for one aeroplane. It’s not working,” he confirmed.

Gravel said that for them to run a 19-seater they must be convinced that government is serious about the Carriacou to Grenada route and that the high exorbitant taxes are removed.

“A new 19-seater costs EC$ 8 million while to lease one is EC$500,000.00 as a deposit plus several other financial requirements. If there is light at the end of the tunnel we can, but with the track history of Carriacou as such; we need government support to make it work,” added Gravel.

“It costs us $50,000.00 daily to rent an aircraft from Mustique for which we are not even collecting $10,000.00 for an entire day,” pointed out the general manager.

Stating that business has been dropping drastically, Gravel said that they soon might be forced to cease all operations.

“This is all because of government bureaucracy, government’s fiscal irresponsibility. They keep increasing the size of government, they are bringing more people into government to make the government pay-roll that much bigger, which means more money to support it, which means it has to hit the entrepreneurs and the private sector that much harder.

Eventually, the whole thing comes to a grinding stop,” pointed out the general manager.

With plans to construct a new airport in Dumfries, Gravel said that there is more of a need to ensure that there is constant and more reasonable airlift to and from the island for both the operators and passengers.

“You don’t need a bigger airport if you can’t even fill a 9-seater on most flights,” he said.

He said that there is a need for a two-tax system; one for those travelling inter-region and another for those travelling internationally.

He is also appealing to the stakeholders of Carriacou to assist in ironing out the issue so that their business could grow through an increase in visitor-arrival

“They are the ones with the bacon in the fire and they need to sound their voices in order to grow their business”, he said.

This country has recently become a shareholder of LIAT. However, Gravel strongly believes that if those Caribbean governments who are still imposing taxes do not change their approach and policies, soon there would be no regional airlines.

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