Elective value or overcrowding

Once again the question of what to do with George F.L. Charles Airport in the city of Castries and how best to pursue the Hewanorra International Airport (HIA) redevelopment in Vieux Fort is consuming policymakers, the business community and the people of Saint Lucia.

Aside from the certainty of a few scheduled flights from LIAT and private operators that service George F.L. Charles Airport, and a concentrated schedule at Hewanorra International Airport (HIA), it really comes down to the cost of operating these facilities, the level of service required to facilitate commerce and the bravado that reflects the priorities of government largesse.

Sure enough, the capricious political authority of the day messes with commonsense and the intelligence in national development, in determining what’s best in the public interest.

Elective value or overcrowding_page3_image1But before deciding on what to do on an island of 238 sq miles, with two airports of varying capacity, basic economic structure come to mind, as well as the outlook, timing and magnitude that is relative to the present economic constraints.

Perhaps the times has come to either lease, or privatize George F.L. Charles Airport. This should be followed with high-end commercial travel facilities, an airport hotel with seaport access, extension of Point Seraphine and other commercial development on the surrounding landmass.

These combinations would significantly enhance Saint Lucia as a destination of choice. With the capacity to provide high quality sustainable jobs and cash flow to the Inland Revenue and the Treasury, while repositioning the capital city of Castries and Saint Lucia for future development.

The Grantley Adams International Airport in Barbados is up and running and Argyle International Airport in St Vincent and the Grenadines is nearing completion, the pressure is on an aging HIA, to step up and be on par.

But at what cost: USD$200 million? Where will the financing come from successfully to position HIA operations to compete and remain viable.

In recent memory, a number of options were tabled to government with either no acknowledgement and in other instances little interest; however, it is being reported that the proposed privatization of HIA was on the agenda at the Airports Summit in Athens.
“In an ideal world, the RFP will be put out to tender next year and the airport will get the new terminal by 2018. SLAPSA’s general manager, Keigan Cox, told Airport World: “We are looking for private sector knowledge and know-how as well as financial investment.”

“It is refreshing to learn that this major infrastructure development is back on the table. However, I do have a major concern in regard to the method that will be utilize in securing the requisite level of funding. Within this framework, the promoters must realize that there are a number of financial experts, (i.e. St Lucians) that should be engaged in structuring the financial model for this massive development. When I speak of financial experts, I refer to St Lucians abroad who have been exposed to developed global capital market mechanisms and operations. Therefore, I strongly suggest that a team of St Lucian financial experts be put in place to form the nucleus that will drive the financing model for this airport project. As a St Lucian my ultimate goal is instituting a financial model that will minimize future cash outflow. The amount in question is US$200 million and that is approximately, half the size of our national budget. Hence, you can appreciate the debt servicing implication that will unfold. Therefore the financial model needs to be right and properly executed.” – Mark Cadette.

Wilson Jn Baptiste reiterated the following: “This is where the concept of the Global Skills Bank and the Global Development Band comes in.”

To most well-headed the above is not difficult to understand. But what has kept this from happening is the indecision by the political directorate of the day, being allowed to get caught-up with political priorities that suppress the priorities of the public at large. And that cannot continue to happen at will.

Already, government’s annual interest payment is approximately EC$150 million, with annual revenue of EC$850 million and approximately EC$3 billion in debt, and besieged in -3% deflation.

Moving forward, HIA requires due diligence and leading edge performance and competitive market analysis to protect against costing irregularities and the availability of a clear prospectus for public opinion, to combat any perceived half-baked exuberance.

And, while cost efficiencies and the region’s capability to attract passenger volume is a continuous challenge, unresolved issues such as intra-regional trade, travel and free movement of people within the region is producing more difficulties instead of helping to achieve integration.

This makes the need for a more intensive regional marketing campaign aimed at securing new destinations to increase the number of passengers and flights into the region. This would include improved passenger transfer into other destinations, enhanced service, streamlining the customs and immigration process, and making the country more accessible for travel to emerging markets.

By the same token, to make HIA a more integral part of the economic revival of the country, the services and fees will have to be very competitive, in order to offset Grantley Adams International Airport and Argyle International Airport, St Vincent and the Grenadines, with comparable operations within the same time zone and geographical region.

In conversation with a marketing analyst recently, the observation is such that the Caribbean region is increasingly becoming more expensive to operate with fears that participating in this marketplace is too restrictive, in addition to the absence of a regional air and sea travel strategy. Meanwhile, a lot of unknowns have not helped to attract business and to excite investment substantially.

Therefore, the continuing upper hand of the political left better think hard, as it pertains to HIA reconstruction project financing of over US$200 million.

The development model must meet the future requirements of local, regional and international transportation standards to deliver core services at significant value and the provision of service distinguish itself, or risk crowding the Southern Caribbean region with another monument.

But regardless of which value proposition is decided upon, the writings of economist and Nobel laureate Edmund Phelps ought to serve as caution:

“Moral creativity, however, has a price. Innovation, as we’ve noted, involves trial and error. Certain ideas and ventures will be rejected by the market and not succeed. Failure is painful for both companies and individuals. But it’s vital to the learning process and sets the stage for bigger successes later.”

Elective value or overcrowding_page3_image4The disparity between George F.L. Charles Airport and Hewanorra International Airport can be summed-up as apprehensive; as well as the political and economic risk calculations that hang over, exclusive of a well define strategic national investment policy and a national development plan.

Ultimately, deciding on what direction to take must deliver better value and a fresh perspective.

By: Melanius Alphonse


 

Elective value or overcrowding_page3_image2Melanius Alphonse is a management and development consultant. He is an advocate for community development, social justice, economic freedom and equality; the Lucian People’s Movement (LPM) www.lpmstlucia.com critic on youth initiative, infrastructure, economic and business development. He can be reached at malphonse@rogers.com

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