The Antigua and Barbuda government confirmed today it turned down a request from Virgin Atlantic for a minimum revenue guarantee (MRG), describing it as “outrageous”.
The government’s Chief of Staff Lionel ‘Max’ Hurst, speaking on Observer radio in the country, said the Gaston Browne administration could not agree to the MRG, an air services agreement entered into between an airline and a government.
By offering an MRG, the government agrees to compensate the airline if actual project revenue falls below the specified threshold, thus mitigating the revenue risk taken by the private sector.
“Theirs was so outrageous that we could not agree to it,” he told radio listeners, adding “I think they were making the same demands of other Caribbean countries.
“But they have had their own financial woes as a consequence they are focusing more on reconstructuring their own operations,” Hurst said.
He said that “at one point” American Airlines had made a similar request, adding the airlines ‘we know we have provided support for in a big way is LIAT”.
Last week the Antigua and Barbuda government agreed to write-off EC$8.5 million (One EC dollar=US$0.37 cents) in debt owed to the country by LIAT, which is now undergoing a restructuring plan.
Last year, the St Lucia government says it had entered into negotiations with other carriers even as it left the door open for talks with the British carrier that had threatened to stop servicing the island from next year over the payment of an EC$20 million subsidy.
Prime Minister Allen Chastanet told reporters that he had been hoping that there could be an amicable solution to the impasse with Virgin but that his administration was already adopting an alternative strategy.
Chastanet said that the carrier had indicated that it was encountering some difficulties and was approaching several governments in the region to get financial support and that the request from St Lucia was US$2.5 million a year for three years.