Notes From The Margin

March 11, 2008

Barbados Tries For CAT1 Status -Is There Another Airline Setting Up?

In the wake of the Airone story, we noted an article in todays Nation about an upcoming audit for the island.

 

BARBADOS’ AIRPORT IS 99.1 per cent ready, as its review for Category 1 status approaches.This is according to director of Civil Aviation Anthony Archer.The island is now in its final stages of qualifying for the rating by the Federal Aviation Authority (FAA), members of which will be coming to Barbados within another two months to do an audit….

The rating will enable Barbados to give permission to people to start up airlines here in Barbados and while applications are pending, it makes little sense to sign off on them now.”They can’t go to North America. So when we get the Category 1 then we would be able to deal with that. My department deals with the operational and certification but the other part of my ministry deals with the economic regulations, so they will decide whether or not they will get the permits to travel to the various destinations,” said Archer.

It would seem that the Nation got the story wrong as usual, from what we have heard the Category ranking has less to do with the airport than the Government’s regulatory oversight. What is interesting, is Mr. Archer’s statement that there are TWO proposals that they are looking at. We can assume that one is AirOne (currently on hold if the Irish Independant is correct) so who’s the other one? Does LIAT have a competitor waiting in the wings?
Interesting times….
Marginal
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February 27, 2008

Irish Airline Headquartering in Barbados?

 Mr. Leslie Buckley one of the main backers of the airline.

To follow on from our post Jamaica Drops The Ball – Irish Competition For LIAT – Coming Soon To Grantley Adams? We thought we’d provide some more background info that we were able to find online about the airline that might be headquartered in Barbados. The source of the story is an article in the Jamaica Gleaner. The excerpt below has been edited for conciseness.

Airone Ventures, has successfully raised US$30 million  so far from private investors to begin its operations.

It plans to operate a fleet of five new Boeing 737s in the first eight months, with the intention of expanding to eight aircraft in two years.

Airone has tapped Digicel for assistance, saying that it would be relying on the savvy mobile phone company for sales support.

The airline principals envisage Airone becoming the largest regional carrier under plans to to add routes to the wider Caribbean and Central American markets.

The company says it will be positioning itself as a low-cost carrier.

“We are here to establish a headquarters and a home from which we will grow to over 25 planes spread over 7 bases within the Caribbean and the Americas,” the company said in its business plan.

BJM Nominees and Buckley have been named as the main shareholders of the company, with the remaining 22 per cent being made up of promoters and cash investors.

This new entity, which is comprised of interests with expertise in finance, telecommunications and aviation, plans to break into the Jamaican market as a Low Cost Carrier (LCC) with the ethnic Diaspora and cost conscious tourists as its main target.

Airone is promising fares priced as low as 80 per cent below current fares offered by airlines flying to Jamaica and other Caribbean destinations.

The principals in their pitch for CAA approval, argued that the establishment of Airone in Jamaica would not only provide low cost travel to residents and foreigners alike, but it would also generate some 220 new skilled jobs in the first year of operation with 90 per cent of those positions to be filled locally.

It estimates that its operations would contribute 2.0 per cent to the country’s Gross Domestic Product, and contribute a minimum of US$65 million in taxes to the Government, excluding those to be had from new employment and third party service providers.

Airone Ventures has set May 2008 to commence flights.

Irish Private Equity firm Quantum Investment Capital has also been publicly identified as an investor in the airline.

AirOne Ventures application for a license was denied by the CAA of Jamaica, the company had indicated that it would try it’s luck in Barbados (since then the company has been recruiting staff for a Barbados base of operations).

Marginal

February 26, 2008

Jamaica Drops The Ball – Irish Competition For LIAT – Coming Soon To Grantley Adams?

Back in July of 2007 we ran a post “Irish Competition For LIAT?” based on a very short column that appeared in the Irish press, since then we hadn’t thought much about it. We only connected the dots with the saga of the Low Cost Carrier AirOne quite recently. The AirOne story bumped along at the edge of our radar until this afternoon when we were investigating an unusual spike in interest in the above story.

The AirOne story begins back at the beginning of December last year in a Jamaica Gleaner story:

First low-cost Caribbean airline to be launched in Jamaica

A group of entrepreneurs has applied to the Jamaican government to create the first Caribbean low-cost airline. Group head representative Ian Burns said: “We have made a formal application to the Jamaican Civil Aviation Authority under the name of Airone Ventures Ltd, although this isn’t the name that we will be flying under. We have the potential to add one million tourist arrivals to Jamaica within five years, a huge boost to the tourism industry.” The airline will also seek to open new markets and new routes. It will service the Caribbean, the United States and Latin America.

737-300 Aircraft Similar To What is Mentioned In Article

…. Speaking with Caribbean Business Report last night, Burns said: “We will be providing non-stop airlinks to the Caribbean, the United States and Latin America and will be using Boeing 737-300 aircraft. The idea is to develop Kingston’s Norman Manley International Airport as an international hub for the Caribbean.

 

Sounds like great news for the Jamaican government to us doesn’t it? We could hardly believe what we found next in the Jamaican Gleaner

 

Low-cost air carrier denied J’can licence

Irish firm told to wait as Air J divestment a priority

The Government has, for the time being, rejected Caribbean low-cost carrier Airone’s formal application to the Civil Aviation Authority for a licence to operate in Jamaica.

…However, last Thursday, the minister without portfolio in the Ministry of Finance, Don Wehby, and a team of Government officials took the decision not to grant the new airline a licence now, essentially because the Government is in the process of divesting the loss-making Air Jamaica and it was felt that a decision to grant another carrier a licence at this time would adversely effect the divestment of the national carrier.

“We met with representatives of Airone last week and we regrettably were unable to grant the carrier a licence at this point in time,” Wehby told the Sunday Observer last night. “The divestment of Air Jamaica is our foremost priority, and the Government feels that it would not put it in a good light if it were to grant a carrier a licence to compete directly with Air Jamaica. In fact, to grant a licence at this time will not add value to Air Jamaica, and we would be seen as not negotiating in good faith. Our decision does not constitute an outright rejection of Airone. It is just a question of timing.”

 

Understandably the investors are pissed. However the great thing about airplanes is that they can move, so what happens next?

 

Last night, Buckley, one of Airone’s lead principals, told the Sunday Observer from Hong Kong, “We want to offer Caribbean people a low-cost carrier that will service the tourism industry and the Diaspora.

We want to grow new routes and help tourism thrive. There must be a way in which we can all survive together – that is, Air Jamaica remains the national carrier and goes from strength to strength and we are granted a licence. If we are unsuccessful in Jamaica we will set up operations in Barbados. If Air Jamaica is not divested in 12 months’ time, then Jamaica would have missed out on having an affordable, reliable carrier that would have been a boon to the tourism industry and Jamaicans living around the world.”

 

Now note the time frames here, NFTM reported what at that point was little more than a rumour about 6 months before AirOne was applying for a license. It is obvious that these investors are not letting the grass grow under their feet on this. A little more digging on our part revealed the following page on the website www.caribbeanjobs.com. We can only assume that the license has been granted.

As the first Caribbean Low Fares airline, Airone plans to become the largest airline in the region developing bases by combining bold deal making along with the quick rollout of new exciting routes from our base in Barbados. (our emphasis)

Using efficient aircraft and dedicated staff, Airone will provide unbeatable low fares, superior reliability, innovative products and services and a better choice of non-stop routes. We strive to continuously reduce costs in order to continually drive down the price of our low fares for our customers.

Airone is currently building its workforce and will employ over 200 people over the coming months. We are looking for bright, dynamic and energetic individuals with the ability to work in a flexible and fast paced environment. We have many opportunities for a wide variety of areas in this exciting new low fares airline!

Accompanying the post are vacancies for a number of management positions with the new airline.

As it happens the AirOne application would have come at a time where there was growing dissatisfaction with the current aviation agreements in Barbados. LIAT is the Worlds Most Expensive Low Cost Carrier, and BWIA/Caribbean Airlines unceremoniously pulled up stakes last year and removed a significant portion of the island’s airlift. Our sources in the aviation sector tell us that although Barbados is further away from the North American market than Jamaica, it is actually better suited geographically as a hub as it is very centrally located between Europe, South America, North America, Africa and the Eastern Caribbean. They also tell us that Grantley Adams has recently expanded it’s parking apron to facilitate the Cruise Ship passengers and hence capacity at the airport is not a problem.

Now Jamaica can hardly accuse Barbados of “stealing” this investor who went first to the Jamaican government to be turned down cold. However in this case it would appear that Jamaica’s loss is Barbados’ gain.

We on the margin will continue to follow this story.

Marginal

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