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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March 7, 2008

BREAKING NEWS: Airone ON HOLD……

tracking a story out of Ireland this morning….

Plans by a number of Irish businessman including Digicel vice-president Leslie Buckley and former rugby international Brendan Mullin to launch a new Caribbean airline later this year have been grounded, the Irish Independent has learned.

It is understood a number of issues have led to the decision, including the recent surge in oil prices and the failure of the Jamaican government to give the airline a licence.

The decision was also taken against the backdrop of the current turmoil in financial markets and the collapse of US consumer confidence.

The original venture, which had been dubbed the “Ryanair of the Caribbean”, was to launch the airline in May 2008 covering the Caribbean as well as flights linking the region to the US and Latin America.

Since then, oil prices have shot up from about the $70 dollar a barrel level to spike close to $106 yesterday.

In addition, concerns about the subprime market in the US have had a significant negative affect on US consumer confidence.

While the decision by the Jamaican government not to give the licence to Airone pending the privatisation of Air Jamaica was taken earlier this year, the company had been looking at an alternative plan for Barbados, but that has also been put on hold.

It had already began recruiting staff for a Barbados base of operations.

Future

Informed sources said yesterday the company is “continuing to assess the situation” in relation to future plans for Airone.

It is understood about $30m (€20.4m) had been raised for the venture. Other business players on board are Ian Burns, the president of Wanderers rugby club, and Peter Delaney, the former director of operations at Guinness Peat Aviation.

Mr Mullin, who left Quinlan Private to set up public and private equity firm Quantum Investment Capital, recently joined NCB’s private wealth division and Quantum has backed into that business as a result.

BJM Nominees and Mr Buckley are the main shareholders in the company, with the remaining 22pc made up of promoters and cash investors.

At the time of the launch last year, the company confirmed it was 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 seven bases within the Caribbean and the Americas,” the company said in its business plan.

Airone Ventures was promising fares as low as 80pc below current charges available from competitors flying to Jamaica and other Caribbean destinations.

– Ailish O’Hora Business News Editor

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

February 14, 2008

Proposed Alliance Between LIAT & Caribbean Airlines – It’s Deja Vu!!!!!

Came across an article in the press yesterday that sounded like something we’d heard sometime before…….

 

Grenada’s Prime Minister Dr. Keith Mitchell is proposing the setting up of a new regional airline alliance including LIAT and the national carrier of Trinidad and Tobago, Caribbean Airlines.Dr. Mitchell, who recently held talks with his Trinidadian counterpart Patrick Manning, also met Tuesday with the Barbados Prime Minister David Thompson with the matter of regional air transportation high on the agenda.

Grenada is a minority shareholder in LIAT and Dr. Mitchell is proposing that it enters a cooperative agreement with Caribbean Airlines for the benefit of the regional travelling public.

“What you need is a cooperative arrangement and Caribbean Airline providing services at particular times when LIAT is not able to service those areas, and there are so many opportunities for transport linkages that can be beneficial to any serious airline that we are not utilizing,” Dr. Mitchell told the Caribbean Media Corporation (CMC).

“In my view I would say that only five percent, maximum 10 percent of our people do get the opportunity to travel within the region, in light of the current transportation problems.

“We are talking about CSME (Caribbean Single Market and Economy) and regional cooperation and at the same time our people are not able to travel,” Dr. Mitchell added.

Hmmm….

Wonder if it will work this time.

Marginal

January 30, 2008

Why did we get upset about Caribbean Star again?

Does anyone remember the arguments that were given around the time when Caribbean Star started up? This crossed my mind today, when I think back the main objection to Caribbean Star went something like this….
“We don’t want to have Caribbean Star run LIAT out of business and then have regional air travel at the mercy of an American who could then charge whatever he wanted”

That’s not a quote, that’s my summary of it.  So where are we now? Allan Stanford and the Caribbean governments have both spent huge amounts of money propping up unprofitable airlines. The standard of service was not raised by the competition, in fact Caribbean Star seemed to gravitate towards LIAT’s service levels.   However, fares were low and people traveled.

Realising that he was in a competition that couldn’t be won, Allan Standford blinked. “selling out” Caribbean Star in a merger with LIAT, and what has happened.

We now have an airline in the Caribbean that can offer terrible service, charges astronomical prices way above what the marketplace considers acceptable. Further it has a level of staffing (particularly in Antigua) that defies any rational economic explaination, and continues to be subsidised by the taxpayers of the shareholder governments.

Exactly HOW are we better off?

Marginal

January 29, 2008

The State Of Shipping In The Caribbean

We on the margin have for a long time been supporters of the idea of ferries in the Caribbean. In our view one of the most serious barriers to regional integration and the creation of a single market and economy, is the sheer difficulty faced by an individual attempting to move around the Caribbean. Moving people and goods from island to island is hugely difficult, and that has several knock on effects in the economies of the region.

In Europe it is possible to drive on to a ferry in Scotland and be in Ireland a couple of hours later driving YOUR car on Irish roads, all for the price of a ferry fare. It is possible to ship container loads of merchandise/products/food/whatever on the same ferry without even taking them off of the truck! When you contrast this ease of movement with the situation in the Caribbean it’s pathetic.

Move a car? Sorry you only have one seat on LIAT (world’s most expensive low cost carrier) and 50lbs of baggage, and when we get to our destination we are greeted by Immigration officers and Customs Officer who seem to have difficulty with the concept of people wanting to travel to another island. There was a brief moment of hope during the Cricket World Cup when we had the single space, but that seems to have separated back into the default position of fragmentation.

President of the CDB Prof. Compton Bourne, touched on these issues recently in a speech where he highlighted the difficulty in moving goods from areas with excess productive capacity to areas with demand for those goods.

“There are countries in the region that have considerable food production capacity, but their arrangements for trade in the region are far
from adequate.”

This made it very difficult to supply the markets that are experiencing shortages or to provide a cheaper source of commodities to those markets with the existing arrangements, he argued.

“First of all, shipping is very poor within the region,” he charged. “Our shipping arrangements are largely geared towards bringing commodities from outside the region to the region, rather than moving commodities between the various islands and countries in the Caribbean.

“Secondly, our port facilities in the main for CARICOM trade are atrocious, often under-staffed, often not provided with the requisite phyto-sanitary inspection facilities and sometimes characterised
by a bit of hostility towards the trade. . . .”

For the single market and economy to become a reality, there needs to be ease of trade, and ease of travel, at the moment it is easier to get items out of a furniture store in Miami than it is to get it from a furniture manufacturer in Guyana. To speak of a single economic space is a farce unless this situation is rectified.

Marginal

January 10, 2008

Politicians, It’s One Week Before Elections, Do You Know Where Your Vote Is?

With one week left to go before elections, Barbados is in the grips of one of the most intense election campaigns in recent memory. The two parties’ campaigns appear to be evenly matched, and evenly funded, and to a certain extent evenly supported. We on the Margin have been watching the silly season unfold in all its glory, and we have to admit we are unable to predict a winner at this stage.

Yes, if you listen to Waiting In Vain and Royal Rumble and the other party hacks that inhabit the blogosphere, they all predict a resounding victory for their particular party. But having spent the last week talking to many people, we think that both parties are “Whistling past the graveyard”. For as much bluster as either side makes we’re not sure that either of them has captured the hearts of the electorate.  Barbadians are looking at both parties with a skeptical eye and the hard truth is that this election could go either way.

What we have noted that this campaign has been more about accusations and counter accusations rather than issues. We would like to see some serious discussion about both parties’ visions for the next five years. While we wish that we could say that we thought we would get such reasoned debate in the next next week, we really don’t think so. We think that this next week will get wilder and dirtier with each passing day.

We on the margin would urge Barbadians,  think long and hard about both parties before you go into the polling booth. Whoever you choose is entirely up to you, but be sure to participate, be sure to cast your x. Be sure to treat that decision with the seriousness it deserves.  Hopefully we will all be better off for your doing so.

Marginal

December 26, 2007

Delays, Lost Luggage, Chaos at Check In on LIAT – The World’s Most Expensive Low Cost Carrier!

One of the consistent themes of conversation this Christmas is the Worlds Most Expensive Low Cost Carrier LIAT. Across the Caribbean people are still waiting for luggage with Christmas gifts and just their basic necessities to arrive. Many of them are hoping their luggage will arrive before they have to go back home (on TWMELCC) when it probably will be lost again.

Those of us on the margin, can only comment on the chaos at the check in counter in Barbados which required Airport Security and Police to be called to keep order. It should be noted that this disorder stemmed from the fact that none of the passengers having the remotest idea what was happening with their flight. To the observer it appeared that the logic was whoever pushed their way to the counter got checked in. Whoever didn’t; got left.

No effort was made by LIAT to tell passengers where they should queue. No staff member out front, no indication on the fancy new flat screens above the check in, not even a note written in marker on paper and stuck where people could see it. Calls to all LIAT numbers were met with either no answers or voice mails which gave the obviously irrellevant flight schedule. The chaos at the check in could have been avoided by simply telling people what was going on.

Yes we on the margin can appreciate that LIAT was struggling to move the back log due to industrial action by it’s cabin crew, however how they managed that back log was pathetic and inexcusable. The staff members appeared to be carrying out the same processes as if it were a normal day, when it was clearly anything but. Having let things got out of hand they had to resort to airport security and police to restore order.

It should be noted that we have only good things to say about how the police and the security officers took control of the situation in a professional manner without needing to resort to strong arm tactics.

LIAT’s shareholders need to ask some hard questions about what is being done with their money. We now have a monopoly carrier that treats its customers with disdain and charges higher prices while insulting our intelligence by telling us they are a “low cost airline”

Marginal

October 2, 2007

Another LIAT Horror Story

Filed under: aviation,Barbados,blogging,Caribbean,Caricom,Grenada,LIAT,St. Vincent,tourism,transport — notesfromthemargin @ 2:59 am

We found another LIAT horror story online on Mathaba.net, it would seem that their director of news was bound to Barbados from St. Vincent to connect to an Air Jamaica flight. Little did he know what LIAT had in store for him….

After the LIAT aircraft had closed its doors and was taxying to the runway for taking off from St Vincent and the Grenadines airport this morning, the air hostess announced to the surprise of many on board that flight 752 to Barbados was now renamed flight 761 to Grenada.

Affected passengers with connecting flights onward were reassured that the plane would still arrive in Barbados in good time and if need be, connecting flights would wait. In the case of flights to Jamaica and with onward connections to Cuba, those passengers need not worry as there would be “plenty of time” to check-in at the Air Jamaica counter.

However, at the superb Cuban-built airport in Grenada which had been used as an excuse by the United States to invade and overthrow the government of that island nation in 1983, a further delay occured due to a shortage of seats on the aircraft which was now covering for a second flight route.

 

Needless to say by the time the flight got to Barbados, the beleaguered editor  missed his connection. This consolidation of flights is not unusual to anyone who travels LIAT regularly. However there were some interesting observations about transiting through Barbados’ new 200 million dollar HUB airport.

 

Not only are passengers subjected to a lengthy bureaucratic form-filling operation that gives them a visa to remain in Barbados even if wishing to do nothing more than transfer flights, but the immigration officer will pose unwaranted questions!

Passengers in transit through Barbados to independent island nations such as St Vincent or Dominica which long ago threw off British colonialism, but which may not have airports large enough to receive direct international flights, are then subjected to questioning by the immigration officials: “Why are you going to St Vincent (or insert other destination here)?”

Most European and North American travellers are told they must answer these questions if they wish to pass through and may then be told “why don’t you stay in Barbados? We have this that and the other on offer”, however, those more aware usually answer something like “mind your own business, you are not the government of St Vincent.”

The fact of this unjustified questioning is well known among both the community and government and business leaders in St Vincent, and there are already rumblings of doing something about it.

 

Now we’ve heard the Minister of Tourism Noel Lynch talk about how the main function of LIAT is to protect Barbados’ investment in being a hub (which makes sense) however  unless the Government can facilitate the smooth passage of transiting passengers this 200 million dollar investment (plus whatever we have sunk into LIAT) will be wasted.

 

And if you think that there is nothing that can be done about it,  one of the reasons given by Allan Chastenet (St. Lucia’s Minister of Tourism) for pursuing American Eagle was that transiting passengers were being charged Barbados departure tax. When they are booked through on AA they don’t have to pay. The lesson to be taken from that is that unless Barbados can sort out the legal and institutional frameworks for being a functioning hub, being the prettiest airport in the world will get you nowhere.

 

Marginal

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