Going for broke Guardian 04.10.03 The bad news: fares to go up Planning to visit your family in Brooklyn in= =20 August to take in Labour Day? Thinking of taking your vacationing children= =20 to Disney World in July to celebrate their performance in exams? If you=20 are =96 start putting away money now and book your flight early, because=20 fares on the national carrier BWIA are likely to increase steeply in the=20 near future. Just how high? BWIA sources said the exact details of the=20 airline=92s fare structure and schedule for the =93summer=94 peak period are= =20 being worked out =96 but that the days of an adult travelling to New York= for=20 $2,200 (all taxes included) are history. Significantly higher fares to=20 BWIA=92s North American destinations will result if Cabinet accepts certain= =20 key proposals in the bail-out package junior Finance Minister Ken Valley=20 presents to it today, a high-level BWIA source said Tuesday. Among the=20 elements of the plan, fine-tuned by BWIA chief executive Conrad Aleong and= =20 presented to Valley on Tuesday, are measures to curtail the aggressive=20 pricing policies of the charter airlines which operate with frequency=20 during the =93summer=94 months to New York and Toronto. =93There are rules= that=20 the charter airlines are breaching and it is allowing them to cut BWIA=92s= =20 throat,=94 said the airline source, citing the fact that charter flights are= =20 only supposed to bring passengers from the originating airport and fly back= =20 empty. In practice, charter flights operating into Trinidad are allowed to bring=20 passengers into the country from New York and Toronto and fly back to those= =20 cities with different passengers. The Air Transport Licensing Authority=20 (ATLA), the source said, is supposed to control the fares of all flights,=20 both charter and scheduled, coming into the country. Airlines must apply to= =20 it for approval of fares. =93ATLA is supposed to ensure that airlines= flying=20 into the country quote economic fares,=94 said the source, adding that the= =20 benchmark to determine economic fares is the scheduled scheduled flights=20 and not the charter flights. Once ATLA enforces the rules, thereby=20 levelling the playing field, the charter airlines will be forced to=20 increase their fares to a level that will allow BWIA an =93economic=94= return. The Aleong business plan As well as higher fares, among the elements of the Aleong plan, which aims= =20 to return BWIA to the profit position it last reached in 2000, are: =95 An immediate reduction of the number of flights to the North American=20 destinations, up until the end of June, when the schedule will be= reassessed; =95 The return of one of the seven new 737s to the aircraft lessor; =95 Further staff reductions; =95 A preferential rate on aviation fuel similar to that granted to British= =20 Airways; =95 Some US$25 million in loans and loan guarantees. If the survival plans gets past Cabinet, BWIA expects to be in the black=20 again by the end of this year. =93The numbers still suggest if we can get= =20 past the (US/Iraq) war, with some recovery in the summer, we can break even= =20 and perhaps turn a small profit, a couple of million TT (dollars) net=20 profit,=94 said BWIA spokesman Clint Williams. This is the second time in= =20 less than six months that the airline is going back to the Government for a= =20 bail-out package. BWIA received a 10-year, $13.5 million loan from the=20 Government starting in November and the airline executives completed a=20 business plan at the end of January which estimated that it would make US$9= =20 million this year. On January 6, Aleong declared to the local and=20 international media that BWIA would be operating in the black before the=20 end of the year. =93We have a plan to produce a profit in 2003,=94 Aleong= had=20 said. =93You will hear us coming back to shareholder value. Our shareholders= =20 have waited too long to get a return and get dividends.=94 On January 28, BWIA=92s board and management launched a business plan which= =20 they said would stop the financial haemorrhage that seemed to be slowly=20 killing the airline - The 2003 New Business Model. Government stipulated=20 it would not loan BWIA any money until it could save US$1.3 million a=20 month. In January, the BWIA management assured the State its plan would=20 create those savings through staff reductions, outsourcing of specific=20 operations and the franchising of its duty-free department. =93Unless this= =20 Business Model is implemented now, and fully, BWIA will not continue as a=20 viable airline,=94 said the January business plan. BWIA appears to be no=20 more viable now than it was two months ago. Where did the $13.5 million loan go? Many of BWIA=92s retrenched employees as well as Government officials, union= =20 leaders and members of the general public have questioned what happened to= =20 the State loan between January and now. =93Where is the $13.5 million the= =20 Government had give to you?=94 asked retrenched BWIA employee Curt Smart of= =20 the airline=92s management. Interviewed last week, Williams said the $13.5= =20 million was used solely for debt-clearing purposes, and that was why BWIA=20 was unable to pay all of its promised $53 million in severance benefits to= =20 its 617 retrenched workers. =93We owed some of that ($13.5 million) to the= =20 lessor (International Lease Finance Corporation), we owed some of that to=20 the fuel companies. That money was to help us get current,=94 Williams=20 said. BWIA has leased its six Boeing 737s and its only A340 from ILFC,=20 which, Williams said, will continue to be patient with the airline. =93We= =20 owe them February, March and April. We were able to make a partial=20 payment,=94 he said. =93People have to understand, you talk about $13=20 million=97when BWIA spends US$700,000 a day that is about TT$5 million a= day.=20 How long you think that will disappear in the system when you=92re losing=20 money?=94 Fans and critics BWIA seems to have the support of key members of the private sector, many=20 of whom will be forced to pay higher fares to fly the national=20 carrier. =93BWIA is an integral part of our society and is very important= to=20 us, especially in these times. Who are we going to depend on to fly =96=20 American Airlines?=94 asked David O=92Brien, the president of the T&T= Chamber=20 of Industry and Commerce. BWIA called top business leaders, including=20 O=92Brien, to a closed-door briefing session at the Chamber=92s head office= in=20 Westmoorings yesterday. The business leaders were generally supportive of=20 the airline and its new plan. Critics of the BWIA management, including=20 the unions representing the airline=92s employees, do not see what the new= =20 plan can achieve that the January plan did not. =93If you are going to put= =20 plans in place, and you going back to Government for money two months=20 afterwards you do not have the solutions,=94 said Jagdeo Jagroop, president= =20 of the Communication Transport and General Workers Trade Union. On Tuesday, BWIA executives presented Government with a new plan to save=20 the airline from financial ruin in the hope of receiving another cash=20 infusion from the State. BWIA says the Government, which currently owns=20 49.5 per cent of the airline=92s shares, should provide the additional=20 bail-out because of the service the carrier has rendered the nation and the= =20 region during its 61 years in the air. Jagroop, Smart and others conclude= =20 the BWIA management was aware of these factors when they were preparing=20 their 2003 New Business Model. =93You know what not having BWIA would do to= =20 us? We can=92t allow that uncertainty to take place. It=92s not as though we= =20 don=92t have the money,=94 says O=92Brien. How BWIA plans on saving $ The following is a list of the savings BWIA=92s board and management= promised=20 in their 2003 New Business Model for the airline: Computer reservation systems restructuring Annual savings estimate: US$2.5 million Fuel BWIA sought a fixed fuel price for its supply from Piarco from the= Government. No annual savings projected Duty free franchising Annual savings estimate: US$350,000 Reduced cost of borrowings Annual savings estimate: US$400,000 Management staff reduction Annual estimated savings: US$645,595 Outsourcing of annual =93heavy=94 aircraft checks Annual savings net of third party costs: US$2.5 million Outsourcing of Piarco Ramp operations Annual savings net of third part costs: US$575,760 General staff reduction Annual savings: US$800,000 *************************************************** The owner of Roger's Trinbago Site/TnTisland.com Roj (Roger James) escape email mailto:ejames@xxxxxxxxx Trinbago site: www.tntisland.com Carib Brass Ctn site www.tntisland.com/caribbeanbrassconnection/ Steel Expressions www.mts.net/~ejames/se/ Site of the Week: http://www.carstt.com TnT Webdirectory: http://search.co.tt *********************************************************