?The fol­low­ing is a let­ter sent to the T&T Guardian, writ­ten by Pe­ter Hill, for­mer BWIA vice pres­i­dent on Con­rad Ale­ong's man­age­ment team.

LEFT: ?Con­rad Ale­ong

I must chal­lenge the com­ments that Mr William Lu­cie-Smith re­cent­ly made in his Jan­u­ary 12th ar­ti­cle in the Ex­press re­gard­ing BWIA. As a for­mer vice pres­i­dent on Con­rad Ale­ong's man­age­ment team I need to bring cer­tain facts to the at­ten­tion of your read­ers. The Gov­ern­ment's orig­i­nal plans for BWIA in the 1993 to 1995 pe­ri­od was di­vest­ment. It con­tract­ed Ale­ong in 1993 to re­struc­ture the air­line with a view to pri­vati­sa­tion. Even be­fore this man­date was com­plet­ed the Gov­ern­ment elect­ed to sell BWIA. Ale­ong strong­ly ad­vised the Gov­ern­ment against the pro­posed Ack­er busi­ness plan, but the Gov­ern­ment pro­ceed­ed any­way. In just three short years af­ter the Gov­ern­ment wrote off BWIA debts in pri­vati­sa­tion, the Ack­er man­age­ment lost $310m (US$50m), and in 1998 Ale­ong was asked to come back with a team to turn things around.

Ale­ong and his team:

1. Gave BWIA its first prof­it in 62 years in 1998.

2. Re­brand­ed and re­freshed the BWIA im­age with new pan lo­go, colours and uni­forms.

3. Re­placed ag­ing MD-80s with new Boe­ing 737s.

4. Re­placed the very old L-1011s.

5. Bought new Dash 8 air­craft for the air­bridge.

I have great pride in our ac­com­plish­ments un­der Ale­ong's lead­er­ship and I must re­fute Lu­cie-Smiths as­ser­tions re­gard­ing BWIA. Lu­cie-Smith's ar­ti­cle at­tempt­ed to de­fend:

1. The Gov­ern­ment's use of the trea­sury to the tune of $2b to close BWIA;

2. The de­ci­sion to sell (un­der­sell?) the grand­fa­ther route rights on Lon­don and cause Trin­bag­o­ni­ans and oth­er Caribbean peo­ple to suf­fer as sec­ond class cit­i­zens to get back and forth to Eu­rope and be­yond;

3. The Gov­ern­ment's fu­el "hedge" which any third par­ty pro­fes­sion­al in­vest­ment an­a­lyst would ad­mit is noth­ing more than a "gov­ern­ment sub­sidy," since there is no fi­nan­cial con­sid­er­a­tion paid for the fu­el hedge (which is what BWIA pur­chased and paid for in the open mar­ket for its fu­el hedges when it was mak­ing prof­its in 1998 to 2000);

4. The on-time per­for­mance of Caribbean Air­lines (Cal); and

5. The sup­posed fi­nan­cial suc­cess of Cal, which when the au­dit­ed ac­counts come out (if they ever do), will like­ly re­veal the num­bers to be net loss­es.

In oth­er words, the Gov­ern­ment with its "avi­a­tion" en­thu­si­asts/ad­vis­ers with­drew $2b from the na­tion's trea­sury to close one air­line, then opened an­oth­er giv­ing it $735m (US$115m) in cash, pro­vid­ed a sub­sidy for any fu­el costs in ex­cess of US$50, rail­road­ed the em­ploy­ees in­to "im­posed" con­tracts with the "bril­liant re­sult" that it is still los­ing mon­ey and this "na­tion­al eco­nom­ic" dis­as­ter is be­ing de­fend­ed by a well re­spect­ed fi­nan­cial brain. Like Lu­cie-Smith, who was a part of the BWIA board when they closed BWIA and sold the Lon­don route rights, I was a vice-pres­i­dent on Ale­ong's man­age­ment team when prof­its were be­ing made. Un­der Ale­ong's man­age­ment, BWIA West In­di­an Air­ways pro­duced three con­sec­u­tive years of prof­it from 1998 to 2000, amount­ing to $88m (US$13.8m), even af­ter ab­sorb­ing in­ter­est costs of some $75.3m (US$11.8m) on debt which was in­her­it­ed from the pre­vi­ous Ack­er and Fil­i­a­treault man­age­ment teams fail­ure. In fact un­til the 9/11 tragedy in 2001, which dec­i­mat­ed the air­line in­dus­try, BWIA had al­ready racked up a US$9m prof­it and was en­route to a fourth con­sec­u­tive year of prof­it.

The Iraq war and Sars which came soon af­ter 9/11 were fur­ther fi­nan­cial blows which could have flat­tened any air­line. Ale­ong's man­age­ment team re­newed the fleet from old (25 year) L1011 air­craft and age­ing (18 year) MD83s, to six brand new, state of the art B737s, two sev­en-year-old A340s and three brand new Dash 8 300Qs. And as a team, we did all of this with­out a cent of sub­sidy or cash from the Gov­ern­ment dur­ing those three years.

In fact, we were even fi­nan­cial­ly dam­aged to the tune of US$5m ($31.9m) in 2000 when the gov­ern­ment of the day al­lowed Air Caribbean to vi­o­late BWIA's sole na­tion­al air­line's route right to fly to Mi­a­mi and al­lowed a pro­lif­er­a­tion of char­ter flights. And in the same year, BWIA trashed Air Ja­maica in open com­pe­ti­tion on the Port-of-Spain-Kingston route. De­spite both "chal­lenges" in 2000, we still made a prof­it that year. And all of that was achieved with­out a cent from gov­ern­ment in those years.

Had BWIA had a fu­el sub­sidy to cov­er fu­el prices over US$50, cash in the bank in the amount of $735M (US$115m) in­stead of in­her­it­ed debt of over $255m (US$40m) and "im­posed" labour con­tracts in­stead of labour con­tracts ne­go­ti­at­ed in good faith, think of where BWIA could have been to­day. One more thing, we would still have had a suc­cess­ful Lon­don route with state of the art A340 air­craft fly­ing to Lon­don, New York and Toron­to. You see the mis­rep­re­sen­ta­tion that two A340 air­craft was not fi­nan­cial­ly vi­able, on the sur­face sounds rea­son­able, but the "avi­a­tion" en­thu­si­asts/ad­vis­ers omit­ted one fact. The A340 was nev­er ac­quired for the Lon­don route alone. They were on­ly com­pelled to op­er­ate on this sole route when T&T's gov­ern­ment lost civ­il avi­a­tions' cat­e­go­ry one sta­tus, and BWIA was banned from fly­ing this new air­craft type to the US or through US air­space. But this Lon­don Heathrow route sale and A340 can­cel­la­tion were short sight­ed de­ci­sions since T&T has now re­gained its cat­e­go­ry one sta­tus and there is no A340 wide­body air­craft to fly on those US and Cana­di­an routes.

Since Air Cana­da pulled out of Trinidad the A340s could have served Toron­to which would have in­creased the util­i­sa­tion to a lev­el of prof­itabil­i­ty. Un­for­tu­nate­ly, these as­sets were dis­posed of so the op­por­tu­ni­ty was nev­er re­alised. Al­so, it ap­pears that in their prof­it analy­sis of the Lon­don route, they did not take in­to ac­count the for­eign ex­change as­pect of the USD ver­sus the British pound. Most air­line costs are in US$, so when­ev­er the pound drops sub­stan­tial­ly, the rev­enues on the Lon­don route un­der­stand­ably de­clines as well, but this is usu­al­ly short lived. Right now, BWIA would be rak­ing in prof­its on the Lon­don route with the pound at $10.50, and with one A340 (and a bit of the oth­er A340) fly­ing the route. One fi­nal word, Caribbean Air­lines on-time per­for­mance has been note­wor­thy; how­ev­er, it should be point­ed out that most air­lines can be on-time if they are pre­pared to lose mon­ey to do so. Fly­ing on­ly from point A to point B, padding buffer min­utes to the his­tor­i­cal flight op­er­at­ing times, sched­ul­ing a long enough turn­around time at point B, and re­turn­ing di­rect­ly back to point B should al­ways pro­duce a great on-time per­for­mance.

Hint: You can­not make mon­ey that way. In a small mar­ket like the Caribbean you need to use a larg­er net­work of in­ter­me­di­ate is­lands and con­nect­ing flights to have enough pas­sen­gers to gen­er­ate the rev­enues re­quired to make mon­ey and you have to get high util­i­sa­tion of the ex­pen­sive air­craft. But the risk is that a de­lay of one flight could cause an­oth­er de­lay and so on, which in­vari­ably will hap­pen. De­spite poor­er on-time per­for­mance AA, Delta, Unit­ed, etc have hubs at Mi­a­mi, At­lanta and Chica­go. To gen­er­ate enough busi­ness to pro­duce prof­its, but on-time per­for­mance is com­pro­mised. BWIA in 2000 and 2001 be­fore 9/11, had an on-time per­for­mance of 80 per cent ver­sus the US car­ri­ers' 72 to 77 per cent, and made mon­ey. The cur­rent Caribbean Air­lines must be giv­en cred­it for achiev­ing an en­vi­able on-time per­for­mance, but stay­ing out of tax­pay­ers' pock­ets can­not be achieved with that type of sched­ule. The trick is to be on-time and still pro­duce a prof­it, which is why the in­dus­try on-time stan­dard ranges from 80 per cent to 85 per cent.

In his ar­ti­cle, Lu­cie-Smith states "all re­gion­al air­lines (in­clud­ing Cal) cur­rent­ly face com­mer­cial chal­lenges." Is this to pre­pare the read­er for sub­stan­tial loss­es and fur­ther sub­si­dies? Did BWIA not con­tin­u­ous­ly face com­mer­cial chal­lenges from un­reg­u­lat­ed char­ter air­lines, Air Caribbean, heav­i­ly sub­sidised Air Ja­maica, 9/11, Iraq war and Sars? If Caribbean Air­lines had pro­duced any re­al net prof­it re­sults, you can rest as­sured that the pub­lic would have been bom­bard­ed with the news. Have you ever heard of a busi­ness­man or politi­cian hid­ing his/her lamp un­der a bushel? It may be sur­mised that the rush to ab­sorb Air Ja­maica may well be a move to cloud the stand-alone loss­es of Caribbean Air­lines and to try to find prof­itabil­i­ty in economies of scale. Much, much more can be said and be de­bat­ed fur­ther to Lu­cie-Smith's de­fense of the var­i­ous de­ci­sions, but as we all know that the pi­geons will come home to roost in time, and usu­al­ly when most in­con­ve­nient to those who made the de­ci­sions and fund­ed the plans.

Pe­ter Hill

On­tario, Cana­da

Proud to have served BWIA

and the won­der­ful peo­ple of T&T.