Caribbean Airlines ‘gouging’ taxpayers

By Raffique Shah
Sunday, March 16th 2008

Manning And The JetAS I listened to billionaire-businessman Arthur Lok Jack reel out the numbers surrounding Caribbean Airlines (CAL) decision to purchase a Bombardier Global Express SRX, I was puzzled. If anyone knows anything about basic “counting”, it should be a billionaire. If anyone knows about price-gouging, it’s invariably the very wealthy. After all, that’s how most among the super-rich become wealthy. At his media conference last week, Lok Jack reeled out some numbers that stunned me.

Some numbers he mentioned in justifying purchase of the jet do not quite add up, and here I seek guidance from him and CEO Phillip Saunders. According to Lok Jack, we must sign for this jewel-of-an-aircraft by tomorrow, or lose it to a queue of prospective buyers that stretches from Montreal to Moscow. Having made a refundable downpayment of US$500,000, the government (read taxpayers) must cough up US$63 million, with another $2 million added for spares to secure the deal. Additionally, LJ said, we need to add another $1.5 million a year for crew, maintenance, etc.

CAL would then secure the luxury liner, which will be delivered later this year. And yes, CAL did its arithmetic, which showed the SRX would earn its keep, even make a profit. How so? Well, Lok Jack confidently added, that’s why government (taxpayers again!) had to commit itself to 600 hours of travel-time on the jet. The charter fee is a modest US$12,000 to US$15,000 an hour. I did a double-take when he mentioned those numbers. A 2004 Los Angeles Business Journal analysis showed that it was cheaper for groups of executives (as distinct from individuals) to use charters instead of regular commercial flights. The article compared the charter fees with first class travel on regular airlines, which the writers thought were engaged in price-gouging.

Having studied the numbers, I am convinced that Lok Jack and CAL and the Government are trying to sell us a half-picked duck, as Trinis would say. Or they think we are all fools-because most of us don’t have the money to even enquire about such services. What they did not cater for is the fact that we have access to massive amounts of information at the click-of-a-mouse. Here’s what I came up with for charter costs.

Large Jets-Cost per hour (in US dollars):

Boeing 727-100 $3,805;

DC-9-30 $3,686;

BOEING 737-500 $2,311;

BAC 1-11-400 $2,208;

GULFSTREAM 11 $1,939;

CHALLENGER 600 $1,830;

FOKKER 100ER $1,813;

GULFSTREAM 111 $1,795;

GULFSTREAM IVSP $1,614; and

GLOBAL EXPRESS $1,493!

Now, even if costs have increased by 100 or 200 per cent between 2004 and today, how did Lok Jack come up with US$12,000 to $15,000 per hour charter fee? A 200 per cent increase in fees would put the Global Express at around US$4,500 per hour. That’s almost four times cheaper than what Lok Jack wants to charge users of the CAL service. Maybe the Government would pay up for their travel, since they are spending taxpayers’ money, not their own. But which billionaire would use his money to charter our jet when he can access many aircraft-options at prices far cheaper than what CAL is suggesting?

Mr Manning and his Cabinet cannot be part of this elaborate scheme to hoodwink taxpayers. As I suggested in my previous column on this subject of a private jet, the Prime Minister can avail himself, and by extension the government, of a less-costly jet for private travel to the destinations he frequents. For longer journeys he (or whoever qualifies for using the plane) can charter long-range jets at prices close to those mentioned above. I don’t know that anyone would be angry with that, except perhaps Mr. Panday, who, with Jack Warner, flew to South Africa on a private jet.

I’ll add these facts to what I’ve already written on this subject. Research shows that outside of big, powerful nations like the USA, Canada, the UK and Australia (to name a few), only oil rich Arab countries that are run by monarchs and sheiks own fleets of private jets. Singapore, for example, always cited by people like Lok Jack as the perfect example of a small country that has attained first world status on little resources, has no presidential aircraft. With that country’s “sovereign fund” far exceeding anything we can dream of, its government does not see the need to buy a private jet for the Prime Minister.

Among the very prosperous European countries, Norway, which ranks very high in “sovereign funds”, does not own a private jet. The monarch, the Prime Minister and other government officials, travel on Scandinavian Airlines. If the need arises, they charter private jets. In Sweden, the government owns two Gulfstream jets, and Switzerland three. A common thread that runs through these countries is the standard of living of their citizens, which is among the highest in the world.

By tomorrow we shall learn if the PM really cares about his people, about how our money is spent.

6 Responses to “Caribbean Airlines ‘gouging’ taxpayers”


  • Warner: Jet just to satisfy Manning’s ego

    Ria Taitt Political Editor
    Sunday, March 16th 2008
    trinidadexpress.com

    Trinidad and Tobago has been duped once again into spending money to satisfy Prime Minister Patrick Manning’s ego.

    This is the view of United National Congress Deputy Political Leader Jack Warner on the issue of the proposed purchase of an executive private jet by the Government, via State-owned Caribbean Airlines (CAL).

    Warner said neither the Prime Minister of Canada, the Prime Minister of England nor the leader of France, all major powers, has a private jet.

    Warner, a Federation of International Football Associations jefe, who has occasionally had the privilege of travelling via executive jet, stressed that he was not against governments having private jets available to help them undertake their public functions. “But,” he said, “such jets must be judged against one very important criterion-does it provide value for money to the taxpayer?

    “The purchase of this jet by Patrick Manning fails this test spectacularly,” Warner contended.

    Noting that at a purchase cost of $450 million for the jet, which works out to an expenditure in capital cost of $90 million annually for the next five years, Warner said this compared very badly with the annual travel costs of Ministers, which was approximately $2 million.

    This $90 million figure does not include the projected annual costs for the purchase of 600 block hours by the Government. Based on figures provided by CAL chairman Arthur Lok Jack, Government is guaranteeing payment to CAL for 600 block hours a year at a rate of between US$13,000 to US$15,000 per hour, which works out to between US$8 million and US$9million (TT$50 million a year).

    “This is one hell of a cost for an ego trip for the Prime Minister,” Warner noted in commenting for the first time on the planned acquisition of the jet. He has been out of the country on trips to Egypt and Switzerland in the last few weeks.
    Full Article : trinidadexpress.com

    Ticket to fly Bombardier

    By Andre Bagoo
    Sunday, March 16 2008
    newsday.co.tt

    OVER THE last two weeks, Cabinet’s decision to approve a Caribbean Airlines (CA) proposal to acquire a $400million executive jet has generated heated controversy. Not only was Cabinet’s decision of February 28 leaked to the media, but subsequent statements made by all the parties involved, which failed to clarify and define the exact nature of the proposal, fueled even more outcry.

    Yesterday, Arthur Lok Jack, the CA Chairman, attempted to smooth over apparent inconsistencies between statements made this week by himself and Mariano Browne, the Minister in the Ministry of Finance.

    Lok Jack, Colm Imbert, the Minister of Works and Transport, as well as Browne himself, had previously indicated that a $400million (US$63million) advance on the jet had been paid to CA. At a press briefing held last week Wednesday at the Hilton Trinidad, Phillip Saunders, the CA CEO, said that this money had been paid into a local bank account.

    But at Cabinet one day later, Browne disclosed that the sum paid was really $327million (US$52million).

    Asked yesterday how much money Government had paid into the CA bank account Lok Jack said, “I don’t really know how much it was.”

    He questioned whether the discrepancy was relevant and emphasised that the jet’s cost was clear: $400million (US$63million). He said $333million (US$53million) was due to the jet’s manufacturer as a down payment, with the remaining to be paid when the jet was finished being built.

    Lok Jack also said no agreement had yet been reached with Bombardier, the manufacturer of the luxury Global Express XRS which the airline hopes to purchase for Government use. “No agreement has been made yet,” Lok Jack said. But he was clear that Monday’s deadline over the issue of the insertion of an anti-corruption clause into the purchase agreement still holds. “We will have to wait and see.”

    This week Sunday Newsday takes a look at the events surrounding the jet, which website Aviatrade Incorporated estimates will cost $18million a year to maintain. Following is the time line of how things have unfolded.

    February 5, 2004: Prime Minister Patrick Manning calls for a private jet for Government travel at a post-Cabinet press briefing.

    September 9, 2006: Manning and his wife Hazel take a test flight on a Bombardier Global Express XRS.

    January 18, 2008: The Finance (Supplementary Appropriation) 2007 Act is passed approving a payment out of the Consolidated Fund of, among other things, $430 million to CA for the settlement of BWIA Voluntary Separation from Employment Packages (VSEP).

    February 28, 2008: Cabinet approves a proposal for Caribbean Airlines (CA) to provide Govern-ment with a private jet.

    March 5, 2008: In the wake of reports of a $400million payment to CA for the jet, a former BWIA boss and a company official strongly condemn the jet purchase.

    March 6, 2008: At a post-Cabinet press briefing, Colm Imbert, the Works and Transport Minister, says CA wrote to the Ministry of Finance on February 27, one day before the Cabinet approval, proposing the jet service. He says “discussions” had been ongoing long before this. He says no money was as yet paid to the manufacturer of the jet.

    March 7, 2008: The next day in Parliament, Imbert reveals that $400million had been paid –at an unspecified date – to CA for the jet purchase.

    March 9, 2008: CA cancels a family day to which the press had been invited.

    March 10, 2008: Mariano Browne, the Minister in the Ministry of Finance reveals that he approved the $400million jet payment on February 29, one day after Cabinet approved the deal.

    March 12, 2008: Arthur Lok Jack, the CA Chairman says the deal with Bombardier is at a stand-still because of disagreement over the insertion of an “anti-corruption” clause. He gives a deadline of Monday for whether or not the deal will go through.

    In a written statement issued to the press, he also discloses that a refundable deposit of $3.1million (US$500,000) was paid to Bombardier.

    In the statement, he further says, “the Government of the Republic of Trinidad and Tobago advanced US$63million ($400million) to CA.”

    March 13, 2008: One day later Browne says the money given to CA was $327million (US$52million), at a Cabinet press briefing. Browne denies that the Supplementary Appropriation Act passed in January had anything to do with the jet and says BWIA VSEP money was not being used to acquire the jet.

    http://www.newsday.co.tt/news/0,75096.html

  • I disagree with Raffique on the point that the government should acquire a less expensive jet. No figures were presented to show how this would be more efficient. They were dishonest in how they went about this Bombardier jet deal and they should not be rewarded for that.

    Even if they consider a less expensive jet, what would the cost be? They already travel first class on commercial airlines and when they feel that is not working out they charter jets. Is this not less expensive than owning a jet at this time? If they feel taxpayers should buy a jet for official use, let them first show how it could save money and increase their performance, and let us scrutinize their data.

    If the Prime Minister wants the type of luxuries that some corporate executives have, then let him go into private business. The corporate executives are not using taxpayers’ funds for their luxuries (at least they should not). The monarchs, sheiks and other governments in countries with poverty and other social ills that own these luxury jets are all abusive and wasteful. We should not be following suit.

  • Bombardier, CAL jet deal stuck on corruption clause
    The controversial jet deal is heading for a fatal crash. Up to press time last night, there was no word on a meeting of minds with respect to the sticking point of the anti-corruption clause.

  • Why all the fuss about the PM’s private jet? Let him buy it. Maybe him and his theiving ministers will all crash somewhere. All fot the betterment of T&T. God is not sleeping.

  • To Cyril,

    The fuss is because it is a waste of resources. It should not cost us so much if they have to crash because of karma. It is also good for the government to know that people are not being so easily fooled this time.

  • caribbean social network

    Politicians will never change.. Besides we put them in office..

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