Proposal: PRIVATE Pan-regional Business System

Submitted by Jim Lynch, Captain, retired

Proposal: PRIVATE Pan-regional business system, facilitated by pan-regional airline – #2

PM Antigua
PM Bahamas
PM Barbados
PM Belize
PM Dominica
PM Grenada
PM St. Lucia
PM St. Kitts
PM St. Vincent&Grenadines
ANU Minister Yearwood
CARICOM Deputy Sec-Gen
CARICOM Sec-Gen
CARICOM Ambassador Comissong
ECCAA Chairman

To the Prime Ministers and other leaders of CARICOM …

Honourable Ladies and Gentlemen …

Proposal: PRIVATE Pan-regional business system, facilitated by
pan-regional airline

As COVID-19 decimates the world’s corporations, we see businesses large
and small as well as airlines collapsing and closing for a variety of
reasons. Some airlines will fail because of poor loads, some from
executive/management greed, some from sheer incompetence.

LIAT and Caribbean Airlines will not be immune to this virus, mainly
because its top management are not aviation or airline people, they have
never seen any other “models” of airlines than what they inherited or
have always worked in. They are incompetent in aviation at the best of
times, and this is far from the best of times.

For six years I have been interested in starting a private, truly
regional airline with a network covering all of CARICOM and the British
OTs, NOT including the US Territories or any US destinations.

“De man crazy”, you say? Well, my best aviation industry opinion is that
a start-up going head-to-head with US carriers is business suicide.
Forget it, American carriers can do international routes more
economically for our people.

The network, for Stage 1, is intended to be Surinam to Mexico City to
Bermuda and back to Surinam, and all viable CARICOM destinations in
between, with the stated exceptions above. It would be based in the
OECS, under the auspices and authority of the EC-CAA.

There exists a Stage 2, for after the IPO, and a Stage 3 for about 9
years after start-up. But I’d like to concentrate of doing the first
things first. There is long-distance planning going on here, this is not
a flash in the pan I threw down into a Word document.

The COVID-19 argument against its existence is not valid, in that
funding will take some months to achieve, and the EC-CAA seldom issues
an AOC air Operating certificate within a year. That the EC-CAA has lost
its Category 1 (and is not=w considered unsafe) will be 100% irrelevant
until Stage 2, after the IPO. And perhaps =by then we may see our
leaders selecting top management for their qualifications and not
because of their political friends.

Even if someone handed me the entire “ask” amount right now, May 2021
over the horizon would be a reasonable starting date for operations.

I have been reluctant to share this concept with any government before
because the last time I took a concept to a government Minister I and my
partner were shut out and the government stole the idea – and then had
the gall to suggest they had not done so.

This also CANNOT be a government-run entity, or it WILL end up with the
same kinds of utterly incompetent politically appointed management like
LIAT, Caribbean Airlines, BahamasAir and others and keep sucking money
out of taxpayers pockets.

============================================

Extracts from the 3-page Executive Summary to the 100+ page Business
Plan:

THE HARD REALITIES – FEASIBILITY DISCUSSION

CURRENT REALITY: THE COVID-19 PANDEMIC AND ITS LESSONS

From the date of successful funding, this business system will take at
least six months to start, and (due to the CAA application) the airline
part of the system will take a year until legal start-up. So it is
reasonable to expect that by then the pandemic will have ceased, or will
at least be on its way out. Earlier projected hotel revenue in Year 0
(non-revenue for the airline) should pick up and accelerate later in
year 0 – and a savings will still be realised by our people staying
there instead of at other hotels.

The lesson to be learned is that the pandemic has reinforced the
absolute need for financial reserves in any business – globally – and
understand the real perils of operating at the edge of viability – as
most airlines have done in the “boom times” over the last 12 years.
After so many years of these “boom times”, scores (if not hundreds) of
airlines globally WILL PROBABLY FAIL THIS YEAR due to the pandemic
combined with reduced or eliminated revenue and inadequate reserves –
from small to national and international. A few airlines in developed
countries will ask, qualify for and get government bailouts, but the
vast majority of airlines in the entire world which did not have reserve
funds – for ANY eventuality – will collapse and disappear.

The more we are prepared for the unexpected, the more “weatherproofed”
we will be. This also applies to employees: if a similar pandemic hits
again, we have to decide how we will cater for their needs and keep
allowing them to pay their bills and feed their families. One way is
through bulk purchasing – which we will already be doing for the
catering and hotel business – but on a larger scale. The greed
demonstrated – especially in the USA – is an unacceptable management
approach.

There is actually an opportunity to be gained by starting now for the
first flight in a year’s time. Many airlines, large and small, will be
closing, and their used aircraft (recent and not-so-recent) will be up
for sale or returned to the lessors. In either state of use, prices will
have come down substantially – as much as 40% – similarly more
favourable lease costs and conditions, and we can take advantage of that
to start with a lean operation.

With large cuts in capacity and little expectation of a quick and full
recovery, many (if not most) large commercial jet aircraft are headed
for one of four fates — temporary storage, long-term storage, cargo
conversion or disassembly for parts.

This proposal, based on 4 years of Sabre and GDS data (not on
speculation), is for a region-wide business system which contains and is
facilitated by a politically protected (but not politically directed),
scheduled, medium-haul truly regional PRIVATE airline whose core network
will be the Caribbean Basin – initially serving only the economic
grouping of sovereign developing countries of CARICOM (excluding the USA
and Territories), over a network the size of Canada, with little or no
competition.

This airline network will be a virtual monopoly, since non-regional
airlines are banned from operating over them between these countries
(see CARICOM Multilateral Air Services Agreement), and the current
“regional” airlines are all government owned and 100% broke. The
proposed business section will include joint ventures with entrepreneurs
in businesses where their products and services are needed locally to
reduce or eliminate imports.

A 100% LOAN is sought of US$215 million over 14 years, at 8% interest,
with no payments or fees up front.  Of that $215 million, up to 40%
(US$86 million) is available for direct investment, but the rest – 60%
(US$129 million) – MUST be in loan form. By the end of the first year
(Year 0) when service starts there will be more than $160 million
available in assets, in aircraft and real estate.

The airline portion of this project is based on actual Sabre and other
GDS database numbers for four recent years (2014-17), not on
speculation. The financial forecast – prepared by an experienced UK
airline consultant – suggests that even using deliberately conservative
(even pessimistic) assumptions we may still expect to break even during
the second year of flight operations (year 3).

SOME OF THE BENEFITS TO CARICOM

From the beginning this project was intended to be synergistic and
cooperative to the CARICOM Common Market.

TOURISM IN CARICOM:

The on-line booking software to operate the airline will be designed to
include assistance to other small airlines, small hotels, ground tour
operators and a range of other regional tourism-oriented activities
while allowing passengers to modify their itineraries on the fly (within
limits, of course), perhaps to go as far as allowing customers to set
automated local wake-up telephone calls for themselves from within their
web accounts.

BUSINESS IN CARICOM:

This regional project was also intended to facilitate regional
businesses – to start with minority positions in joint ventures with our
own airline suppliers (such as catering), to initiating pulp and fibre
manufacturing providing containers for both on-board service and
replacing all styrofoam and plastics normally used in food service, and
also to start providing a regional referral / connection business
database service between supply and demand (including labour).

RISK ASSESSMENT

Because of budgeted contingencies, the EXISTING political protections
and almost complete lack of regional competition, I suggest you should
regard this Project as a VERY LOW RISK proposition, more of a
non-governmental development.

All of the larger regional carriers are government-owned, politically
run – and always on the verge of bankruptcy (supported by hundreds of
millions of taxpayer dollars over the years). It is REASONABLE to assume
that because they can barely afford to operate their current routes they
would not be able to start innovating new routes to compete with this
project.

THIS CARRIER DOES NOT INTEND TO COMPETE WITH ANY OTHER REGIONAL CARRIER

MANAGEMENT AND STRATEGY

On stand-by is a start-up team of highly qualified, respected and
experienced hands-on aviation professionals – the majority are regional
nationals, but there are some globally experienced professional
ex-patriates.

In addition, a UK company is interested in a joint venture to perform
the airline’s maintenance, and they have indicated an interest in future
expansion of that facility to a much larger heavy-maintenance facility.

The compulsory objective is not to just “try” to do this, but to ensure
all of the right conditions and funding fully pre-exist before we start
which will guarantee success. Except for the funding, all of the right
conditions exist NOW – and we are all determined to either make this a
success, or not do it at all.

A loan, as opposed to investment, is sought for this Project to
primarily to keep this in CARIBBEAN hands, to finally do this the right
way for our region, and to satisfy our regional needs and small
investors – not purely the greed of foreigners.

The Founder offers a career, qualifications and experience in several
modes of air and ground transportation plus management training,
experience, contacts, reputation, two CARICOM citizenships (and life
experience).

============================================

I ask each of you for your assistance in funding the funding for this
project, which would seek to kick-start entrepreneurs and small business
in every destination in CARICOM.

It would fully enable CSME, and our efforts to coordinate all regional
carriers – in every region – would make Caribbean connectivity a reality
for the first time ever.

It would make such things as pulp plants and vertical farming (which
avoids praedial larceny and can control atmosphere to grow any kind of
plants) and many other advantages to feed and clothe ourselves.

We should LEARN something from this pandemic, understand that we cannot
live on tourism alone, that in a pinch we MUST be able to feed
ourselves, that entrepreneurs can no longer be left to the wiles and
denials of commercial banks – AND “Development” Banks.

We can replace external products with products we make ourselves – but
that does not come with excess bureaucracy and scant funding. I am
willing to do what you will not or cannot do, that is perform joint
ventures with entrepreneurs and give them real-world business advice,
guide them to success, and open their market from a local 70,000 to
CARICOM’s 14 million, facilitated by the airline.

I know there are plans for a CARICOM fund from the regional banks, and I
would like to be the first in line for that funding. But I cannot wait
forever on bureaucracy and red tape, fumbling and internal politics. As
you can see I am offering 40% of the ask in equity to an investors, and
I am about to connect with one in China.

As a Caribbean Man I would like to keep ownership in the Caribbean and
avoid flight of foreign currency (ROI) before and at the IPO, but unless
the regional leaders and CARICOM ease the purse strings that is the way
it will have to go.

None of you ever respond to my emails. I do hope this appeal will
receive a different reception.

And that you will not just steal my idea and screw it up like LIAT and
Caribbean Airlines.

Thank you for your valuable time and consideration.

Best wishes,

James C. “Jim” Lynch
Captain, retired
* Originally from Barbados, West Indies

https://www.linkedin.com/in/captain-james-jim-lynch-90892328/

19 comments

  • Nice plan, but it fails in the face of reality. You forgot to budget retirement posts for dumped politicians like Owen Arthur and bribes.

    Like

  • Bajan Free Party 2023 0r sooner

    Last we heard that DLP MOF and now the MOF BLP are all crooks, Like the DLP Chris it was said he wanted 10 Million to keep RED-Jet flying for his own Pockets, 5 Million for himself and the other 5 Million for his friends, Until the last 30 crooks are removed Keep your money in your Pockets, If you don’t believe in Corruption you will get a stiff lesson in Barbados or this Caribbean, You may have to pay all type of Money and more landing fees, Just another business going against LIAT their Pvt drug flyers of the Skies, As you can see they charge more and more Fees, Soon there will be a Pilot fee, sitting fee, seat belt fee, stand bye fee, late fee, and “fee fee”$ might even be a party fee ! & the courts are shit they may even put drugs on your plane to give you fines or even groud you the day after you land!

    Like

  • Why would anyone want to get involved in a startup airline in the region, especially post Covid 19?

    Liked by 1 person

  • Author is/has obviously been smoking some extremely poor local weed bathed with heavy socialism flavor and lacks all REALITY. His thinking that an AIRLINE can rescue the CARICOM FAILED STATUS is similar to BARBADOS surviving on a one industry(tourism) philosophy.

    Like

  • The author is a Bajan who has been in Caribbean aviation across the entire eastern region since 1968 and is well aware of the risks and corruption. He is ALSO well aware of the opportunities and the hopes and aspirations of entrepreneurs who are so hog-tied by the financial institutions that they are unable to raise cash to buy two chickens to start a coop.

    If the politicians will not assist in finding the funds and helping this start, and the funds are found elsewhere, then I will make sure they feel the weight of the people – not a threat but a promise. Politicians have made promises and implemented Treaties since CARICOM started without ensuring that they could be facilitated.

    CSME, for example, is a VERY bad joke if people have to travel to Miami or New York in order to merely cross the Caribbean Sea.

    But y’all go ahead and be negative. After all, that’s all you have left – negativity. Those same politicians have taken everything else away. You no longer have hope, expectations, trust or anything that will bring you a brighter tomorrow, so you revert to “crabs in a barrel” syndrome, where you just drag everyone who makes the effort back down into the barrel with you.

    I. Gone.

    Like

  • ONCE MORE

    Q Why would anyone want to get involved in a startup airline in the region, especially post Covid 19?

    A BECAUSE THERE IS A GREAT NEED FOR SUCH AN AIRLINE SINCE THERE IS NOW NO
    EFFICIENT ECONOMIC SYSTEM FOR MOVING FOLK IN THE REGION AROUND.

    I BELIEVE THAT THIS IS A SENSIBLE ANSWER TO THE QUESTION

    Like

  • The challenge experienced with LIAT and other regional airlines that have tried and failed had nothing to do with there being a need. Too many big fish in a small pond. It is the politics!!!

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  • WHAT EVER THE CHALLENGES ARE OR WERE OR WHATEVER THE POLITICS IS OR WAS…….THERE IS A NEED! THIS IS A FACT THAT CAN NOT REFUTED.

    A MAN THAT IS A FARMER SEEKS A LIVELIHOOD IN FARMING
    A MAN WHO IS AN AVIATOR SEEKS TO SERVE OR EARN IN AVIATION, DESPITE THE ODDS.

    Like

  • There is a need for many things, the ability to make it financially viable is another thing. All over the world airlines have to restructure. The point is that it will be harder now than before for a private initiative to float an airline in the reason without heavy injection of equity b6 governments. We are back to square one. The comments so far are not meant to dissuade Jim Lynch from pursuing the matter, however, whether he approaches government, finance house or venture capitalist he will have to answer some hard questions.

    Liked by 1 person

  • @ BimJim

    I am sure given your background that the plan has operational merit. However the realities of life in the Caribbean now especially post Covid make a very unlikely proposition to see the light of day.

    (1) The immediate focus of most governments now is how to generate foreign exchange by diversification and import substitution as soon as possible. Pouring money into an airline with an unsure profitability timeline does not help that focus

    (2) Corruption and pocket-lining is a reality of doing business in the region so double your budget. If you do not address this unfortunate reality then the project would not even be approved far less grow into profitability. Red Jet?

    (3) It requires too much co-ordination across the region to get off the ground. We can’t even co-ordinate on LIAT. What’s the incentive for any politician to care about a regional project at this time? We are back a point (2) again

    (4) Who will fill these seats on a cross Caribbean airline? Airlines don’t generate demand on their own, they grow as a result of underlying existing demand and need. It’s not build it and they will come. Intra regional travel has been on decline for years given taxes and user fees on tickets. How does your airline avoid this? Without the traffic, which is declining how can you sustain revenue and profits?

    It’s just too ambitious a project at this time. Not about crabs in a barrel but more about reality at this time of especially scare resources

    Like

  • NorthernObserver

    Wondering…..LIAT is/will be in financial trouble now/soon. Why not just buy them, getting all the approvals you need, rename it and carry on smartly. Their debts are likely so high as to make the entity worthless, and the coming battle between shareholders on ‘new funding’ means one of them is likely to pay somebody to stop their continued bleeding. Just make sure they bankrupt the current company to dispose of current liabilities.

    Like

  • de pedantic Dribbler

    @David, Bajeabroad n @Northern all very well stated… The former captain must know something you guys are all missing big time.. I certainly myself can’t fathom what that is, however.

    And @northren as bluntly practical and more financially reasoned as your post is u are missing the ‘crab in barrel’ (there is always dat).

    Do u really think that the endless executives n pols who presided over LIAT these many years would give honest and whole hearted support to a successful and restructured operation ran by a guy n team who for years SAID they could absoutely do a better job!

    Bout hay… I think not! They say trouble don’t set up like rain but boy dat one surely looks like very dark clouds all around!

    Call me cynical but if Bizzy Williams – a proven business guru in the Bezos/Jack Welch/Jay-z mold – and team were unable (different circumstances true) to establish a viable operation with ‘Redjet’ do we really perceive (as noted) that the “politics” of this (primarily) will EVER allow a successful airline business to thrive!

    Like

  • LIAT is in ‘a very precarious situation’ and will need a bailout, Antigua PM says – LIAT is in ‘a very precarious situation’ and will need a bailout, Antigua PM says: https://barbadostoday.bb/2020/05/10/liat-is-in-a-very-precarious-situation-and-will-need-a-bailout-antigua-pm-says/

    Like

  • — “The challenge experienced with LIAT and other regional airlines that have tried and failed had nothing to do with there being a need.”
    LIAT and other regional airlines that have tried and failed had everything to do with POLITICS and installed incompetent management who – in MOST cases – knew NOTHING about airlines or aviation, and simply did as they were told by their political masters.
    — There IS a need. Why should regional people – assume St. Vincent – first have to take a week vacation to travel to a US Embassy to get a visa, then go back home and start again to travel via SJU or MIA to one of the other islands?
    — There IS a need. Where is CSME if there is no first travel between CARICOM members?
    — There IS a need. Governments have set up the Development Banks to help entrepreneurs – but converted them into parking spots for their political friends – and made it harder to get loans from the Development Banks than from the commercial banks. All the while borrowing hundreds of millions for their own pet projects from China, World bank and even the CDB – which do NOT lend to individuals.
    — Bizzy was a minority investor in REDjet. Bizzy called me and asked if I would come down and meet with the Board of Directors at the next meeting. They said no, so I did not come. Bizzy did NOT control that airline, they were foreigners with a foreign business plan – and a foreign budget which did NOT cater for the vagaries of Caribbean flying. No West Indian killed REDjet, the investors of REDjet killed REDjet by their own stupidity and arrogance.
    — In this concept the airline alone would be financially viable. Why? Because it would have COMPETENT, QUALIFIED, EXPERIENCED management. But the proposal is for a BUSINESS SYSTEM. The airline is merely the facilitator that happens to be an airline. And I am not talking island-hopper pistons but Airbus aircraft, carrying passengers and cargo for the business system within the region, converting 80K markets into 14 million markets across the board throughout CARICOM.
    — WHY NOT NEW YORK?? WHY NOT MIAMI?? Go to hell right now, fool, and the sooner the better! A brand new start-up to go up against deep-pockets carriers who would add a dollar to every domestic ticket, take Caribbean fares below cost, and put the start-up out of business in weeks? It’s called business suicide, idiot. Let the Merkans fight amongst themselves, we have more important REGIONAL work to do..
    — The cry, suddenly, is to feed ourselves. In our own arena, WHERE is Mia Mottley in promoting agriculture or making it possible for the rest of CARICOM to participate in this?? And SHE is now the Chairperson of CARICOM. NO IMPRESSED. One interview on CNNi and suddenly she has a halo around her fat head. NOT IMPRESSED.
    — Bajeabroad, I am not going to open my business plan to these armchair do-nothing losers and naysayers – let’s face it, they don’t know any better. But suffice it to say that ALL of your points are addressed in my 120-page document. I have another (ever-increasing) document now at 350+ pages of my own ideas and suggestions.
    — As I said, I am asking the politicians to HELP ME FIND THE MONEY, not to supply me with the money. If they were to supply me with the money then verily I say unto you that the corruption and influence would follow me all the days of my life. So I am looking for a political word to the wise Chinese, the sage Turks, the intelligent Singaporeans, that this is indeed a low risk – and if you are willing to say it is not so without knowing what you are talking about, then I personally tell you to shut the feck up and that you are in fact a Master Boolshytter.
    — All eastern sources, yes, but like the Merkans the English and Europeans all want me – a poor Caribbean Man – to have “skin in the game”, to plonk a hundred million US dollars on the table before they THEN tell me I don’t need a loan.
    — Again, my concept is a BUSINESS SYSTEM, enabling entrepreneurs throughout the region, and an airline that is forecast to make a PROFIT of US$100 million in year 5.
    — If YOU cannot figure it out, the reason is that YOU are not in a position to know what is going on in REAL Caribbean today and, as I said before, you should shut the feck up. Because I am not going to explain my business concept here any more than that. REAL business partners like my ideas, you rum shop armchair “experts” can go and fly a kite.

    I. Gone

    Like

  • “LIAT is in ‘a very precarious situation’ and will need a bailout”

    What, time for the 6-monthly LIAT bailout again? My, how time flies when you’re going to Hell in a handbasket!!

    But Owen Arthur is the Great Brown Hope, right?

    WRONG!! Owen knows as much about aviation and airlines as I know about dissecting frogs. NADA. ZILCH. ZERO.

    The one bright space is that he may learn something – unlike Jackass Jean Holder, who for decades sat as Chairman of LIAT’s Board and wrote his tourism books, for the entire time learning the same NADA, ZILCH, ZERO about LIAT, airlines and aviation.

    Until the PMs of LIAT put qualified management in place – a book-keeper knows NOTHING abut other airline models, far less LIAT’s airline model – then every six months like clockwork the hand will be outstretched.

    I was hoping to be part of LIAT’s revitalisation, but now it appears the PMs are Hell bent on shutting it down – and, if they don’t want my help, they can go fry popcorn deep in the nearest active volcano crater.

    Like

  • NorthernObserver

    @DIW
    while you are generally correct….the times ahead of us are such, ALL these governments, will be short of money, with shrunk fiscal space. And everywhere they will need to make some decisions they otherwise would avoid. The “grants” are going to be tight. The developed world has used so much cash in Covid, and the calls are for more. Their political bread is buttered at home, not within the international agencies. Money is going to come with requirements most independent nations will not like.

    Like

  • Got to come back and read this later even though I will probably not be able to comment. But i’m sure I’ll learn something.

    Like

  • NorthernObserver

    I see on the newswire this evening, that Avianca has filed for creditor protection. It is the world’s second oldest airline.
    ttps://www.ft.com/content/e0e34501-6cdb-43de-9880-2406bd99cd1c

    Like

  • NorthernObserver

    Whenever there is this much negative, it usually means opportunity

    Like

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