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/
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