Statement by MInister for Communications and Works Hon. Julian Fraser, R.A. on State of Airlift in the BVI Delivered to the BVI Chambers of COmmerce and Hotel Association

~~Adz:Left~~Roadtown, Tortola: It is with great admiration that I wish to thank you all individually and as a group, for your continued confidence in my efforts to bring comfort to a tense and troubled market, brought on by the reality of American Eagle’s impending cuts in services, and the uncertainty of our collective ability to make up for these losses. 

I say collective because, I too realise your efforts, and I wish to publicly recognise it.  Most importantly however, I thank you for inviting me to come here to speak to you today.

It is important for you to appreciate the many undertakings of this Government since first being introduced by the Caribbean Tourism Organisation (CTO) at an emergency meeting in Antigua on May 28th: which I attended, for the purpose of alerting CARICOM Ministers of Tourism and Civil Aviation, on the state of Air Services, and Air Services in the Caribbean and the United States in particular.

The CTO in a proactive step to address the issues as identified, established four committees, namely: Regional Airline Committee; Hubs Committee; Economic Guarantees Committee; and Economic Development Committee.
 
For each of those Committees a volunteer from the meeting emerged as the Chair, and it was the Chair’s responsibility to decide on a time and a place for which to hold a meeting before June 22nd, the significance of the 22nd being the date that the Heads of Governments met in Washington DC; to attend the First Annual Caribbean Tourism Summit, (ACTS), June 21-25.

On Wednesday July 16th I met with Mr. Simon Knight: Head of Negotiations for CIS, Asia-Pacific and North America, International and Safety Division of the UK Department for Transportation, and the matter of Grant of Rights for a Caribbean Airline to provide direct service between the BVI and Puerto Rico was discussed, and the urgency expressed.

While in pursuit of an alternative to American Eagle, I remained mindful of the need to continue to pursue them as well, so on Friday July 11th, I had a discussion with Mr. Peter Dolara: a Senior Vice President of American Airlines on the matter of cuts by American Eagle and we got right down to what’s bothering us here in the BVI.

According to Mr. Dolara, now that American Airlines were able to hear our concerns and wishes, they felt amenable to stepping up in one way or the other in order to help avoid a crisis.  However, I was asked to be mindful of the fact that they no longer have the equipment to do what they once did.  That reference is with regards to having retired its entire Saab 340s fleet of 35 aircrafts at its Dallas/Fort Worth Hub, and replacing them with half of its 39 ATR 72s from San Juan.
 
With my focus continuing on Regional Airlift, the Antigua Hub could not be forgotten, so for two reasons I decided upon visiting with the Business Development Manager and her colleagues at British Airways while in London on July 14th. 

The first concern was the issue of passengers from the UK bound for the BVI having difficulties making their connections: now that American Eagle no longer flies between Antigua and the BVI.

This problem I learned, is not just a British Airways problem, but with all the airlines coming into Antigua with passengers bound for the BVI.  British Airways with the lost of its One World partner is particularly hard hit by LIAT’s one bag policy and not having Code Share, or Interline. 

British Airways we were told; is keen on having such arrangements established with LIAT.

It is expected that this problem will become more acute, because shortly British Airways will be making up to 40% of the seats on two of its weekly flights into Antigua available to BVI bound passengers, for reasons that those flights will no longer be moving onward to St. Lucia which will now have its own direct flights.

Code Share and Interline is not the only problem experienced by passengers through Antigua, scheduling is another, and a huge one at that.  It is reported that passengers are regularly being made to choose between long layovers or risk missing their connection.  This is not good. 

A First Choice representative with whom I met on July 7th to discuss their weekly service into Antigua with passengers bound for the Moorings here in the BVI, reported that the regularly scheduled service between Antigua and the BVI is inadequate, and often requires him to charter the services of LIAT.

My other reason for going to British Airways was to query a proposed new Trans Atlantic Service between London City Airport and New York’s JFK, in a specially configured aircraft equipped to carry 39 passengers Club Class.  This whole program is of interest to us because of three reasons: 1) British Airways interest in new services; 2) the Aircraft’s capabilities; and 3) London City Airport’s features.

Considering the issues with connections out of Antigua, British Airways was asked to consider the possibility of creating a shuttle service between Antigua and the BVI.  Their response was, that any such consideration, must take into account their partnership with American Airlines: both of whom are One World Members. 

The Aircraft which is an Airbus 318 with the range to fly Trans Atlantic; can certainly fly from the East Coast United States to the BVI, and possibly from the UK as well.  British Airways was also asked to consider the possibility of a UK BVI direct.  While the UK BVI direct might be a way off, we are certainly considering the possibility of the option existing to the US. 

Now that the issue of range is settled, the London City Airport becomes a crucial part of our argument for direct flights to the US, since all the studies and tests carried out at London City Airport compliments our Airport’s situation perfectly. 

Upon visiting with the Commercial Director of the Airport, we observed that this is an Airport in the heart of London, with restrictions more stringent than ours, in terms of take offs and landings: which are at 5.5 degrees or steeper, when compared to 3 degrees at other Airports including ours. 

They have two Runways with Available Take-Off Runs of 3,934 feet each; whereas we also have two Runways one with Available Take-Off Runs of 4,449 feet, and the other with 4,156 feet, both of which places us at a distinct advantage.

This issue of direct flights to and from the United States has been our Achilles: because we don’t have that option, whereas for our Caribbean Brothers, it has been their Messiah. 

Speaking of the option; Antigua has it; St. Kitts has it; Grenada has it; St. Lucia has it; Barbados has it; St. Martin has it; The USVI has it, and they all have direct American Airlines flights to the US.  Even Bonaire with a population of fewer than 15,000 has direct flights to Continental United States utilising a Boeing 737-800 at a much greater distance than the BVI.

With all this happening, my dialogue with American Airlines / American Eagle continues. 

On July 20th I discussed with Mr. Michael Rios: Caribbean Sales Manager, American Eagle, the problems of the BVI envisioned by their impending flight cuts, and he related to me that the following Friday July 25th was a date set to discuss future flight scheduling, and promised to inform me of the outcome. 

Realising his busy schedule, and not hearing from him I decided to take the initiative and call him the morning of Wednesday July 30th, to which he informed of a conference call at an agreed time that same day.

At the agreed time despite being unable to locate the third party we spoke.  I again related the BVI’s desire to have the early morning departure and the late evening arrival as obtain today, as a minimum, in order to satisfy the needs of our business and leisure travellers.

Mr. Rios acknowledged my concerns, and he related a host of reasons for the upcoming cuts, some of which I was hearing for the first time.  Specifically among which, were that since January 2007, his Overnight Hotel Expenses had increased by one hundred and fifty percent; the landing fees and other associated charges had escalated; and for those reasons, reinstating the overnight flight was not attractive. 

I immediately ask that he provide me with a detailed break down of all their expenses incurred on flights to the BVI, and he agreed.  He also advocated that the burden should not lie only with the Government, but that the private sector should play a role as well.

Given the urgency I attach to this matter, I again initiated contact with him in the morning of August 4th after not hearing from him.  He immediately extended apology for not being able to respond on the grounds that their financial people were in the process of closing their financials, and that as soon as that was completed he would have the information to me.

I informed Mr. Rios, that while our Government has no control over what the Private Sector can, or would do in regards to the rates being charged to his Airline for services, we are relatively certain that the sector is sufficiently concerned to make the necessary sacrifices.

And as to what we can do as a Government regarding our rates and fees, I gave him my assurance that everything will be on the table for discussion.
 
As soon as I receive this information from American Eagle, I am prepared to share it with you, with a view towards reaching an amicable agreement with American Eagle.

As for positive developments: on August 7th, LIAT has offered for our consideration a Schedule with Daily Departures from Beef Island at 9:35am; and 6:30pm; to San Juan as continuing flights from Antigua, St. Kitts or St. Martin.  Also included is a daily departure from San Juan at 8:20pm.  As expressed earlier, this arrangement does not come without some guarantees.

In the meantime, on August 4th the UK Department for Transportation has reported that they have received word from the US Department of Transportation “that they do not have an in-principle objection to the exchange of rights we suggested”.  This is particularly good news in our search for a replacement for those two critical time slots lost.

The Report went on to say, “They also said that American Eagle have not objected, even though they accept that any new carrier would be competing with them, as they acknowledge that they are withdrawing service. That said, the US authorities say that American Eagle have said that they are in discussions with BVI officials to see if their services could be made more viable. They also say that American Eagle have proposed a phased resumption of services once the services are first reduced in September, as follows:

- September-November: 3 services a day

- November – 17 December: 4 services a day, one extra on Saturdays and Sundays

- 18 December – 14 January: 4 services a day, two extra on Saturdays and Sundays

- 15 January onwards: 4 services a day, one extra on Saturdays and Sundays”.

Meanwhile, on Wednesday August 7th, myself and members of both the Ministry and the BVI Airports Authority met with a representative from The Boyd Group: a Consulting Firm out of Aspen Colorado, and had discussions.   

The Boyd Group are Independent Research Experts in Air Services Issues, highly regarded as an activist research and forecasting firm that prides itself for being the only aviation consulting firm that conducts independent, on-going research and analysis of aviation events and trends.

I am pleased to report that we have since entered into an agreement with the firm, and at their mandate is threefold as follows:

1. Provide guidance with the completion of an agreement with LIAT for commencement of San Juan service to supplement the reduced American Eagle service pattern for the coming Fall/Winter season;

2. Conduct a detailed study of American Eagle and American Airlines air service metrics for the most recent 12 months at both the San Juan hub and on the Eagle Island routes; and

3. Provide assistance with discussions and negotiations with American Eagle on service restoration.

Let me close by acknowledging some simple facts.  The people and my Colleague Ministers at the CTO are to be commended for bringing this issue to the fore, and for subsequently keeping it alive.

It must be noted however, each country in the region ended up going their separate ways to solve their own problems, and others having to suffer the consequences individually.  So whatever happened to all that talk about unity, and negotiating as a group? 

You would recall specifically one of the four Sub-Committees established by the CTO at their May 28th Meeting was the Revenue Guarantee Committee, and their remit was to advise on ways to negotiate with the Airlines with a single voice.  The objective being: to prevent the Airlines from playing one country against the other to their advantage. 

Obviously this has not worked, because we are here negotiating by ourselves, and the same is true for every other country in the system.

The BVI is at a clear disadvantage by not having long haul capabilities.  To continue denying this would be naïve, or at best short-sighted, and can only serve to the long term detriment of the BVI’s future in Civil Aviation.  Any objective comparisons in the region would be hard pressed to deny that our long-time counterparts like Antigua and St. Kitts has won over because of their readiness for the occasion.  What happens to us in the future depends upon what we do today. 

Last and probably most important, let me thank the Premier; the BVI Tourist Board; and the many groups and individuals who continue to support our efforts; and once again promise you that very soon you will be hearing from me on this matter as I continue to labour for a solution.

THANK YOU.