Airport project to start over, CAL could buy planes

| 04/04/2013

cal tail.jpg(CNS): Efforts by the Cayman Islands Airports Authority to persuade the Central Tenders Committee (CTC) via a business case thatits proposed redevelopment could be offered to a sole bidder have failed and government will have to go back to the drawing board on this project. Tourism Minister Cline Glidden said that a new independent business case assessment would now need to be carried out before the project could move towards a request for proposal on an open competitive tender. Meanwhile, Cayman Airways has been given the go-ahead to present its case to the FCO for the purchase of the 737s, which are approaching the end of their lease.

Speaking at Thursday’s press briefing, Glidden said that a the FCO’s own economic adviser has helped put together the value for money case to buy the aircraft, which, despite the financial constraints on the government, may allow CAL to borrow the money to buy the aircraft if London could be persuaded that buying would save the public purse money over the return of the planes and the start of new leases.

The tourism minister also revealed that the preliminary deal, which had begun under his predecessor with the owners of the Philippines airline PAL was no longer active. Glidden said that he could find no evidence in the tourism ministry, which was previously held by former premier McKeeva Bush, of cash changing hands. He said the board had concerns about the proposal, which could have seen the Asian airline hold shares in CAL, and as far as the national flag carrier and the ministry were aware, there were no remaining obligations regarding those talks to the CIG.

Glidden also explained why the airport development business case was going back to the drawing board. He said that all of the work completed so far by the airport management was to present a case for a sole bidder, but that would not meet the business case requirements, as set out in the fiscal agreement with Cayman and the UK, which is now part of the Public Management and Finance Law, for a proposal for a competitive tender.

He explained that when the Airports Authority began making a case for a sole bidder, which was eventually declined by the CTC, the Framework for Fiscal Responsibility was not in existence. As a result, a new business case to justify the project, which will involve public funds, will now have to be undertaken by an independent consultant.

Updating the press and the public regarding the cruise port, he said that had taken a step forward in the process as the strategic outline had been completed and had been presented to the deputy governor, who heads the public sector investment committee. The committee will scrutinize the outline, which, Glidden said, would form part of the request for proposals for developers to make a bid for the project.

Print Friendly, PDF & Email

Category: Politics

Comments (30)

Trackback URL | Comments RSS Feed

  1. Anonymous says:

    737-400-800s is what they should get, and some crjs to go to the sister islands.

  2. Anonymous says:

    They need to hook up with Richard Branson, his marketing capacity is huge, and he wants to fly into Cayman. He is a proven company, so why wait, plenty other islands will have him.

    • Anonymous says:

      Tricky Dicky promised something like this in December 2010. The plan was to connect Virgin services to Miami, Havana and Kingston onto CAL using what were described as conjuntive tickets but you've never actually been able to book it on the Virgin website. He never honored that last round of promises so why go back to him to try again. If Virgin thought there was money to be made from the Cayman Islands you wouldn't have to approach them with a begging bowl they's come to you. Back in the early 1990s Virgin actually offered holidays in the Cayman Islands but they haven't done that for years – I wonder why?

  3. Anonymous says:

    What Cayman Airways needs to do is to become a multi operator of aircraft. For example, buy a couple of Embraer 190 for short to medium routes and 2-3 B737-700 or 800 aircraft for medium to long haul routes. The airline also needs to think outside of schedule flights and get back to the 80’s when they ran multiple charters from the USA. The airline also needs to make the pay for Flight Attendants attractive to encourage our own Caymanian young women to want to represent the airline and country. Again going back to the 70’s and 80’s where you rarely saw a non Caymanian flight attendant on your flight. Just the other day I wentto Miami for the weekend and the 3 flight attendants were all not locals, for both the flight going up (102) and for the flight coming back (107). The flight to MIA had a Jamaican, a Cuban and what appeared to be an Australian and the return was 2 Jamaicans and another Spanish girl. There is definitely something wrong with this picture. The airline SHOULD be a break even business but that won’t happen as long as the airline is run by incompetent people, and to this I simply mean the Board and Senior Management. The front line staff are incredible and dedicated employees who I am made to understand are not recogized for their worth. Hopefully the Government to come after May 22 will strive to ensure that the airline is righted and set on a course for some level of break even or maybe even profitability.

  4. RadarContact says:

    The CAL aircraft are kept well and maintained at a very high level. However with aircraft of this age, you can expect them to sometimes have more problems than newer models.

    CAL is a great benefit, however I think its time for a re-model of the airline. While the 737s are great for the routes currently run, I would say for 70% of the year, they probably go out with 60% loads (and I think im very generous here with that load number, last 4 flights i took, we had i think around 47 people onboard for an aircraf that can carry 130). Perhaps its time to follow the leads and try to "downsize" to become more economically viable. Smaller aircraft (like the Embraers 190 Air Canada use) would mean hopefully a better load factor (less free seats), and smaller/newer aircraft would cut costs in fuel bills and landing fees (which are based of Maximum Weight of Aircraft).

    Perhaps find some feeder aircraft like the Dash8-400 or ATRs to run flights to Brac, Jamaica, La Ceiba, Havana would help also as most of these routes are a monopoly for CAL. 

    So in actual fact, replace the 4 737s with maybe 2 E190s, get 2 Turbo Props and if required for the busy season (November to April), lease some larger/more aircraft to run the winter routes. Caribbean Airlines does this with Amsterdam based Transavia. During Europe's winter, routes are cut. However here in the Caribbean, its our busy season so these aircraft come from Europeto help boost Caribbean Airlines' extra services, and once the busy season here is over, they go back to Europe for the start of Europes busy season. This partnership works for both airlines very well.

    I know this is a thorn in some peoples sides but also look into privitizing both airport and airline! 

  5. Peanuts says:

    Time to rethink. Why not use something like a Dash-8 for the Brac, Little Cayman and Montego Bay. Less expensive and economical to operate. Crew and fuel. Time to rightsize the fleet.

    • Anonymous says:

      I have a brilliant idea. I think we should buy an aircraft for our Politicians, and one that can carry alot of luggage.

  6. Anonymous says:

    They are all third world quality aircraft for a 3rd world quality airline at the end of the day. Cayman has always loved being able to say it has it’s ‘own’ flag carrier, but the truth is the economics can’t support it. But we are talking about Cayman…..

  7. Anonymous says:

    Before we condemn Mr.Glidden it should be noted that the age of a plane in years is not the main factor in determining its useful life. It is the number of pressurisation cycles (take off, flight, landing = 1 cycle) which is the main factor.

    Before anyone can make an assumption regarding the value of CAL's fleet they would need to know the number of cycles they have flown and for the Boeing 737 I think their useful life, before major maintenance and modification is required, is around 60,000 cycles.

    It is true that short haul aircraft would clock up pressurisation cycles a lot faster than long haul aircraft and therefore have a shorter life measured in years but in the case of CAL we just don't know the facts.

    As a matter of interest British Airways 737 fleet of 19 aircraft is on average 20 yrs old with the oldest 6 being over 21 years old.

     

     

    • Anonymous says:

      It's also true that BA are in the process of retiring all of those old 737s and most, if not all, will be eventually be broken down for parts. If you check the records the other problem with the CAL 737s is that none of them were ever operated by anything apart by third-rate/third world airlines with no regular access to major maintenance centres and they have been flown in some pretty hostile climates. However you try to spin it these aircraft are ready for the junk pile.   

    • Anonymous says:

      That last paragraph is not a valid comparison. The remaining BA 737s are all 400 models due to be retired and replaced soon with one of the smaller Airbus models. These aircraftwere all bought by BA direct from Boeing so unlike the CAL fleet, all of which have changed hands several times, are one owner from new. Last I heard they were all based at Gatwick and only being used on internal UK routes with no long over-water flights. The last BA 737-300s were actually pensioned off in 2008/9 and broken up for spares.

  8. Anonymous says:

    Uhhh…is this story for real? So if they have been given the go-ahead to present thier case to the FCO for purchase of the 737s; does that mean they have paid off all of the back debt owed of $10-14 million to the Cayman Islands Airport Authority? They should consider paying off their debts before considering purchasing old planes that are like garbage cans that WE THE PEOPLE keep allowing CAL to over charge for flights in order to maintain upkeep/costs associated with the having the old planes. Then again CAL is owned by the government and the Airport Authority is an authority with government so I guess this is a simple case of robbing Peter to pay Paul. RIDICULOUS!!!!

  9. Anonymous says:

    I cam\\n't believe that CG would come back with this foolish about buying these planes that any other airline would be trying to rid themselves of so that they can avoid costly maintenance checks.

     

    Reminds me of when Truman bought the old 737-200's

  10. Anonymous says:

    CAL will never get out of the red if they keep operating airplanes that are 20 years old. They are too inefficient. Those inefficiencies lead to high cost and annual losses. This then leads to a lack of fund and an inability to acquire newer aircraft types. It's a vicious circle that CAL needs to break. Get newer planes, and newer management.

  11. Anonymous says:

    Cayman Airways is my carrier.Support my KX and only fly them out of here no matter where we go. Glad the PAL deal is off the table. We dont need to be mixed up there.

    But I am not in agreement with buying old planes.

    A full assessment of the National Carrier needs to be done. Too many staff doing nothing in Admin or in the back office. Hard workers on the counter are the ones making money for the carrier!!! Carrier doesnt make money when the staff sit behind a desk. except if they are selling tickets.

    How much does Cayman Airways and Cayman Express currently owe? Who do they owe to? Lets streamline this carrier and make a profit. Make the admin staff come to the airport, check-in a few flights. Make some money for the carrier not just spend it.

    Lets look for newer better planes that can compete in viable markets. We dont need many planes just enough to cover the routes that make a profit.

  12. Anonymous says:

    Wonder if the CIAA redevelopment deal and refusal to go along with directive from board to go with sole bidder was part of real reason for removal of Jeremy Jackson as CEO.

  13. Anonymous says:

    Sell CAL and end the financial drain.

     

    Ooops! My bad. I forgot that the real reason for the existence of CAL is to provide free shopping trips to Miami for well connected friends and relatives.

     

    No wonder the government is such dire financial straits.

  14. Anonymous says:

    How about shutting down the feed bag(thats all it is) and let real airlines handle flights? Is because Cayman still does not  to be known as a developed country? Is it What passes for pride here?  Grow up!

  15. Airline insider says:

    This is the current CAL fleet –

    VP-CKY just over 20 years old been with CAL since Nov 2003.

    VP-CAY just over 20 years old been with CAL since Nov 2004.

    VP-CKW just over 17 years old been with CAL since June 2008.

    VP-CKZ just under 17 years old been with CAL since Jan 2009.

    The first two aircraft are now ready for the boneyard. The other two have a useful service life of possibly another three years.

    Do you wonder that the leasing company, ILFC, is so keen to unload them? These aircraft are reaching the point in their service lives when the cost of keeping them flying is rapidly going to exceed the revenue generated by leasing fees.

    CAL are already unable to generate enough money to cover the existing leasing costs so what do you think will happen if they take full financial responsibility for operating these aircraft? Even if they buy them in at just their collective scrap value it stillwouldn’t make economic sense.

    The harsh reality is that CAL needs to give up the concept of flying its own jets on its own routes and start code-sharing with other operators, which is what all the real airlines now do when they can’t afford to service a route on their own.

    • Anonymous says:

      In fact with air travel in deep recession these aircraft are probably worth more as spare parts and scrap than as flying examples. It's known in the trade as 'parting out'. There are about 200 737-300s in storage right now looking for new owners at asking prices from US$2.5million upwards but the two engines on their own are worth about US$1million each. If they do buy them they better be dirt cheap.

    • Anonymous says:

      They would be generating enough money if they would do away with all the free tickets for the politicians & their families, the board members & their families etc.

      I really, really hope that those privileges are soon revoked caue WE CAN"T AFFORD THEM!

    • Anonymous says:

      I wonder what the lease return conditions are.

      It is entirely usual for lease return conditions to be very specific in terms of condition and presentation of planes on return to the lessor.

      With planes at this time of their life cycle the terms are often the aviation equivalent of dressing mutton up as lamb – you have to spend much more than makes economic sense.

      At that point the leasing Companies have you over a barrel – would you like to spend a whole load of money and we will allow you to give us our planes back or we could be very kind to you and sell you the planes for very lttle more than it will cost you to return them to us.

      In those circumstances you are goingto drop a lot of money either way and the lesser of two evils is often to buy the planes, run them to their mext major check and then scrap them. My guess is that that is what is happening here. If so then fine get it done but start planning now for what we really need when these old birds finally leave the scene

      • Anonymous says:

        That is a very good point because these aircraft are on long-term lease, not temporary fill-in deals. However, if CAL has got themselves trapped into this kind of no-win contract some very serious questions need to be asked about the abilities and motivations of those who put their names to the agreement. If this is the case it makes a strong argument for the winding up of CAL, if not completely at least in its present form.

  16. Anonymous says:

    As Mr. Glidden said the morning "My fellow Americans,  . . . "

  17. Anonymous says:

    typical cayman….. incompetence at all levels….

  18. Anonymous says:

    This nuts…….the 737 300’s are 15+ years old and have no value, because they are costly to own and operate.

    Lease newer planes chaps.

    • Anonymous says:

      And the amount of the taxpayers' annual subsidy to Cayman Airways is how much……..?

      • Anonymous says:

        … and how much more if maintainance/ownership is more costly than maintainance/rental?

         

        But I guess thats what a business case is for, right. Be interesting to see it published.

        • Anonymous says:

          'See it published', that sounds like wishful thinking to me. This is probably a done deal already – wonder who they paid the customary 'consultancy fees' to?