REDjet provides tough lessons for foreign investors in the Caribbean

“REDjet might still have been flying if the Barbados Government had honoured financial commitments to the collapsed airline.”

Former Prime Minister Owen Arthur talks to The Nation about the DLP’s failure to honour its promises.

Owen Arthur chides DLP for breaking REDjet promises – conveniently forgets he did the same thing with other foreign investors

Submitted by One Who Knows

For a man who himself made false promises to major foreign investors just to entice them to Barbados, Owen Arthur has some nerve criticizing the DLP for their handling of REDjet.

Not that the DLP government is undeserving of criticism over the REDjet matter. The point is that both DLP and BLP governments have shown they will say and promise anything to a foreign investor: at least until the cash arrives. The promises aren’t always about money or tax breaks, sometimes they are about changing the laws to facilitate business or protection of the environment, or putting in roads and sewerage treatment to encourage development.

Unfortunately that long-established history of promising anything to potential investors but then failing to keep up the agreement is starting to cost Barbados credibility in the eyes of the world.

REDjet and the silence of Caribbean Airways Ltd.

 

Merger of REDjet and Caribbean Airways Ltd. a viable solution!

by Leonard St. Hill

A mysterious silence surrounds the existence of Caribbean Airways Ltd. as the national airline of Barbados duly licensed but without planes to perform its function, while REDjet an airline duly incorporated in Barbados with planes to operate a national service is a first denied and delayed a licence to do so, and then deprived of financial support to complete the deficiency of Caribbean Airways Ltd. by merger or other lawful means to avert bankruptcy proceedings.

Receivership should not be regarded as inevitable liquidation proceedings; it should be for REDjet an opportunity for creative redemption where imagination is not lacking.

By a merger between Caribbean Airways Ltd. and REDjet as the national airline of Barbados with operating capital secured by diverting subsidies from foreign airlines now paid for airlift to Barbados hotels, the viability of the combination should be assured.

There can be no net loss attributable to the operation of a national airline of a country whose economy is almost totally dependent on tourism for its viability and whose owner is the ultimate beneficiary of income from nominated airfares i.e. fares lawfully fixed by the government of the national airline.

REDjet is entitled to the same guarantees even not “in extremes” that are assured Four Seasons and CLICO. It has prospects for generating a CARICOM AIRWAYS SYSTEM in collaboration with LIAT and Carribean Airlines Ltd. for a short, medium and long range operations, serviceable by existing aircraft of the partnership.

Leonard St. Hill
St. James, Barbados

REDjet officially dead, takes a chunk of Prime Minister Stuart’s credibility with it

Nonsense from the Prime Minister…

The Barbados Government “has not turned its back on REDjet”

Prime Minister Freundel Stuart speaking at a DLP meeting on Sunday, May 6, 2012

The Truth from Barbados Free Press…

“REDjet is dead, dead, dead – and it’s not coming back…

If the Prime Minister of Barbados is going to speak, please let him speak the common sense truth – and if he doesn’t, will the news media please call him on it?”

BFP’s Robert on Sunday, May 6, 2012 About REDjet: False hope and nonsense from PM Stuart

The Reality: REDjet declares bankruptcy on June 8, 2012

from The Nation Over for REDjet

FINANCIALLY TROUBLED airline REDjet has officially gone under.

A day after dismissing the remaining 94 employees, the carrier announced it had shut its Barbados operations and was filing for bankruptcy, blocking any legal proceedings by passengers and others owed by the airline.

“Airone Ventures Limited, doing business as REDjet, hereby announces the suspension of all operations in Barbados. REDjet profoundly regrets this decision and its impact on its suppliers, staff and passengers,” said a statement from the airline…

The last word from Ian Bourne and Bajan Reporter…

94 Barbadians unemployed, bravo George Hutson – REDjet officially dies

About REDjet: False hope and nonsense from PM Stuart

REDjet is dead, dead, dead – and it’s not coming back

by Robert

If the Prime Minister of Barbados is going to speak, please let him speak the common sense truth – and if he doesn’t, will the news media please call him on it?

On Sunday, PM Freundel Stuart (photo above) told a Democratic Labour Party meeting that the government “has not turned its back” on REDjet, and that the government would review the company’s books prior to making a decision about the airline.

This kind of ‘happy face’, deflecting statement is normal in Bajan politics to keep the PM or other big ups from having to say negative truths in public. It is a political strategy to keep the public from associating negative events with the leader. The problem is that the public becomes so used to hearing this kind of cow dung from our leadership that we too begin to accept it as ‘normal’.

It’s time we had leaders who just spoke the truth. Bajans can deal with the truth. We’re not children.

In the case of REDjet, everybody who has anything to do with Caribbean aviation knows that airline is dead, dead, dead. The airplanes are out of service (they were the wrong choice for the mission anyway), the ground and flight staffers are long gone and most important: whatever trust, goodwill and brand value that REDjet developed in its short life evaporated like a puddle of spilled Jet A fuel on a hot day. People are still waiting for refunds that will never come and they aren’t about to take another chance.

Killing the Vampire

The staff at the governments-owned Caribbean Airlines called REDjet a ‘vampire’ for sucking the passengers and cash from Caribbean Airlines in such troubled times. Now that REDjet lies in its grave, the surviving airlines are making sure that a couple of wooden stakes are pounded through its heart. They are determined that this phantom should never rise again. Trinidad & Tobago and Barbados revoked REDjet’s licences and after it ran into trouble and if the airline tries a return you can be sure that the company and staff will have to jump through all the hoops once again when it comes to licensing. It’s not going to be “Oh, you’re back. Here’s your papers.” That will be six months gone.

Unlike our Bajan babysitter, the Prime Minister of St. Vincent and the Grenadines told it like it is. Dr. Ralph Gonsalves said he had no intention of getting involved in the any action to save the REDjet, explaining, “REDjet is privately owned, Caribbean Airlines (CAL) is owned by the governments of Trinidad and Tobago and Jamaica, LIAT is owned by the governments of Antigua and Barbuda, Barbados and St Vincent and the Grenadines”.

REDjet is dead, dead, dead and Prime Minister Stuart should be saying that truth to Bajans and to foreign investors suckers seeking to revive the airline.

Any investors foolish enough to try to revive REDjet will be most disappointed because it always ends the same way when private business tries to compete with businesses run by the government.

Further Reading

The Nation – PM: Door not closed on REDjet

REDjet: What is happening with the funds collected from pre-paid tickets?

Where’s my refund?

by Thinking Aloud

First I do not want to say or even imply anything that may negatively influence the return of REDjet, but I am surprised that no-one so far has seized on some of the financial implications.

A very high proportion of any monies collected for planned future travel that has not yet been refunded, is in fact due to Government(s) and their agencies: whether they are departure taxes, VAT, landing fees or other airport charges.

Should the company NOT be in a position to refund, then those passengers who paid by credit card could be protected. I am not sure of the legal position regarding Surepay payments, but at the end of the day any advance payments will be largely made up of what would be Government dues, if travel had taken place.

It is also not clear whether REDjet have so far paid all its statutory obligations, such as VAT, landing fees, departures and other taxes for people that have already traveled.

Questions MUST be asked!

I think these questions have to be raised to establish if in fact further taxpayers funds should be placed in the airline.

Thinking aloud

REDjet collapses due to government hostility, airfare prices soar: Tourism Minister Sealy’s tears

Ever see the movie “The St. Valentine’s Day Massacre” ?

There is a scene at the funeral of one of the murdered mobsters where the camera focuses on a huge flower arrangement that says “From Al”… as in Al Capone – the guy who arranged the murders.

Flash-forward…

REDjet down, fares up

Minister of Tourism Richard Sealy

Airline prices have “gone right back up in the air” with the grounding of REDjet, says Minister of Tourism Richard Sealy.

And he has warned that the true potential of regional tourism, especially the event-based niche, will only be realised through viable travel options for those in the Caribbean.

He stressed that facilitating intra-regional travel was imperative for the industry… (snip)

… Directly addressing REDjet airline’s suspension of flights since March 17, the minister said “… the cost of travel in this region is simply prohibitive. I am told that there are some discussions on with respect to other players and we may be able to get some specials around the Reggae Festival. Certainly the resources of the Barbados Tourism Authority will be working feverishly behind that effort.

“Obviously, with the demise of REDjet, and the way the fares have gone right back up in the air, it is a big problem. I sincerely hope that once and for all we can come up with a meaningful, long-term resolution for that situation… I sincerely hope that something can be done to get REDjet back up in the air; and if in the unfortunate case REDjet flies no more, I would sincerely hope that another venture along those lines can come into reality very soon so that the consumers of Barbados, and the rest of the Caribbean can benefit,” Sealy stressed.

Read the entire verbal diarrhea from Minister Sealy at Barbados Today: REDjet down, fares up

REDjet debacle shows CARICOM is a sham

“What has been dished out to RedJet is shameful. I bow my head in that shame. I truly now know that CARICOM is but a sham and obviously just a ploy for Heads of our nations to get together and feed their egos.”

by Rosemary Parkinson

The reception that RedJet has received from our so-called- unified-by-CARICOM governments has been to say the least based on protectionism for LIAT and Caribbean Airlines. RedJet were doomed to fail if Caricom Heads did not put the necessary openings in place. The Barbados government was also a tad unhurried in getting RedJet the necessary support and I am not talking investment. There was no need at the time for this – those behind RedJet saw a niche, did their homework and were well-prepared to give the people a low-cost airline. This is where I smell a rat because these businessmen would not have gone through with their plans had they not been given certain assurances…by certain people…or at least that is my belief. I could be wrong, this could be an assumption.

We the people, however, embraced RedJet, welcoming this opportunity for the Caribbean region to be more integrated. Vendors could now move back and forth and make a living. Artistes from all areas of the creative arts had an opportunity to truly know our neighbours and earn extra dollars. Families and friends could now travel easily. Regional tourism had been finally given the push it required. Regional business at all levels could now afford visits to their partners rather than just telephone meetings. Most importantly RedJet gave an opportunity for food and goods to be moved between the islands – a huge plus for us the people as we sought to reduce our import bills from the north.

RedJet was people friendly and had one and only one vision…to give the people (I said the people) of the Caribbean an airline that cared cost-wise. Naturally making ends meet and profit would have also been a priority. But digging out the eyes of their own people was not.

REDjet on the edge of financial collapse?

UPDATED: REDjet denies rumours. Says route closures are about expansion

Ian Bourne has the story at The Bajan Reporter.

Too bad: but that’s what happens when the competition is government funded – and governments stand in your way to protect their own businesses.

The Nation is reporting that REDjet is cutting back 56 flights because the low-cost start-up is running out of money.

Local investor Ralph “Bizzy” Williams told The Nation that he and his Irish partners are unwilling to invest any further as they were “fed up with the way their investment had been treated by the Barbados government.“

Not the best advertisement in the world for Invest Barbados, fuh sur, but actually a common scenario. Many folks come into the Caribbean looking to start a business or even a hotel – only to later discover that the competition is funded by the deep pockets of government one way or another. That’s tough competition!

Remember the GEMS hotels were all heavily subsidized by government as is the current Barbados Hilton. I wonder how many of the recently closed hotels in Barbados might have survived without competition from government-owned businesses?

Perhaps REDjet could have made it on a level playing field, but there’s no such thing in the Caribbean.

RedJET benefiting from hidden fuel subsidy?

Who are RedJET’s shareholders & investors?

By “Jay Jay”

LIAT  is struggling to survive against Trinidad-based Caribbean Airlines which is getting the, possibly illegal, benefit of subsidized jet fuel.

Now, LIAT is getting competition from RedJet. Nobody appears to know who are the investors in this company are, but there are strong rumours that a major shareholder in the airline is also a major shareholder in one of the islands biggest suppliers of fuel, also supplied at cost price. Who could that be, and is that legal?

We are all shareholders in LIAT. Our ministers need to look in to this situation.

Loveridge: Jamaica’s protectionism hurting Caribbean unity, tourism

PM Golding tilts the playing field against REDjet and Barbados

In the next 24 hours, some 6,000 people will read this article by Adrian Loveridge. We can only hope that Jamaica’s Prime Minister will be among them.

Has REDjet been treated fairly?

by Adrian Loveridge - small hotel owner

It’s a big question and without all the facts in hand it would be difficult to be totally objective.

However, if you ask the questions, is the concept of a low cost carrier desirable in the Caribbean and can it be made to work, then the answers have to be yes, and probably if they are allowed to operate in a truly commercial environment.

When you can book a week-long cruise that visits seven Caribbean islands with travel, accommodation and food all included for less than the cost of a return airline ticket to one of those territories, then something has to be fundamentally wrong.

LIAT now enjoys a virtual monopoly on certain routes out of Barbados, which includes Puerto Rico after the withdrawal of American Eagle.

According to their website, the cheapest return flights (a round trip of 1,140 miles) bookable in late June to San Juan is US$664.09, which includes a whopping US$176.09 in taxes and add-ons.

For exactly the same dates, return flights to New York with American Airlines cost US$615.50 (including US$177.50 in taxes) and US$664.80 (US$166.80 taxes) with JetBlue, a journey involving 4,182 miles or nearly four times farther both in miles and flying distance than Puerto Rico.

“If LIAT had competition on the San Juan route of course fares would be lower and that is why we need an airline like REDjet.”

REDjet has been criticised by some for having not having a viable business plan but does LIAT or the amalgamated Caribbean Airlines and Air Jamaica?

Without past massive taxpayer subsidies all three of these carriers would have perished by the wayside years ago and the much delayed partial assimilation of the ‘Lovebird’ by CAL has also been finally made possible only after the government of Jamaica wrote-off off huge debts.

And we have to remember that in its entire 42-year history, Air Jamaica recorded a profit in only one of them, 1986.

So when we talk about fairness, what do we really mean?

To the best of my knowledge the owners of REDJet have not asked any government for taxpayer bailouts, heavily subsidised fuel, preferential interest rates or any other major concessions. They just want to operate in a commercially level playing field where competition, supply and demand and all the other factors that in the ‘real world’ decide economic survival or failure.

The people of Jamaica now own a 16 percent stake of Caribbean Airlines and it has been designated that island’s national carrier to the world.

Clearly, Prime Minister Golding is keen to protect that interest and recently stated he was “not saying the REDjet application would not be approved, but it would have to be allowed with the CAL deal in mind”.

Perhaps he has every right to be so protective, but does it really foster better Caribbean unity or take us a step closer to marketing the region as one?

The writing is on the wall, the president of the Barbados Hotel and Tourism has already graphically warned that summer tourism business is down.

REDjet has clearly demonstrated that it can drive additional traffic to Guyana and there is no reason to believe it wouldn’t be the same for Trinidad and Kingston. This just may reduce the real risk of additional hotel closures and job losses this year.

Jamaican Prime Minister alleges dirty tricks in Barbados airline war

PM Golding says Barbados “held up” Caribbean Airlines aircraft in “aggressive action”

The REDjet saga continues with the Jamaican Prime Minister accusing Barbados of harassing a Caribbean Airlines aircraft at Grantley Adams International Airport.

“What I’m told took place two days ago when a Caribbean Airlines plane was held up, I don’t want to use the word detained, in Barbados and the suspicion is that it is an aggressive action, and I hope it is not, because that is not the way we in Caricom should resolve our issues.”

PM Golding to The Gleaner: Red Jet Row Heightens

REDjet gives up on Trinidad & Tobago – Jamaica route

Barbados – Jamaica flights also postponed for two months

by BFP with contributions from a special friend

REDjet announced today that the airline will not pursue plans to fly between Jamaica and Trinidad, and that the Barbados – Jamaica route is postponed for two months.

The story behind the story…

Some observers wonder how long REDjet can continue, and whether the forces aligned against the new Caribbean airline will be successful in squeezing the financial life from the upstart before it really gets off the ground. There is a story behind the story but nobody is really telling it because REDjet officials have been keeping their silence in the hope that they will be able to work things out with the various Caribbean governments.

Says a special friend to Barbados Free Press: “If it doesn’t work out and REDjet ultimately fails, the fireworks will really start. Robbie Burns is a consummate diarist. It won’t be pretty.”

Further Reading

BFP May 13, 2011 – REDjet Update: Political problems with Trinidad and Jamaica

Caribbean Hotel and Tourism Conference cancelled – lack of interest!

Is this a problem with the organisation behind the conference, or something that goes much deeper?

Is this a backlash against Barbados for REDjet, Shanique Myrie, CARICOM movement rights, health care for immigrants and a host of other grievances?

by WSD

The Caribbean Hotel & Tourism Association just announced that their (ahem) “much anticipated” inaugural annual summit scheduled for June 1-3 in Barbados has been cancelled due to low registration numbers. Unmentioned in the brief press sheet are the reasons why the conference failed – or if the organizers have even started to understand what happened.

Your writer is not in the tourism business, but I have some questions and observations as an ordinary Bajan. Let’s see if my thoughts are shared or disputed by those in tourism and Barbadians in general.

Barbados and the BHTA were heavily committed to this conference, but the conference website shows only four commercial sponsors – only two of which are major companies recognizable to your non-tourism writer (LG and MasterCard). Was this an adequate level of sponsorship interest for a conference that represented itself to be a major summit by a major organisation?

Contrast the Barbados 4 commercial sponsors with the 22 sponsors of the May 10-12, 2011 Caribbean Hotel and Tourism Investment Conference held in Jamaica.

Was the dearth of sponsors in Barbados a fault of the conference organizers, or fallout from a damaged economy and lower advertising budgets? Was the Barbados conference scheduled too closely to another major event?

Was enough notice given to the tourism industry about the conference itself and the apparently excellent list of speakers? (See BFP’s TripAdvisor’s Brian Payea coming to Barbados)

Backlash against Barbados?

Barbados is under heavy criticism (some of it entirely justified in my opinion) from our Caribbean brothers and sisters over a variety of issues including the lack of health care for LEGAL immigrants and LEGAL visiting workers in Barbados, and the REDjet situation where the airline and the Barbados government failed to show sufficient respect to the laws and sovereignty of Jamaica and T&T.

Then we come to the Shanique Myrie situation where a Jamaican visitor claims she was “finger-raped” by Barbadian authorities upon arrival, held in squalid conditions and deported the next day. Whatever the truth of her story, it doesn’t matter because the damage was done. More important, Shanique Myrie is seen by other Caribbean nationals as just another incident in a long history of similar incidents in Barbados whether reported in the news or not.

Like it or not, the truth is that Barbados as a country and Barbadians as a people are increasingly seen by the rest of the Caribbean as acting arrogantly and disrespectfully in our relations with other nations and on a personal level with visitors.

Remember, it doesn’t matter if this is true or not. It only matters that many other Caribbean nationals believe it is true, or at least have that impression.

It would be a big mistake for Bajans and tourism organizers to assume that the failure of the Caribbean Hotel and Tourism Conference is only about the conference itself. There might be something much bigger happening that needs to be recognized and immediately addressed at all levels.

Submitted by BFP reader WSD. Edited and headlined by Marcus.

Further Reading

Caribbean Hotel and Tourism Conference website

eTurboNews: Caribbean Hotel & Tourism Association cancels conference

Adrian Loveridge: REDjet shows Caribbean unity a pipe dream

The REDjet flap…

Adrian Loveridge - Small hotel owner

I would like to add my two cents worth if I may.

It is clear that the heady concepts of Caribbean unity and marketing the region as one are really just illusional pipe dreams. Ultimately, it seems each country is looking after its own interests. Caribbean Air Lines wouldn’t be in the position it is without massive fuel subsidies, LIAT would have failed years ago if again it hadn’t been for huge taxpayer support. Even now it defies commercial logic with the number of employees and the location of its operating base.

Maybe its time for REDjet to review its planned destinations. Montego Bay instead of Kingston, St. Maarten to break the near CAL monopoly and perhaps to look south to Aruba (low fuel costs) or Curacao. Of course San Juan would have been an obvious one if we had secured Category One.

I also think there is some way they could work with the cruise ships to open up the home porting possibilities for not just Barbados but other emerging ports. If they haven’t already done so, they should also be speaking with St. Lucia.

When the new SVG Argyle airport finally opens, things are going to change
and the St. Vincent Government are going to have to at least attempt to justify the airport investment costs and more than one million stated annual handling capacity.

I am also really surprised that with an veteran aviation expert on the BTA payroll that REDjet have found themselves in this predicament.

Submitted as a comment on BFP’s article REDjet Update: Political problems with Trinidad and Jamaica

REDjet Update: Political problems with Trinidad and Jamaica

“A few weeks ago we at Barbados Free Press criticized REDjet for launching without having all the paperwork in place with Trinidad and Tobago.

We take it all back.”

Caribbean Airlines files complaints with Jamaica and T&T

REDjet: “Political delays beyond our control”

The launch of any new business is a formidable task, but when you’re talking launching a new airline into a politically charged world of protected competitors… now you’re talking trouble!

And so it is with REDjet as the governments of Jamaica and Trinidad & Tobago seem to be doing everything they can to block the new upstart from Barbados.

A few weeks ago we at Barbados Free Press criticized REDjet for launching without having all the paperwork in place with Trinidad and Tobago.

We take it all back.

We take it back because we now see what the game was and is: to keep REDjet waiting forever until they give up. That’s what the governments of T&T and Jamaica would like to see happen and they are working hard to protect other airlines from those Bajan upstarts.

We’re guessing but it looks to us that after being blocked for over a year in various attempts to move forward, the REDjet team came to the conclusion that the issue had to go before the public. REDjet had to launch to force its way into the market or else they would never launch.

We’re behind REDjet 100% because the simple truth is this: if REDjet fails, the big losers will be the ordinary people of the Caribbean who, for the first time, will be able to fly to other islands without having to sell their first born children.

Further Reading

Barbados Today: REDjet still awaits T&T green light

Caribbean 360: REDjet says CAL protection blocking Jamaica flights

Go-Jamaica: JCAA tight-lipped about Redjet’s delay

REDjet approvals given – Flights to Guyana & Trinidad within days

We told you that Trinidad & Tobago would issue the approvals, but not before they punished REDjet for failing to respect T&T’s sovereignty. So now that the T&T government has made its point, REDjet can finally go wheels up with scheduled passengers heading for Trinidad.

Ian Bourne has the story at The Bajan Reporter: Trinidad says – 15th May and no later for REDjet flights, Guyana ready for Barbados flight 10th May

REDjet winning Facebook war over Caribbean Airlines, LIAT

No doubt who is #1 for this REDjet employee!

Facebook ‘Likes’ Stats: REDjet vs Caribbean Airlines

REDjet = 16,991

Caribbean Airlines = 7,078

LIAT? (Couldn’t find a Facebook page for LIAT)

BREAKING: Doubts over REDjet Approvals in Trinidad and Tobago

T&T Transport Minister Jack Warner “in the dark”

T&T Civil Aviation Director “No permits issued.”

Breaking News: April 14, 2011, 11:42PM Bridgetown

This story is just breaking on the internet and there will be more to come when it all hits the fan in Bridgetown in the morning. The permits issue will probably resolve itself and calm down tomorrow – but right now it sure is interesting!

I’d like to follow the story but I’m dead tired and if I don’t pack it in I’ll be useless at work tomorrow so…

Here’s a start and our readers or others at BFP can pick up on the story as it develops. Comments are open!

“You know something, regrettably, I don’t have all the details of REDjet’s entry into Trinidad and Tobago. … I keep trying to know how it happened and why and so on. Be that as it may I want to believe that it is healthy competition and if REDjet coming to Trinidad and Tobago means that (Caribbean Airlines) will buck up … or lower its fares for the general public then so be it, because nothing is wrong with competition,” said (Transport Minister) Warner during the post-Cabinet press briefing at the Diplomatic Centre, St Ann’s.

“I would have liked to know how the airline got the permission, from whom and when and I’m not quite sure I can answer you those questions,” Warner continued, adding that he had no documents at his ministry’s office with respect to REDjet’s operations.

Director general of the Civil Aviation Authority Ramesh Lutchmedial told the Express yesterday that no approval had been granted for REDjet to start operating in Trinidad and Tobago.

REDjet, the Caribbean’s first low-fare airline, was launched at The Carlton Savannah hotel, Port of Spain on Wednesday.

… from the Trinidad Express article Jack in the dark on REDjet’s permit