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Parliament paid for jet?

By ANDRE BAGOO Sunday, March 9 2008

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THE PARLIAMENT of Trinidad and Tobago may have paved the way for Caribbean Airlines (CA) to purchase a $400 million executive jet as early as January 18 by passing legislation accounting for an advance of $430million to CA for the payment of BWIA Voluntary Separation from Employment Packages (VSEP). A similar sum, of $400 million, was also approved for payment to the Central Bank on that date.

The $430million was paid via the Finance (Supplementary Appropriation) 2007 Act which was passed in the House of Representatives on January 18, and assented to by President George Maxwell Richards on January 28, a full month before the Cabinet met to reportedly discuss and consider the issue on February 28.

On Friday, Colm Imbert, the Minister of Works and Transport, whose ministry has day to day oversight over the fledgling CA, for the first time publicly revealed in Parliament that $400million (US$63million) has already been paid into a CA bank account. No details of how this money got to CA have to date been provided by any party to the transaction.

This payment could have only come out of the Consolidated Fund, according to a former Minister of Finance who yesterday asked to remain anonymous.

At Thursday’s post-Cabinet briefing, the Works Minister said the Cabinet had only approved the deal for the Bombardier Global Express XRS jet at the previous meeting of the Cabinet (on February 28) and that that decision was “confirmed” on Thursday itself.

The Finance (Supplementary Appropriation) Act 2007 authorises a further issue from the Consolidated Fund in the sum of $1.1billion “for the service of Trinidad and Tobago for the financial year ending September 30, 2007”.

In Parliament on January 18, Karen Nunez-Tesheira, the Minister of Finance, broke down that figure, saying that part of the money was for paying debts owed to former BWIA workers under their (VSEP) as well as capitalisation of the new CA.

She said the $1.1billion was being sought, “to bring to account expenditure funded by advances from Treasury deposits, firstly, for the payment for the enhanced separation voluntary plan and buyout claims for employees of BWIA in the amount of US $68 million or TT $431,800,000; secondly, capitalisation of Caribbean Airlines Limited at a cost of US $46.16 million or TT $293,120,000.

“Both areas of expenditure were met initially by advances from Treasury deposits,” she said. Some VSEP payments still remain outstanding, former BWIA employees said yesterday, as various legal disputes over sums owed remain in train.

The Act also approved, “payment of the first installment of $400 million to the Central Bank pursuant to Government’s decision to increase the bank’s authorised share capital from $100 million to $800 million.”

The Finance Minister continued, “Mr Speaker, authority is provided in the Exchequer and Audit Act, Chap 69:01, for the Minister of Finance to temporarily utilise balances on Treasury deposits to make payments in the public interest and recover them within the 12-month period after the year in which the payment was made.

“In the case of BWIA, the Government was faced with an intractable problem of having to support an inefficient, overstaffed and unprofitable airline. It was, therefore, incumbent on the Government to stop the haemorrhage of state resources by finding a permanent solution to this problem.

“After putting a new board of directors in place and engaging specialists to drive the way forward, the Government concluded that it was necessary to the operations of BWIA and replace it with a new airline, CA. The Government has always acted responsibly and has also demonstrated a capacity to confront and deal with state companies that have presented a drain on scarce state resources.”

BWIA closed off operations on December 31, 2006, and was succeed by CA in January 2007.

A “normal” private jet costs around $13,000 per hour to fuel and pilot, according to one internet site. However, the costs of a Bombardier Global XRS jet, which is billed by its manufacturer as “the most accomplished and luxurious business jet ever brought to the market”, is considerably higher, coming in at around, $17,000 per hour for fueling and other variable costs according to the Aviatrade Inc. website. CA, according to Imbert, proposes Government guarantee 600 hours per year, making the total variable annual cost an estimated, $11million.

To this must be added, however, a total annual pilot bill of $800,000 for a captain, $54,000 for first officer, hangar/office costs of $1.3million, $3.5million in costs such as painting or interior decorating, and $800,000 in fixed costs like insurance. This ups the total annual cost to something around $18million, according to Aviatrade Inc. The effect of record high oil prices must further be factored in.

This would put the five-year bill for a private prime ministerial executive jet at around $ 90 million. In the single year of 1996, Government’s travel bill for ministers was $2million.


COST OF OPERATING BOMBARDIER JETS
(source Aviatrade Inc.)


Challenger 605 Global Express XRS

VARIABLE COSTS US$ (Hourly)
Fuel Expense $1,208.00 $2,108.21
Maint,Labor Expense $74.88 $54.62
Parts Expense $200.00 $58.00
Miscellaneous Trip Expense $402.11 $445.94
Total Variable $1,884.99 $2,766.77
At 600 hours per year $1,130,994.00 $1,660,062.00

FIXED COSTS (Annual)
Hull Insurance $60,238 $83,247
Liability Insurance $29,000 $29,000
Hull Insurance per $100 0.22 0.17
Liability Insurance Per $M 145 145
Maint. Software Programs $7,778
Miscellaneous services $11,614 $16,996

PERIODIC COSTS
Mid-life/Hot section Insection
Engine Overhaul
Overhaul Interval 0 0
Paint $108,400 $174,600
Interior Refurbishment $218,200 $311,800
Modem./Modif./Upgrade $61,800 $70,100

PERSONNEL COSTS
Captain Salary $105,833 $127,960
First Officer Salary $82,078 $85,660

TRAINING
Pilot Initial (Per pilot) $32,100 $38,200
Maintenance Initial $8,200 $12,200

FACILITIES(Annual)
Hangar/Office Lease Expense $144,664 $147,075
Miscellaneous Office Expense $52,012 $54,268

$US $2,053,056.22 $2,811,313.17

TOTAL ANNUAL COST TT$ $12,913,723.62 $17,683,159.84

See: http://www.aviatrade.aero/operating%20costs-B.asp

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