PORT OF SPAIN, Trinidad, May 7, CMC – Transport Minister Devant Maharaj says Trinidad and Tobago taxpayers “have been paying for the luxury of Jamaicans flying at a fuel subsidy” as controversy continues over the finances of the state-owned Caribbean Airlines (CAL).
Last Friday, Finance Minister Winston Dookeran told parliament that the state-owned airline had recorded losses in excess of TT$50 million (US$8.3 million) last year, and owed several creditors including the United States Inland Revenue Service (IRS) and the Norman Manley International Airport in Jamaica millions of dollars.
But former CAL chairman George Nicholas, who last November had indicated that the airline would record TT$200 million (US$33.3 million) in profits, said Dookeran’s figures were wrong and that “it cannot be left without response for fear that someone might think that his…ill thought out comments are true”.
In a two-page statement, Nicholas said when he reported “the hope and expectation that we would close the year with a TT$200 million profit…the report was based on the figures that management presented showing an US$18 million profit to that time”.
Nicholas said that the Ministry of Finance’s change on the fuel subsidy affected the airline’s profitability and lay blame on Dookeran for the situation.
“In November 2011, the fuel subsidy was reduced without consultation by the Minister and the price CAL had to pay was retroactively increased, as from January 2011.
“The increase, which was an attempt to play politics with the livelihood of all those who work so hard for CAL, was an increase of 50 per cent (where fuel is 80 per cent of the airline’s cost) to TT$2.34. The airline did over 2.4 billion (US$400 million) in revenue last year. Passengers and freight would have paid for flights throughout 2011 on the basis of tickets calculated at the former fuel price.
“CAL would not be able to make up the loss that this would generate and that wiped out the prospective profit and caused an unanticipated loss. Had we known the fuel price, the cost of fares would have been different,” he added.
But While Dookeran has not responded to the last statement by Nicholas, Transport Minister Maharaj told local media here that Nicholas erred when he announced that the carrier would make a profit based on “a cash figure balance.
“ I think that is where Mr Nicholas erred. He did declare it (profits). You would recall when I was asked by the media to comment on it, I kept on repeating that I had not seen the audited figures.”
But in his remarks, Maharaj blamed the former People’s National Movement (PNM) government of prime minister Patrick Manning for its financial abuse of CAL over the years.
“Trinidadian taxpayers have been paying for the luxury of Jamaicans flying at a fuel subsidy. We have been trying to address those issues and rationalise it in some way that will be as painless to the country and Jamaica, given Trinidad and Tobago’s commitment to CARICOM,” he added.
Maharaj said the burden Trinidad and Tobago had to endure because of Air Jamaica arose out of the “imperialist ambitions of former Prime Minister Patrick Manning, as he attempted to become the colonial master of the Caribbean.”
He said the subsidy on Air Jamaica should be reviewed. Maharaj could not say what was Jamaica’s monthly losses. “I don’t have that on the top of my head.” Maharaj said , noting that CAL was in a positive position before Manning’s administration.
In 2010, Port of Spain and Kingston agreed to a deal that allowed the Jamaica government to own 16 per cent of CAL as part of the conditions for the CAL taking over the lucrative routes of Air Jamaica.
The deal also allows for Trinidad and Tobago agreeing to a US$300 million transition plan for CAL to acquire and operate six Air Jamaica aircraft and eight of its routes.
When it came to office following the May 24, 2010 general election, the five-party coalition government of Prime Minister Kamla Persad Bissessar said it was review the accord, but Dookeran later announced that the government was okay with the accord.
When he signed the agreement with his then counterpart Audley Shaw in May last year, Dookeran said Caribbean airline would now “have legal access to all the routes that were being flown by Air Jamaica giving it an opportunity to expand in the global arena”.
He said the agreement will also allow Caribbean Airlines to claim “it is the designated air carrier for Jamaica in the world at large.”