A photo of a Caribbean Airlines aircraft as depicted on the carrier's website, www.caribbean-airlines.com. - Contributed

It will take an investment of US$360 million to put Caribbean Airlines into operation, the Trinidad and Tobago government has said.

The funds will also cover the winding up costs for BWIA.

Junior Finance Minister Conrad Enill, speaking on an opposition motion calling on the Patrick Manning government to state the reasons behind the closure of the cash-strapped BWIA, said that the new airline would have a 'no frills' strategy.

"The investment that is required is a total of US$359.9 million, that is to terminate the employment contract of all BWIA staff, settle all bona fide liabilities, restructure the existing infrastructure and commence the operations of the new airline," he told Parliament.

Caribbean Airlines starts flying January 1, and is promoting the service in BWIA's markets. Press advertisements appeared on the weekend in Kingston newspapers promoting daily flights from Kingston to Barbados.

Redundancy costs

Enill said that the redundancy costs for all BWIA staff is estimated at US$96 million, while the restructuring exercise would cost US$2.3 million.

Enill said that the new airline would operate on a different business model, using reduced staff and a smaller fleet.

"It will be a network strategy, provision of dual class service - business and economy; the London route will be closed and you will have an exchange of the London-Heathrow slots with code-sharing arrangements with British Airways to ensure that travel from Port-of-Spain to London and beyond," he said Friday.

"Caribbean Airlines is basically going to be operating on a no frills model."

Earlier, opposition United National Congress (UNC) legislator, Harry Patrap, said he was not convinced that the new entity could be viable.

Poor management team

Enill

He told legislators that the airline has a poor management team and that it would suffer the same fate as its predecessor, BWIA.

"If you close down one entity and you raise another using the same inefficient management - same results. You will not get far with it and that's what they are doing," said Patrap.

"Government will have to face up to the fact that the new entity replacing BWIA will fare no better if you walk with the same management and if you do the same things."

Patrap said he was also calling on the Manning administration that had first privatised BWIA in 1995 before re-acquiring all the shares last year, why it was seeking to close down the airline.

"We call on the government to provide to this Parliament a detailed account, explanation and rationale for its decision to close down the operations of BWIA as of December 31. This must include a detailed breakdown of how the assets of BWIA have been leached over the years."

Enill said the Manning administration had no choice but to wrap up the loss-making airline.

"The poor financial position of the airline basically saw a continuous decline in the service performance. As an example, the on time performance for 2006 was about 60 per cent against the average in the industry of 80 per cent," he said.

"This meant that one in three flights were late."

That situation, coupled with n ageing fleet, the junior minister said, contributed to the declining financial performance of the airline as customer dissatisfaction grew, eroding market share.

- CMC