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Government subsidising BVI Airways from its own funds – Premier Smith

- said Government to be repaid through revenue sharing arrangement over 3 years
Premier and Minister of Finance Dr The Honourable D. Orlando Smith confirmed that the Government of the VI will be making its investment of $7 million into BVI Airways from the Government coffers. Photo: VINO
Asked how government would be sourcing the money to invest in the airline, Premier Smith said it will be coming from Government’s funds. Photo: VINO/File
Asked how government would be sourcing the money to invest in the airline, Premier Smith said it will be coming from Government’s funds. Photo: VINO/File
Critics have spoken out against the move by the Government in the wake of financial straits that Government has been experiencing over the past months, where contractors and service providers are yet to be paid for work done during 2015. Photo: Internet source
Critics have spoken out against the move by the Government in the wake of financial straits that Government has been experiencing over the past months, where contractors and service providers are yet to be paid for work done during 2015. Photo: Internet source
ROAD TOWN, Tortola, VI – Premier and Minister of Finance Dr The Honourable D. Orlando Smith confirmed that the Government of the VI will be making its investment of $7 million into BVI Airways from the Government coffers.

He make this confirmation at a press conference held at the Central Administration Complex on January 21, 2016 during which he addressed a number of concerns affecting the territory.

Government recently announced that in order to continue to open the tourism sector and to boost the financial services sector, it needed to collaborate with the private owners of BVI Airways to commence direct flights to the United States, in particular the Miami International Airport, from the Terrance B. Lettsome International Airport.

The Premier at an event on January 12, 2016 said the Government was pumping $7 million into the venture, even though passenger numbers could not be guaranteed, in the hopes of opening the territory to travel without the hassle of transiting through the United States Virgin Islands.

“Government will recoup this money because of a [three-year] revenue sharing arrangement between the Government and BVI Airways,” he said. “When the airline makes money there is a way that the airline will return some of the money that is made [to Government],” said Premier Smith.

Asked how government would be sourcing the money to invest in the airline, Premier Smith said, “It will be coming from Government’s funds.”

Critics have spoken out against the move by the Government in the wake of financial straits that Government has been experiencing over the past months, where contractors and service providers are yet to be paid for work done during 2015.

27 Responses to “Government subsidising BVI Airways from its own funds – Premier Smith”

  • you again (03/02/2016, 17:04) Like (6) Dislike (0) Reply
  • 1 (03/02/2016, 17:23) Like (5) Dislike (0) Reply
  • wow (03/02/2016, 17:45) Like (21) Dislike (1) Reply
    money that we don't have is going to be put into a failed airline, a better use would have been to light it on fire at least then we could have used it to keep warm at night
  • tretretrete (03/02/2016, 18:25) Like (0) Dislike (7) Reply
    this is what going kill things when ur own local don't stand with ur plans
  • BuzzBvi (03/02/2016, 18:46) Like (18) Dislike (2) Reply
    Let us say at one flight a day (they say 3 a week at first) over 3 years that is 1000 flights. The Government will have to be paid back at the rate of $7000 per flight. Which means if all the flights were full. $85 from each ticket will have to go back to the Government. This on tickets we are told will be about $300. IF they are profit sharing that would mean $85 for them BVI Airways also. That means that $130 are left for the airline operation, taxes etc. So $130 from each ticket is to go towards the cost of the airline operations and airport taxes etc. $10660 per flight. At an industry mid range 10cent per seat mile cost for operating the flight that is $8944. Leaving $1716 for airport taxes, selling agents fees etc. We are also told this is a more expensive plane to fly.
    These numbers are based on full capacity operating 7 days a week. They are talking about two to three days.
    Who is running these number and getting anything but negative numbers. That money is not coming back.
    Any chance we can see the numbers you ran to see where you got it wrong. (Or right?)
    • Wrong (03/02/2016, 20:06) Like (2) Dislike (5) Reply
      Plan is 3 per week to start soon moving to a daily service and within a year 3 per day.
      • Bushmaster (03/02/2016, 21:41) Like (13) Dislike (2) Reply
        Lol 3 per day carrying who? or should I say whom? that's almost 300 folks going back and forth from Miami to Tola daily. Given that this plane is more expensive to run and will be flying empty can we spell L O S S?

        You self same folks will be catching ferry to St Thomas and flying Jet Blue to save a couple bucks
        • Wrong (04/02/2016, 07:30) Like (2) Dislike (3) Reply
          Not just to MIA, for this to work they need interlink arrangements with major carriers. Then it is 300 people going to the U.S., CAnada, Europe and South America. Remember in its day EAgle had 14 flights to and from SJU carrying theseassengers. It can work with the correct infrastructure, lots of people do not want the ferry to st thomas.
          • BuzzBvi (04/02/2016, 09:36) Like (3) Dislike (0) Reply
            It would be great to see some figures or background information. Even with $400,000,000+++++ (work out the payback math on that) on a new airport they will only be able to fly 2 types of planes Airbus A320 and Boeing737800 as far as Atlanta in USA. Not all over USA, Or Europe or South America.
            Please find out what is possible from the figures. If you have figures to show how it works please show them.
            Non of this is about making a working transport system (proper ferries can do that) this is about access to and distribution of money to the right people. We can already fly to St MArtin or SJU to transfer. Makes no sense to fly to MIami and then transfer. There is no advantage. Great if you just want to get to Miami though. 1000 people a day going to Miami from BVI??
            I would love to see the figures that prove me wrong (or right?)
    • The Judge (03/02/2016, 20:14) Like (18) Dislike (0) Reply
      How could anyone be so naïve as to think that there is the slightest possibility that this investment could be recovered. Dr. Smith knows better and should act accordingly. This investment is nothing more than a subsidy which is intended to attract the attention of this operator. What is unfortunate is, the Cuban has already wasted seven million [$7,000,000.| over the past four years seeking to develop his $400,000,000. dollar run way which even Steve Wonder could see is a pipe dream. Just when will these Ministers bring closure to this travesty and engage reality for a change.
    • Sherry (05/02/2016, 00:40) Like (1) Dislike (0) Reply
      I have friends coming down for charter and their tickets cost $1200 to Beef Island via San Juan. Try and fix THAT.
      I have friends coming in from St Thomas by ferry (now almost up to $100 round trip) but the direct flight from Jet Blue was $322. YOU choose!!!!
      Support the ferries and get more people!!
  • The watchman (03/02/2016, 20:15) Like (16) Dislike (1) Reply
    No business plan has an upstart airline making a profit to return 3 million in 3 years. Especially in the Caribbean which is a seasonal economy. BVI Airways has not flown for two + years! An airline cannot even lease planes unless they have been in business for two - three years or have a lot of backing. What are the details of this deal. Government funds are the people's funds. We demand more information.
  • Political Observer (03/02/2016, 22:23) Like (13) Dislike (0) Reply
    What nonsense is Doc saying. It is not government's money; it is the people's money. The airline business is a competitive and capital-intensive business with razor thin profit margin. Is the profit sharing means that the airline has to turn a profit? The pay back is not guaranteed but based on profit. A small, start up airline paying back $7M in 3 years is not realistic. I will be suprise if it is paid back in 10 years, if at all.

    BVI Airways could not stay airborne before so why do we think that it will stay airborne now? Bet that BVI Airways did not have many investors racing to invest in it. But somehow it found a su..r in the BVI. One is born every second. Government will never have the money to do all things that it needs to do. Demands will always exceed resources. As such it must prioritize and make the best use of its scarce resources. Is this $7M investment the best use of scarce resources? As Andrew says, we must keep it real. "We cannot love someone so much that when they are wrong they are right. Or we hate someone so much that when they are right they are wrong."
  • Beneficiary (03/02/2016, 22:37) Like (3) Dislike (0) Reply
    That $7million should have been put in as a start up to NHI.
    • jack i tell yo! (04/02/2016, 09:24) Like (3) Dislike (0) Reply
      It could fix them dilapidated classrooms at Elmore Stoutt that I sat in 30 years ago. Additionally it could pay HLSCC

  • Clearly (03/02/2016, 23:21) Like (7) Dislike (0) Reply
    Russell and Orlando tek we money to go give deeds broke white men and can’t even open the treasury to pay people or pay the local bands. But you all voted from them so you make a bed lay in it!
    • Boo (04/02/2016, 21:30) Like (0) Dislike (0) Reply
      "these" but good point. Let's get a proper opposition and a snap election ASAP
  • we really stupid sah! (03/02/2016, 23:23) Like (3) Dislike (0) Reply
    Well look how we made this man (the owner of the airline) an instant millionaire?
  • voiceofthevoiceless (03/02/2016, 23:50) Like (5) Dislike (2) Reply

    Your figures have not taken into consideration revenue alternatives like baggage fees, fuel surcharges and cargo fees. Also no airline sells all their seats at one price so the low end one way figure of $ 300.00 ( Still not sure where you got that from) will not be for all the seats. $300.00 will be the starter for the first say 10 seats then once they are sold $350 for the next 10, $400 x10, $450 x10, $500 x10, $550 x10 and 600 x10. Then there is business class of say maybe 10 seats( maybe less) that might range from $1000 x 5 and 1200 x5. You already got $ 42500 in revenue on a one way full flight and this does not include baggage fees, cargo and fuel surcharges. A lot more complex my friend.

    I take major issue with the fact that we have to pump 7 million dollars as start up capital for an airline that is yet to prove its necessity and efficiency by being in operation for a couple years then we can consider subsidizing it.

    Secondly, BVI Airways will have to forge interline arrangements and possibly codeshare so that they can tag and issue one ticket with the major carriers like AA, BA, Delta, Virgin etc. This does not happen on start up or overnight as they have to prove their reliability, safety and viability for a couple of years before the major carriers jump on board. A lot of people are enrolled on the frequent flyer programs of AA, BA etc and would want to earn miles, so codeshare arrangements should be sought. Thirdly, immigration in Miami is major stumbling block as from what I have heard Miami Immigration is very long and hectic experience so that maybe a drawback especially when your bags will not be tagged for connections.
    • BuzzBvi (04/02/2016, 12:36) Like (2) Dislike (0) Reply
      Nice to see some actual figures. Cargo fees. Yes missed that. Baggage generally included. Fuel at record low. Surchages in fuel later go on paying for fuel.
      My figures were simplistic. $300 was from the owners of the company.
      As the figures were simplistic I think they were representative of real expectation as the flights will not fly full but that was my assumption for the purpose of demonstration.
      It would be nice to see some figures that were actually used when deciding this was a good investment and what performance was needed to get our money back. I say ours as it is our money the Government is using not theirs. They have been put in place to manage our affairs properly. So much better it would be with TRANSPARENCY ACCOUNTABILITY RESPONSIBILITY.
      • ........ (04/02/2016, 15:01) Like (3) Dislike (3) Reply
        You all know the tickets won't cost no dam $300, not from Beef Island. Ain't everything you hear is worth repeating. And even if they cost $600 it would still be a good deal given all the time and hassle to St. Thomas. And why the hell is this news anyway, who else was going to subsidize it??? Government can subsidize with someone else's money?? Even if it were BVIAA, still the same dam thing, government money/tax payer money. You all always quick to shoot down every damn thing. It's a good idea. The price might be too high but it's a good idea. Some of you will be on the same damn flights..
    • Boo (04/02/2016, 21:31) Like (1) Dislike (0) Reply
      This crackpot deal will be about as "robust" as the current BVI economy.
    • The watchman (04/02/2016, 21:53) Like (1) Dislike (0) Reply
      LOL! Do your research, and work your maths. You have to be able to carry the cargo to collect for it. LOL! My intelligent friends abandoned this idea more than a decade ago. Lol lol lol ROTF. Doc dem lost their marbles!

      Typical design weights*
      Maximum Take-off Weight. KG. Lbs
      • standard. 42,185. 93,000
      • maximum. 43,999. 97,000
      • unpaved. 39,009. 86,000

      Maximum Landing. 38,556. 85,000

      Zero Fuel Weight. 35,834. 79,000

      Typical Operating Weight Empty**
      • 5 abreast. 24,600. 54,234
      • 6 abreast. 24,820. 54,719

      Maximum structural
      payload. 11,234. 24,766

      100 Passengers @
      95 Kg 9,500 20,94

      LOL were you carrying the cargo when the plan burns 15,000lbs of fuel for a 1,000nm leg and you need 45mins reserves and a next hour, into Florida the land of thunderstorms lol.

      Please be advised people in the BVI can read and write and we are not riding donkeys much anymore. Please stop taking us for fools. We have members of our community present in some of the highest places in this world. Stop taking us for idiots Doc.
      • Meliodas aka Dragon Slayer (05/02/2016, 13:50) Like (1) Dislike (0) Reply
        Good One

        Unfortunately no one has ask the question where will this jet park.

        Lets Calculate (Max Weight)

        Dash 8 200 - 36300 lbs
        Dash 8 300 - 43000 lbs
        ATR 72 - 50000 lbs

        They all sink into the current ramp even if they are not at max weight.

        BAE 146 - 100 - 84000
        BAE 146 - 200 - 93000
        BAE 146 - 300 - 97500

        I'm just wondering are we going to reinforce the ramp first???
  • Dumm azzx Decision (04/02/2016, 05:30) Like (5) Dislike (0) Reply
    Thats a lot of Eggs in one Basket. Who really making these dumm azzs decisions. Festival I'd a tourist attraction event. Music Festival is a Tourist attraction event. Why let these things die while you put 7 million in a basket of uncertainty... Wouldnt it be better to put a million in music festival. 1 million in August festival. 1 million in sport tourism. 1 million in historical sights and beach development.. Give people things to do and see once they get here. 3 million was enough to put in the Airline.
  • Tisk Tisk (04/02/2016, 11:45) Like (6) Dislike (0) Reply
    While local business going under weekly these criminals taking out tax payers money what is left form the stealing and supporting xpat companies but we voted for this so I going sit down
  • W*F (04/02/2016, 19:46) Like (2) Dislike (0) Reply
    Dr. Smith, the government coffers don't have any money. NDP dried the coffers. So come on Doc, where is the $7mil coming from to subsidize the airline? Hospital no supplies, Cruise ship pier incomplete, (but in the tank for $83mil), road works incomplete, inefficient supply of water, entertainers not paid for last year's work, vendors not being paid timely, and God knows what else. But you Doc has $7 mil in government coffers to subsidize an airline that no body going to use. You never fail to amaze me, and I am sure many others. I think my advice to you previously was to shut your mouth, stop talking before you talk yourself in confinement.

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