BVI News

Airline collects full $7M -Premier dodges questions

BVI Airways

By Horace Mills, BVI News Online Staff

Premier Dr D Orlando Smith yesterday declined to answer some questions about his government’s deal with BVI Airways, but he admitted that there is an addendum to the initial bi-partisan agreement, adding that his administration already has pumped a total $7 million into the privately owned carrier.

When the premier announced the deal in January last year, he said his government would have ‘invested’ the money into the airline over a three-year-period.

But, based on answers he presented in the House of Assembly yesterday, the full $7 million was paid out to BVI Airways within months, starting January 22 last year and ending August 26, 2016.

The payout, Premier Smith said, ended up costing the government to pay more, because an additional $207,000 was required to establish an account. That extra cost, the premier added, was shared.

Leader of the Opposition Andrew Fahie, who hit the premier with a plethora of questions, asked if BVI Airways has requested additional funds from Government. “BVI Airways has not requested any further funding from the government of the virgin islands,” Premier Smith replied.

He maintained that the monetary injection, which he now refers to as a subsidy, was based on ‘a sound business case’ that involved assessment of various factors including expected tourist arrivals.

“The tenets of the BVI Government’s agreement with BVI Airways provide for that of a subsidy. This is very much like the subsidies that countries throughout the Caribbean give to airlines to get them to fly into various destinations,” Premier Smith said, but he admitted that the big difference is that his government provided the ‘subsidy’ to BVI Airways before the private airline acquired its planes.

Premier Smith is hoping that the funds already provided will be enough for the airline to remain in the skies. “We continue to expect that it (BVI Airways) will be self-sufficient once it is able to go through a complete year of operation,” added the premier.

No responses now

In the meantime, the territory’s political leader declined to answer a number of the Opposition leader’s questions in relation to BVI Airways.

For example, he admitted that there is an addendum to the initial agreement with the airline, but he declined to give specifics of the addendum, and to provide a requested copy of the said addendum.

“There is an amendment to the agreement with BVI Airways that was necessitated due to difficulties in securing a line of credit as required in the original agreement. The amendment to this agreement essentially allows for an escrow arrangement for the transfer of funds, and a sharing of the costs associated with the setting up of this escrow account… As this is an addendum to the recent agreement, all facets of the agreement and the addendum must be adhere to,” Premier Smith noted. He added that the contents of the documents are in conformity with the Protocols for Effective Financial Management.

Premier Smith said he was not making the documents public at this time because he did not want to prejudice ongoing negotiations involving BVI Airways.

“Because BVI Airways is in negotiation with various entities at this time, it would be appreciated that we would be prejudicial to the operation to make this information public,” the premier said repeatedly in relation to the questions he did not answer.

He eventually promised to provide the answers at a later date. “I can say this, Madam Speaker, that it (response to the questions) will be brought to this House in time when I am ready to bring it. But I don’t think it is appropriate at this time,” added Premier Smith.

The unanswered questions, as posed by the Opposition leader, include the FOLLOWING: “Madam Speaker, would the Premier and Minister of Finance please inform this Honourable House if any more funding, equity or investment of any kind is presently being considered to be given to BV Airways/BVI Airways separate to the initial investment of $7 million? B) And, if yes, for what purpose and how much? In what form will the investment be made to BV Airways/BVI Airways and when? C) If no [funding, equity or investment is being considered presently for BVI Airways], will any more investment be made during this year 2017? If yes, when?”

When Premier Smith declined to answer that and other questions, the Opposition leader noted that, under the Freedom of Information Act in the United States, the Department of Transportation (DOT) has to post crucial information regarding airline negotiations on its website for the public to scrutinize.

Currently, a number of documents that BVI Airways has submitted to DOT are being displayed on that department’s website, which also explains whenever documents are being withheld from public viewing.

BVI Airways had written to DOT, requesting permission to operate direct flights into Miami from the British Virgin Islands (BVI).

A response is still pending and so BVI Airways is still unable to start flying into Miami.

Premier Smith yesterday indicated that he could not say when exactly BVI Airways will commence its proposed service between the BVI and the US.

“I am aware that BVI Airways recently announced publicly that it hopes to commence flights in June 2017. At this point, it is out of my government’s hand; I am not at liberty to say definitely when this would occur,” Premier Smith said.

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