national airline has amassed between $50 million and $51 million in what were
described as “under-funded losses” over a period of years, according to
testimony Monday in the Legislative Assembly’s Finance Committee.
amount will have to be paid back by the Cayman Islands government within the
next 10 years.
Board Chairman Jude Scott told committee members that the losses mounted
following chronic under-funding by government. To make up the difference, Mr.
Scott said the airline often had to borrow money.
some cases they were formal borrowings, and in some cases they were informal
borrowing,” he told the committee.
the airline had to find between $3 million and $4 million to fund principle
repayments on those amounts and they just added up over time.
clearly recognised…such a deficiency in the capital would need to be
rectified,” Mr. Scott said. “There was an agreement reached that over a ten
year period the government would fund that amount.”
Side MLA Ezzard Miller asked whether anyone other than the airline itself –
meaning the government – might be able to fund the $50 million deficit.
Scott said there had been a lot of
discussion in the community about whether Cayman Airways should be privatised
following a consultant’s report earlier this year that suggesting such a move.
always held that it’s not really my decision to determine whether or not the country
has an airline,” the CAL chairman said.
McKeeva Bush said there had been no discussions about a partnership for Cayman
Airways at present.
Scott said part of the difficulty with operating Cayman Airways for profit is
that the airline is competing against much larger US-based airlines and has to
attempt to remain competitive even if those airlines “have a lower floor” for
their pricing structure.
essentially has two types of flights: Those it considers its core services –
mainly flights to Cayman’s Sister Islands as well as Florida, USA, and Kingston,
Jamaica; and its strategic marketing services to other US and Central American
destinations, which are designed to boost Cayman as a tourism destination.
Scott declined to discuss whether any of the core service routes actually make
money, but it is understood that none of the strategic market routes do so.
best, we’re targeting to break even,” he told the legislative committee.
area where CAL has chronically lost money is on flights to Cayman Brac and
Little Cayman. In the upcoming budget, some $1.5 million worth of government subsidies
are planned to offset operating costs of running Twin Otter turbo prop planes
to the Sister Islands and another $1 million subsidy is required to fly jets to
to airline estimates, the turbo prop planes – which carry between 15 and 18
people – are usually about 70 per cent to 75 per cent full. The jets, which are
much larger, average about 40 per cent capacity and run only four times a week.
The Twin Otters fly roughly six times per day.
the Twin Otter is under utilised,” East End MLA Arden McLean said. “If you’re
doing six flights per day, what is CAL doing to increase the (passengers) and
decrease the flights?”
Scott said it’s difficult for an airline running scheduled service to improve
passenger load numbers by reducing flights without also affecting the service
those people receive.
“That leads to
changing schedules, cutting flights on short notice,” he said.