Christopher Gill’s Column
We Do Not Own The Dream
Many Seychellois misunderstand Air Seychelles’ position in regards to the planes it flies in our name as a National Air Carrier. Most of these planes have the Air Seychelles logo on them. However, the planes do not belong to Air Seychelles. Air Seychelles cannot afford to buy these planes. It is a dream to think that we have the purchasing power or credit worthiness to afford these planes. After 30 years of borrowing to prop failures of a communist regime, companies like Air Seychelles have a very turbulent future ahead. We cannot afford purchasing these planes. Air Seychelles leases (rents) the planes from a company based in Los Angeles California, USA, named International Lease Finance Company (ILFC), a wholly owned subsidiary of American International Group, Inc., the world’s largest insurer, a company that trades on the New York Stock Exchange. So be careful the next time SPPF, when you go on bashing Americans and American companies, “our” plane might come in for an emergency landing.
We Pay For Bad Business Sense
ILFC has purchased and leased out over 800 large jet airplanes all over the world since 1977. It has a portfolio valued over $40 Billion. After the Coup in 1977, Mr. France Albert Rene did not know about the existence of ILFC. So when he started Air Seychelles, he did a very expensive thing in 1983: he ordered Air Seychelles to “wetlease” aging DC-10’s from British Caledonian Airways. This means Mr. Rene ordered that all the seats on the British Caledonian Airways flight would be purchased by Air Seychelles for long haul flights from London and Frankfurt. A very expensive way to fly a national carrier indeed. When the seats were empty, the People of Seychelles paid the price for this decision not him or his family. At the time, Mr. France Albert Rene was kicking everyone out of the Country. Thus, he could not even offer the empty seats to Exiles in London for a 25% discount, or promote a “Buy One Get One Free” ticket to mitigate Air Seychelles losses. That is real bad business sense clouded by arrogance of the first degree. Running an airline is more complicated then say, for example, placing 10% mark up on everything a parastatal like SMB imports and passing that off as good business sense as the 10% is banked.
Defy the Industry Trends
In 1987, Air Seychelles made another attempt at trying to fly for profit. Air Seychelles leased- purchased two Boeing 707 aircraft from Brazilian Airline, now bankrupt, “Varig”. This effort was disastrous since Passengers did not trust the old planes Air Seychelles was trying to sell them. They were narrow bodied planes and we missed the mark at a time when airlines were starting to use wide bodied planes for long hauls. Of course, we paid the price for this error in business judgment again. How much it cost us we do not know exactly, but Government gave Air Seychelles millions to cover the shortfalls. The People of Seychelles paid the price for more SPPF business follies on Air Seychelles again. Champagne is never for free...someone always pays for it....with the SPPF it is usually the ordinary people that foots the Bill.
Trying To Get It Right Only To Get It Wrong Again
In 1989 Air Seychelles embarked on an effort to secure wide body planes to make good on a bad business decision. This time it was the 767-200ER. Air Seychelles did not buy this plane. It discovered almost a decade later, that the world airline companies lease their planes from ILFC and it could do the same as well. We paid the price for Air Seychelles leadership slow learning.
After the Boeing 767 plane arrived, Air Seychelles used the leasing facility to acquire a 737-700 to handle shorter regional routes it has since abandoned in whole or in part, like Dubai, Maldives, Bombay and Jo’ Burg. However, the Boeing 737-700 Series has only 126 seats and much limited air cargo ability compared to the 767. It could not handle cargo demands on these routes effectively, which make up a big part of the air traffic business in the region. The profit is in the cargo.
When receiving the Boeing 737- 700 in Seattle Washington, Captain Savy said: “ It is always nice to acquire a new plane, as this is the premier element of a modern fleet”.
After selling us on viability and comfort, fuel efficiency of the Boeing 737-700, Captain Savy only went back on SBC a couple of years later just to tell us he will be giving back another plane. He replaced it with another Boeing 767-300ER while the first one was getting too old for comfort. The second plane is leased (rented) not purchased by Air Seychelles from IFLC. Every month, we must pay the lease payments. Of course, we paid the price for Captain Savy’s hobby of acquiring new planes. Having a new plane is nice of course, picking the right plane for the right job is serious business, beyond boyish-like dreams. Doing the numbers to pay for the new Planes will require Captain Savy acquire a calculator that is much better then the one he has been using over the past Ten (10) years. Hopefully he does not ask the Governor of the Central Bank to borrow his calculator to do the figures on the Boeing 787 -800 Dream-Liner Fleet.
Our Leased Dream “Liner” Is Coming
In May 2007, Air Seychelles signed another Lease Agreement with ILFC for two more planes: “The Boeing 787-800 Dream-Liners”. These planes are scheduled for delivery in May and September 2010. The contract for the engines exceeded 25 Million Dollars. The monthly lease payments are in Captain Savy’s portfolio. This Lease (rent) Agreement is for Twelve (12) years. Twelve (12) years can be a long marriage if things are not working well. Can you imagine what it will be like for an Airline that cannot even compete with a boat on it’s most profitable route? We do not own this dream....we are renting it! As we pay the rent, we will dream on. When we default, and the dream will come to an end, we will likely be told that we need another plane by Captain Savy on SBC and the Dream Liner has entered into a Joint Airline Agreement with Qatar Airways to ferry Natural Gas Field Workers in the region, because of our excellent service record.
Dream Liners Are Great
The Dream Liners are a popular addition to fleets. They are great planes. Everyone wants them. Kenya Airways has ordered 9 of them. Singapore has ordered 20 and has an option on another 20. Air Pacific, the air carrier for Fiji Islands has ordered 5 and has options on 3 more. If we could all have and afford rockets to the moon we would. But some company’s have trouble competing and meeting clients expectations out of lack of vision and adequate business acumen. But of course, as the Captain racks up the bills, we will pay the price. So paying in the range of about $500,000.00 per month for each dream should not be a problem for us. The Government of Seychelles has guaranteed the Dream.
In the meantime, our little Otters ( they are so cute and hot inside) and Shorts (ideal aircraft for cargo), are skidding on the runway making room for Cat Coco to start landing at the Airport....no dock at the Port....sorry again. As Captain Savy adds 30 plywood like seats to a route, Mr. Albert adds 350 seats of luxury and class to the same route in the same fiscal year.
You do not need to ask who wins the Aviation Award For Excellence in 2007!
Long live All Freedom Loving Seychellois!
