February 25, 2014

Honourable Dr. Ralph Gonsalves of St. Vincent and the Grenadines

Dear Prime Minister Gonsalves:

Re:  Run it like a business before it goes out of business

On the televised program Time to Face the Facts on Sunday, February 23^rd, I appealed to you to step aside as Chairman of the Shareholder’s committee of LIAT.  As mentioned on the program, given the respect and admiration I have for you, particularly on your stance and leadership on issues such as reparations and the cholera outbreak in Haiti, it was personally difficult for me to do this.  But it is necessary.

LIAT has moved from an operational meltdown in the Summer of 2013 to a financial meltdown a mere 7 months later.  LIAT drains our treasuries, operates inefficiently and stifles competition.  The source of LIAT’s problem is its financial unsustainability and as with everything else at LIAT, no one is accountable.  As Chairman of the Shareholder’s committee, the buck stops with you.

LIAT needs to fight the battle of its life to transform itself to be financially viable and sustainable.  But you believe, and have stated so publicly, that LIAT can never be profitable.  This battle, therefore, needs a different general.

Unsustainability

LIAT has lost ec$120m in the last four years.  Last month, LIAT could not pay both the lease on its aircraft as well as its payroll.  So it chose one and delayed the other.  A leased ATR gives 36% more seat capacity than its closest Dash 8 equivalent but is double the (lease) expense.  In 2015, repayments will begin on LIAT’s recent loan of us$65m to purchase new aircraft.   So monthly cash outflows go up even more.

And the new inflows to cover this?  Inter-island tourism is down 60% in 7 years and LIAT’s load factor is running at about 55%.  The fantasy (aka “business plan”) is that the load factor will go up to 75%.  The fantasy is also that LIAT will fly its way out of losses by expanding to new destinations – Jamaica, Haiti, Aruba, Panama, and eventually to cities in North and South America.

LIAT employs 850+ people, flies 22 destinations, operates between 10 and 12 aircraft from 2 hubs (3 if you count Trinidad) to move 800,000+ passengers a year to generate massive losses.

So it’s bail out time again.  Call on shareholders, and call on other good neighbors so that we can continue to drain our treasuries, operate inefficiently and stifle competition.  And for you this is acceptable because LIAT should not be run like a business and can never make a profit.

Our fragile economies can no longer support perpetual bailouts.  If we do not take the bull by the horns LIAT will go out of business – it will employ no one, fly nowhere, operate no aircraft and use no hubs.  But alas, it will generate no losses and competitive players will fill the gaps because LIAT, the airline unfairly propped up by perpetual subsidies, will not be there to run them out of business.

LIAT must therefore immediately begin a journey towards financial sustainability to save itself.  But if the leader does not believe in the journey, then the journey will never begin.  It is on this basis, with full respect and admiration, that I ask you to step aside as Chairman of the Shareholder’s committee, so that a new mandate to make LIAT financially sustainable can be ushered in.

Sustainability

The new chairman of the Shareholder’s committee needs to believe that the battle can be won.  And what needs to be done is not rocket science.

Appoint a Chairman and a Board capable of turning around the financial fortunes of the company and running a top-notch airline.  Give them the authority and autonomy to do what needs to be done.  Allow them to appoint a CEO and restructure the management team as necessary.   Allow LIAT to become a real business free from political interference tasked with a perfect safety record, high employee satisfaction, great customer service and solid financial performance.  A fierce focus on the company’s finances with adjustments made to yield (including renegotiation of government/airport taxes), network efficiency and operating costs will be required.  The resulting operation will have fewer employees, fewer destinations and fewer aircraft.  It will be profitable, dependable and it will deliver great service.  Like any airline, unprofitable routes will continue only with guarantees from the interested party/government.  But at least then, the taxpayers will know what they are paying for, and can make that decision.  And other/smaller airlines will take up the slack.  Competition will flourish, as will LIAT, and the Caribbean will finally get the airlift network it needs.

With a restructured board and executive, confidence in the airline’s financial performance will be established and other Caribbean governments may even want to invest.

At the right time, joint venture the company while maintaining a minimum 50% shares among shareholder governments.  The two best run airlines in the world (Singapore Airlines and Air Malaysia) are run like a business and are profitable and remain owned 50% or more by the State and 50% or less by private interests.  Like LIAT, they were bleeding losses and their shareholder governments could no longer manage the bailouts.  So they took the tough decisions, appointed the right board and executive team, and turned the airlines around to the benefit of all stakeholders.

Yes, it will be painful, but it is necessary.  And most importantly it will pull LIAT back from the financial cliff and put it on a course to long term financial sustainability.

Please consider that I am a hotelier from an island that is almost 80% dependent on LIAT for airlift.  Cut one route to Dominica, and we/Dominica will suffer.  But if my option is (a) to continue to have all the LIAT routes we have today with an airline that is prone to poor service, ad hoc cancellations, occasional and irrational pilot strikes and constantly at the edge of a financial precipice due to insurmountable financial losses – OR – (b) an airline with fewer routes but with good service, dependable schedules and solid financial performance, then my choice is definitely the latter.  And other airlines, once permitted, will take up the slack.

In Summary

Thomas Edison said, “I have not failed. I’ve just found 10,000 ways that won’t work.”  And then finally, he invented the electric light bulb.

We have lived through and exhausted the many ways that LIAT won’t work.  It is time to try the way that will.

I appeal to you, Prime Minister Gonsalves, as well as the other Shareholder Prime Ministers, to mandate a new approach for taking LIAT and the Caribbean aviation industry forward without this perpetual and unfair burden on our treasuries.

It is time to run it like a business before it goes out of business.

Respectfully Yours,

Gregor Nassief

Owner/Director – Secret Bay

Executive Chairman – Fort Young Hotel

cc:        Honourable Dr. Baldwin Spencer of Antigua and Barbuda

Honourable Freundel Stuart of Barbados

Honourable Roosevelt Skerrit of Dominica

p.s.       As we again desperately seek additional funds for yet another bailout, make it the last please.  Don’t put the money into the black hole of an unsustainable business model.  Instead, use it to restructure the airline, rationalize its operations and place it on a solid long term footing.  In other words, make it the last bailout!

EDITOR’S NOTE: Mr. Nassief’s full letter is also available at http://www.scribd.com/doc/209141390/Letter-to-LIAT-Chairman-of-LIAT-s-Shareholders-Committee-February-25-2014-from-Dominica-Hotelier-Gregor-Nassief

September 13, 2013

Honourable Dr. Baldwin Spencer of Antigua and Barbuda

Honourable Freundel Stuart of Barbados

Honourable Roosevelt Skerrit of Dominica

Honourable Dr. Ralph Gonsalves of St. Vincent and the Grenadines

Dear Shareholder Prime Ministers:

Re:  Take Ownership

My letters of August 11^th and August 19^th to the LIAT Board and Chairman respectively were written after LIAT’s worse crisis in its 56-year history had stretched into its third month with no clear explanation of the crisis and with no one accepting responsibility despite clear indications of management and planning errors.  It was on that basis that I called for “heads to roll.”   As the crisis now stretches into its fourth month (see latest list of incidents attached) the calls for transparency and accountability have grown louder but remain unanswered.

As the effective “owners” of LIAT, the final decision lies with you.  You can follow the path of LIAT’s leadership and ignore the calls for transparency and accountability or you can take ownership and act in the interest of your citizens, your visitors and your economies.

Perpetual unaccountability

Your CEO’s explanations of the crisis have included a long list of issues (unscheduled maintenance, crew shortages, bad weather, airport limitations, delays in obtaining licenses for operating the new ATR aircraft in some territories, and a dire financial situation due to failure by your governments to deliver on committed finance, difficulty in selling Dash-8 aircraft and a 10 per cent decline in revenue).  He has taken no direct responsibility for the crisis and admitted to no errors, laying the blame on God and You.

In a brazen act of self-preservation and back scratching, your CEO has rejected a call from many, including the Leeward Island Airline Pilots Association (LIALPA), for an independent investigation into the crisis, choosing instead a “full post-mortem on what went wrong,” the objective of which would also be to reward staff for their “heroic duties and human service.”  And those who “dropped the ball” would be identified “for counseling or better training.”

If after a crisis as deep and wide as this, your CEO is allowed to get away with blocking an independent investigation (in which he would surely be the primary target) and throwing some niceties at staff (in order to calm a revolt), then it surely explains the culture of unaccountability that has led to EC$344m in accumulated deficits at the end of 2012 (sure to grow larger in 2013 as a result of the current mess).  Now add to that the gamble of EC$250m+ on the re-fleeting exercise and you end up with a half billion-dollar burden gift-wrapped in perpetual unaccountability that is now your responsibility.

Break the cycle

If no one is ever held accountable, then no matter how bad it is, it doesn’t matter, and so it just keeps getting worst.

As owners, I appeal to you to hold LIAT’s Board and Executive Team to a much higher standard of performance, one that delivers a great customer experience and a solid financial performance.

As owners, I appeal to you to reorganize and restructure the Board of Directors and Executive team and to hold them accountable to achieve the necessary objectives, giving them the autonomy and authority, free from political interference.

As owners, I appeal to you to be owners, to step up and to act in the interest of your citizens, your visitors and your economies and to break the cycle of perpetual unaccountability.

In Closing

As Victor Hugo said, “All the forces in the world are not so powerful as an idea whose time has come.”  The idea that LIAT can be and must be an airline that is well managed and delivers a great customer experience and a solid financial performance has come.  Constant disappointment, dismay and disruption must become a thing of the past.  Half billion-dollar burdens on our treasuries must end.

A culture of perpetual accountability and competent leadership must begin.  Take ownership, usher it in.

It is time to care.  It is time for change.  Heads must roll.

Respectfully Yours,

Gregor Nassief

Owner/Director – Secret Bay

Executive Chairman – Fort Young Hotel

LIST OF INCDENTS

On August 19^th, LIAT announced its service would be “boosted” by the return to service of one of its two newly acquired ATR aircraft which was grounded in Barbados for about a week due to a technical issue.  On August 27^th, LIAT announced that its operations would be “back to normal.”  While the explanations from the CEO vary on the cause of the crisis, it continues unabated.  Here is a list of incidents from August 19^th onward, after the service was supposed to be significantly improved:

18 incidents in less than 3 weeks related to one island and connected to one person (the affected passengers include me and those known to me).

Regarding LIAT 565 on September 2^nd mentioned above, please read the incredible story on the following page as told to me by a passenger who witnessed it all.

September 2^nd.  LIAT 565.  Eye Witness Account.

Monday September 2nd I was to leave San Juan at 3:00 PM on LIAT 565 to Dominica to arrive at 4:30 PM.  After a series of incredible incidents including the physical assault by a LIAT supervisor of a 15-year-old Dominican boy, we finally arrived to Dominica on September 4th at 2:30 AM in the morning.

Here is what I experienced.

Our flight on the 2nd was cancelled, but the other flight from San Juan to Antigua, LIAT 563, left as scheduled at 3:25 PM.  Several passengers on that flight were actually going to Dominica, but via Antigua, and several passengers on our cancelled flight were going to other destinations, but via Dominica.  We were told to return the following day at 11AM in order to travel to Dominica.

The following day, September 3rd, all passengers arrived as they were requested to, and waited and waited and waited.  Only to see again the LIAT 563 leave to Antigua.  We were told that our flight would come in a couple of hours.  An unbelievable incident occurred on the flight to Antigua.   We witnessed a LIAT supervisor force a paying passenger off LIAT 563 in order to give a seat to a LIAT Pilot who was simply desperate to get home.  The woman was distraught.  September 4th in Dominica is the day schools re-open and her three children were waiting on her back in Dominica.  She explained all of this to the supervisor who simply said “Ma’m, we are taking you off this flight.”  The rest of the passengers were aghast – how could LIAT pull off a passenger that had paid for her ticket in order to give a LIAT employee a free ride back home?

The awaiting passengers, now there for over 24 hours and having seen two planes destined for Antigua leave, became very upset and frustrated.  A young boy from Dominica approached the LIAT supervisor, hit his hand down on the desk and began to demand answers.  He had been cool for the last 24 hours, but he was now frustrated.  After a verbal exchange, the LIAT supervisor slapped him.  None of us could believe it.  He tried to keep his cool and asked her how she could hit him.  She replied that he disrespected her.  The police came, and the Boy’s cousin who was present wanted to press charges (hitting a minor is illegal).  Eventually, she agreed not to but demanded that the police make a report of the incident to protect her cousin in the event that LIAT challenged their version of the story.

It was now stretching into our second night, and we all feared no plane was coming.  Then, apparently, the Puerto Rico authorities, viewing us as a security risk, arranged for a LIAT plane to come to get us.  We boarded at 12:45AM and arrived in Dominica at 2:15 AM in the morning, 30+ hours late.  The many passengers who were traveling via Dominica onto other destinations were now stuck at Melville Hall airport at 2:30 AM with nowhere to go.

I later found out the name of the LIAT supervisor was Ivette Santiago Torres.  I hear heads will be rolling.  Include hers, please.

EDITOR’S NOTE: Gregor Nassief is involved in the tourism business in Dominica and the technology business in Latin America.  He is the Owner and Director of Secret Bay, the Executive Chairman of the Fort Young Hotel and the CEO of Tecsys Latin America.

http://www.scribd.com/doc/167821082/Letter-to-LIAT-Shareholders-September-13-2013

August 12, 2013

Board of Directors

Dear Directors:

Re:  Heads must roll

I respectfully ask you, on behalf of the people of the Caribbean, and the people that visit the Caribbean, and especially on behalf of the people of Dominica who depend on LIAT for their travel and also for their tourism industry, to enforce significant change in the executive ranks at LIAT.

This request is being made first because of 8+ weeks of disastrous customer service which continues to this day due to lack of foresight and planning on the part of LIAT’s executives, and second because of LIAT’s disastrous public relations which has revealed the depth of your executives’ indifference to your customers.

It is your duty to hold your executives accountable for their actions and performance.

Disastrous Service

There has been a complete breakdown in service for over 2 months now, which I and most persons traveling LIAT have experienced.  Here is a list of incidents:

20+ incidents in less than 8 weeks related to one island and connected to one person (the affected passengers include me and those known to me).   And none of these are related to Tropical Storm Chantal or bad weather.

LIAT introduced the new ATR aircraft in early July.  Your executives were well aware that pilots operating the new ATRs could not also operate the Dash 8.  LIAT also knew that before the ATRs began operating, pilots would have to be taken off line for training.  LIAT also returned Dash 8s that were on lease before the ATRs were operational.  LIAT went into their peak summer season with the implementation of new aircraft and with the full knowledge of what they were doing and of the risks involved.  There were no contingency plans, and everything fell apart.  The result is too few pilots and too few aircraft to adequately meet the demand and cover the routes.  The results have been a disaster for the region, and especially for Dominica (68% of our arrivals by air are on LIAT).

The inability to properly plan such a major event and to put the airline and its employees and especially its customers through such chaos, further damaging the reputation of LIAT and that of the tourism industry which it serves is, in to my mind, gross negligence. Who pays for the damage done to each customer, and for the damage to Dominica and its tourism industry, and to the region?  Who is accountable?

Do you believe a visitor traveling to the region for a hard-earned vacation can separate LIAT’s disastrous service from the rest of their experience?  Do think they will return or encourage others to come?

So many that work so hard to bring visitors to our region and to our island cannot and should not continue to the pay the price for the incompetence and actions of your executives.

Disastrous Public Relations

Your CEO has gone on record only once, as far I can see, explaining the crisis as follows: “an increase in unscheduled maintenance at a time when our schedule calls for maximum aircraft availability; crew shortages; bad weather; airport limitations; and delays in obtaining licences for operating our new ATR aircraft in some territories”.

Your Chairman has focused on maintenance issues with the old Dash 8s being the heart of the problem.

This is only part of the truth – poor planning and implementation is the crux of the matter.  It is a great disservice to your ultimate shareholders – the people of the Caribbean – to not deal with the crisis truthfully and clearly and to ensure swift correction action.  Who is accountable?

In the most baffling public relations event that I have ever witnessed, your Chief Commercial Officer responded via a YouTube video to a customer complaint letter which was publicized by Richard Branson.   Your executive said that “LIAT is second only to Virgin to receive the funniest complaint letter every written” and challenged Branson to a race to Necker Island saying that “the loser can wipe the other airline’s tail” or Branson can dress up as a flight attendant for LIAT.

This is your top marketing, commercial and PR executive, the face of your organization, the depth of your indifference to what customers suffer, and for me, the lowest point in my perception of what LIAT stands for.  Who is accountable?

Your customer-facing staff, who through this crisis have had to work incredible hours and deal with an unimaginable number of irate clients, are clueless as to what is happening operationally on a day to day basis.  They are typically unable to answer customer questions as to when or if a scheduled flight will arrive or depart.

Your customer-facing staff are your public relations link to your clients and are your best hope of lifting clients up in their moments of despair, yet your executives give them no information and no tools to manager your most important asset – your customers – through this crisis.  Who is accountable?

In Closing

A friend once said to me that the secret to a stress-free life is simply to lower your expectations, that way you are never disappointed.   I didn’t have to lower them, LIAT’s service to me and several people connected to me, did that for me.  LIAT did it consistently, dependably and ruthlessly.  Through a crisis like this, LIAT could have recovered at least to some extent the understanding and trust of its customers, through clear, honest and appropriate communication and public relations, followed with decisive action, all of which would have demonstrated that LIAT cares, that you care.

But do you care? Do you care about LIAT’s customers who get on and off its planes every day?  Do you care about the disruption to their personal and professional lives caused by LIAT’s incompetence and indifference?  Do you care about the damage LIAT’s poor service and reputation does to the fragile economies of island states like Dominica so dependent on tourism and the airline’s service?  Do you care that your customers are not getting what they pay for?  Do you care that your customers do not travel LIAT by choice, but because they have no other choice?  Caring for your customers is the first step and the raison d’être – the reason for existence – of a business.

It is time to care.  It is time for change.  Heads must roll.

Respectfully Yours,

Gregor Nassief

Owner/Director – Secret Bay

Executive Chairman – Fort Young Hotel

EDITOR’S NOTE: Gregor Nassief is involved in the tourism business in Dominica and the technology business in Latin America.  He is the Owner and Director of Secret Bay, the Exeuctive Chairman of the Fort Young Hotel and the CEO of Tecsys Latin America.

See more at http://www.youtube.com/watch?v=kFPNSAVt9qY and http://www.scribd.com/doc/159417966/Letter-to-LIAT-Board-of-Directors