Exclusive: Is Inselair worth saving?
The current situation of InselAir has been spotlighted regularly, but there has been no tangible solution found yet. My firm and I have been advising and planning for the acquisition of InselAir until last Friday, for and on behalf of an interested party. A decision to withdraw has been made based on many grounds unknown at the time.
InselAir did not renew its IOSA (IATA Operational Safety Audit) which became expired on 17th September 2018 and it will as a direct consequence lose its valuable IATA membership if it does not renew the IOSA within 90 days. There are many things the general public do not know about the airline, certain aspects of aviation industry and most people would not know the importance of that IATA membership.
Interlining and SPA (Special Prorate Agreement) are important tools for the airlines but they also benefit travelling public by enabling passengers to travel to the destinations beyond the existing network destinations of the home country’s carrier and so on. You may find fares involving two or three airlines to your final destination are cheaper than direct flights. Those fares are based on interline and SPA. IATA’s MITA (Multilateral Interline Agreement), MPA (Multilateral Prorate Agreement) are vital economic tools. Please read section of interline and SPA in the Start-Up Airline Guide for Beginners which you can find its link on the bottom of this article.
It was a shocking event that InselAir did not renew its IOSA certificate which is the prerequisite for its IATA membership and a dereliction of duty by the airlines management in failing to maintain that level of operational integrity.
The Curacao government has been telling the public that InselAir is directly linked to the air connectivity of Curacao, but does InselAir actually function as a proper air connectivity provider?
Now it operates a single Fokker 50 and it burnt over US$18 million in less than 1 year with single Fokker 50, a relatively inexpensive old technology propeller aircraft I cannot possibly imagine how the loss of US$18 million in less than one year has occurred. In normal circumstance, US$18 million is the capital for a start-up airline with maybe three leased jet aircraft based on the operation for three months on a ‘without revenue’ basis.
As far as I know, InselAir has over US$90 million of known debts. Who would come to rescue InselAir in these circumstances unless someone has an endlessly deep pockets?
The One Laser Group case does not have any value to talk about at all. InterCaribbean Airways’ sudden appearance as a potential partner was also a surprise. They are currently establishing an AOC in the Dominican Republic and it is not a large scale operator. They have been operating propellor aircraft and just took the delivery of one Embraer 145 jet. Does it really have the spare financial capability to deal with its own operations out of Turks & Caicos, the Dominican Republic and solve the debts of InselAir to normalise InselAir?
We may see yet another, maybe more so-called potential strategic partners days, months to come.
I see two options that which people in Curacao can solve. One is the government to nationalise InselAir, if the government is not willing to let it go and turn it around. The government has 51% of shares in InselAir so it can make changes that are necessary.
The other option is that local business people in tourism and other businesses join the forces to take over InselAir. They can then Negotiate with creditors, convince them to agree in return for shares to make InselAir a viable entity. Those who are involved in BEST VALUE GREAT CARE should compromise if they also wish InselAir survive through this storm.
It may be more beneficial for Cuaraco if it allows InselAir to be bankrupt if the above-mentioned solutions cannot be achieved. The non-existence of InselAir may invite new investors for a new Curacao-based airline ready and able at the outset to service the islands needs. Keeping InselAir just in existence while its network is a couple of routes will not benefit the people of Curacao or the government.
I have been working on the plan covering InselAir acquisition, restructure and expansion. I am sharing some documents with the public and you will find them on the bottom of this article. I do not mind anyone adopting aspects of this plan for the benefits of Curacao.
(Link for acquisition plan – with yellow highlighting on certain contents)
(Link to Start-up Airline Guide for Beginners – Please see interline and SPA section for better understanding)
By James Stewart Kim