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Caribbean Airlines Limited 5th REPORT OF THE on An Inquiry into the Administration and Operations of Caribbean Airlines Limited. September 2017 1 5th Report, JSC State Enterprises - CAL An electronic copy of this report can be found on the Parliament website: www.ttparliament.org The Joint Select Committee on State Enterprises Contact the Committees Unit Telephone: 624-7275 Extensions 2828/2309/2283, Fax: 625-4672 Email: [email protected] 2 5th Report, JSC State Enterprises - CAL Joint Select Committee on State Enterprises An Inquiry into the Administration and Operations of Caribbean Airlines Limited Fifth Report 2016/2017 Session, Eleventh Parliament Report, together with Minutes Ordered to be printed Date Laid Date Laid H.o.R: Senate: Published on ________ 201__ 3 5th Report, JSC State Enterprises - CAL 4 5th Report, JSC State Enterprises - CAL The Joint Select Committee on State Enterprises Establishment 1. The Joint Select Committee on State Enterprises was appointed pursuant to the directive encapsulated at section 66A of the Constitution of the Republic of Trinidad and Tobago. The House of Representatives and the Senate on Friday November 13, 2015 and Tuesday November 17, 2015, respectively agreed to a motion, which among other things, established this Committee to inquire into and report to Parliament on State Enterprises falling under its purview with regard to: their administration; the manner of exercise of their powers; their methods of functioning; and any criteria adopted by them in the exercise of their powers and functions. Current Membership 2. The following Members were appointed to serve on the Committee: Mr. David Small Dr. Lester Henry Mrs. Cherrie-Ann Crichlow-Cockburn Mr. Wade Mark Mr. Adrian Leonce Mr. Fazal Karim Brig. Gen. (Ret.) Ancil Antoine Mrs. Allyson Baksh Chairmanship 3. At its first meeting held on Wednesday December 02, 2015, the Committee elected Mr. David Small as Chairman, pursuant to Standing Orders 99(5) of the Senate and 109(5) of the House of Representatives. Powers 4. The committee is one of the Departmental Select Committees, the powers of which are set out principally in Standing Orders 91 and 101 of the Senate and 101 and 111 of the House of Representatives. These are available on the Internet via www.ttparliament.org. Secretarial Support 5. Secretarial support was provided by Mr. Brian Caesar, Clerk of the Senate, who served as Secretary to the Committee, Ms. Sheranne Samuel, Assistant Secretary and Mrs. Krystle Gittens, Graduate Research Assistant. Contacts 6. All correspondence should be addressed to the Secretary to the Joint Select Committee on State Enterprises, Level 3, Tower D, Port of Spain International Waterfront Centre, 1A Wrightson Road, Port of Spain. The telephone number for general enquiries is 624-7275; the Committee’s email address is [email protected]. 5 5th Report, JSC State Enterprises - CAL Table of Contents THE JOINT SELECT COMMITTEE ON STATE ENTERPRISES ............................................................................. 5 TABLE OF CONTENTS ............................................................................................................................... 6 GENERAL FINDINGS .................................................................................................................................. 7 SUMMARY OF RECOMMENDATIONS ..................................................................................................... 8 REPORT SUMMARY ..................................................................................................................................... 11 CHAPTER 1 .................................................................................................................................................. 12 1 INTRODUCTION ......................................................................................................................................... 12 CHAPTER 2 .................................................................................................................................................. 19 2 KEY ISSUES, FINDINGS AND RECOMMENDATIONS ......................................................................................... 19 APPENDICES ................................................................................................................................................. 1 APPENDIX I ......................................................................................................................................................... 2 MINUTES OF PROCEEDINGS .................................................................................................................................. 2 APPENDIX II ...................................................................................................................................................... 14 VERBATIM NOTES............................................................................................................................................... 14 APPENDIX III .................................................................................................................................................... 184 ANALYSIS OF CAL FINANCIALS ........................................................................................................................ 184 APPENDIX IV ................................................................................................................................................... 186 CORRESPONDENCE BETWEEN JSC ON NATIONAL SECURITY AND INLAND REVENUE DIVISION .............................. 186 ...................................................................................................................................................................... 189 APPENDIX V.................................................................................................................................................... 190 ATTENDANCE REGISTER .................................................................................................................................... 190 6 5th Report, JSC State Enterprises - CAL General Findings 1. The Committee noted that CAL has consistently failed to adhere to reporting timelines. This affects the ability of its line Ministry, to adequately monitor and evaluate operations. 2. The Committee noted that despite the issues experienced with customer service, CAL still benefits from a level of brand loyalty that may be leveraged. 3. The Committee noted that the contents of the Lufthansa report are valuable, and believes that the recommendations therein will steer CAL toward profitability. 4. The Committee noted that the major issues with the CAL fleet circulate around safety/reliability of aircraft, and upkeep of aircraft. 5. The Committee noted that CAL is struggling to manage instances of fraud. 6. The Committee noted that CAL is owed a significant amount by Venezuela. 7. The Committee noted the burden that servicing the domestic air bridge has placed on CAL’s profitability. 8. The Committee noted that CAL’s human resource focus is skewed towards pilots and management. 9. The Committee noted that several positions in the organisational structure are filled by individuals who do not possess the required qualifications. 10. The Committee noted that CAL has permitted excessive use of the flight “jump seat” by staff, for personal travel. 11. The Committee noted that CAL has failed to pay to the Board of Inland Revenue (BIR) “benefit in kind” taxes due in connection to the “jump seat” flights by staff. 12. The Committee noted that CAL needs to conduct a manpower needs analysis, in parallel with a route and flights rationalisation exercise. 13. The Committee noted that CAL has made efforts to recruit foreign pilots, despite the over- supply of local pilots. 7 5th Report, JSC State Enterprises - CAL Summary of Recommendations The following is a summary of the recommendations proposed by the Committee for the efficient operations of the Caribbean Airlines Limited (CAL): Management/Staff Matters 1. CAL should fill the Chief Financial Officer (CFO) and Chief Executive Officer (CEO) positions. 2. CAL should follow through with plans to conduct a manpower audit to review and re- adjust the management structures. 3. CAL should ensure that any employee continuing to be employed by the company on contract after retiring at age 60 should be paid at the base level of the position. This should be implemented with immediate effect. 4. CAL should ensure that with immediate effect, any employee continuing to be employed by the company on contract after retiring at the age of 60 should have no seniority of any kind over employees below the official retirement age. 5. CAL should undertake all necessary actions over the next six (6) months to complete the process of the retirement of all position holders who are over the age of 60. Operational Matters 6. CAL should urgently conduct a route analysis with a view to a reduction and or elimination of services to some North American destinations where over the past five years there has been an unabated trend of declining passenger numbers and massive financial losses. This should be completed within the next three (3) months. 7. Regarding flight operations, CAL should, as far as practicable, implement the recommendations contained in the Lufthansa Consulting report, inclusive of the replacement of the unreliable and extremely troublesome ATR aircraft. This process should begin with three months of the date of this report.
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