Three-member team to conduct audit of sale of BWIA slots in London

The government of Trinidad and Tobago has set up a three-member team to conduct an audit into the same of BWIA's Terminal Slots at Heathrow Airport in London in 2006.

Prime Minister Kamla Persad-Bissessar made the announcement in Tobago Thursday in a speech to mark the renaming of the island's airport the ANR Robinson International Airport.

BWIA sold the slots for about £5 million (Approx TT$60 million) to British Airways Limited. It was part of the negotiation for BWIA's successor company, Caribbean Airlines, to use British Airways for its London route under a Codeshare Agreement.

The sale sparked criticisms and controversy as it was felt that the slots were grossly undervalued. Persad-Bissessar said subsequent information coming to hand appears to confirm this.

She cited a report entitled Competition Issues associated with the trading of airport slots prepared in 2005, by the UK Office of Fair Trading and Civil Aviation Authority, which showed the general value of airline slots at Heathrow Airport around the time of the sale.

The Prime Minister quoted exerpts from the report:

• 2002: British Airways paid a reported £25–30 million for 7 pairs of slots at Heathrow
• 2004: Quantas Airways from Australia paid £20 million for two pairs of slots
• 2004: Virgin Atlantic paid £30 million for four pairs of slots
• 2004: British Airways paid £22.4 million for 8 pairs 
• 2006: Trinidad and Tobago received £5 million 

In Maech Persad-Bissessar asked Attorney General Anand Ramlogan to investigate the sale. She said based on that he recommended to the Cabinet that a Forensic/Management audit be undertaken. 

She said cabinet accepted that recommendation and appointed Jwala Rambarran, Bijan Vasigh and Justice Roger Hamel-Smith to conduct the audit. They would have to produce a report within three months after receiving their instruments of appointment. 

The terms of reference:

• to determine whether the decision made by the then Board of BWIA to sell its seven slots at Heathrow Airport, London to British Airways in 2006 for was consistent with BWIA’s strategic plan and with sound business practices of the global airline industry; 
• Identify the procurement process used by BWIA and the Ministry of Finance and/or by anyone acting on their behalf, in the negotiation and settlement of the sale of the seven slots of BWIA’s at Heathrow Airport and the Codeshare Agreement; 
• Determine whether there were any breaches of the Government’s procurement procedures or applicable laws on the part of BWIA and/or on the part of the Ministry of Finance or on the part of anyone acting on their behalf, in the execution of the sale of the seven slots of BWIA’s at Heathrow Airport and the Codeshare Agreement; 
• Determine what attempts, if any, were taken by BWIA and/or the Ministry of Finance to ensure that a fair market value was realized for the seven slots at Heathrow Airport; 
• Evaluate the feasibility of the valuation model(s) used by the BWIA and/or the Ministry of Finance in determining the value and sale price of the seven slots at Heathrow Airport; 
• Determine whether the bidding process was open to all airlines and whether the process which led to the award of the contract to British Airways was impartial, merit-based and did not involve impropriety and irregularity; 
• Determine whether there is any prima facie evidence to suggest impropriety on the part of any individual or entity which contributed to the award or non-award of the contract to any of the bidders which had submitted proposals to BWIA; and 
• Determine whether the sale of BWIA’s seven slots at Heathrow Airport has had any negative economic impact on BWIA (now Caribbean Airlines) and on 
• the economy of Trinidad and Tobago, especially in terms of foregone revenue, foreign exchange earnings, employment generation and tourist arrivals.