Travel Span Chief Executive Officer Nohar Singh said reports of the local company’s demise are exaggerated as it is still functioning though in a diminished capacity, filling seats on other carriers operating out of the country while preserving a strong clientele base.
In debunking the reports, Singh said the company merely had taken a decision to “step back and re-position itself in the face of crippling losses, poor investment initiatives and an increasingly testing environment.”
By re-positioning he means pulling out of the market as a local carrier after suspending flights in February this year, and adjusting to life as a secondary player, booking flights for passengers travelling in and out of Guyana. Singh frankly stated in a recent interview with Stabroek News that the company had no immediate desire to operate as a carrier once more.
His assessment of what crippled Travel Span GT since its ambitious launch in December 2006 included persistent skepticism about the company’s operations, a failed investment in World Cup Cricket, the introduction of the now tanked Constella-tion Tours into the market, and the obvious challenge of rising fuel prices.
Singh confirmed what Minister of Public Works, Transport and Hydraulics Robeson Benn disclosed last week, that Travel Span had requested its $40M bond which had been lodged with the government prior to its start-up here. He noted that the company was shelling out a substantial amount of money in bank fees to keep the bond going and it had since ceased operations as a carrier.
“We knew that Guyana was a tough market which we had a short exposure to when we came in, and the fact that the market could be highly seasonal was also considered, but there was need for additional seats at the time and we responded… the situation later changed to one where there was too many seats chasing fewer passengers,” Singh stated.
With only North American Airlines offering direct flights to New York at the time, he said, the entrance of Travel Span was timely, adding that the airline had managed to provide a competitive environment and it had introduced new routes in a market which needed them. But, it was only a matter of time before the company suffered substantial losses and took a few hits.
Singh told Stabroek News that at one point Travel Span was just haemorrhaging money and cited an investment the company had made in Cricket Word Cup that failed to bring in any returns. Travel Span, he said, lost US$300,000 (G$60M) during World Cup after investing substantially in hotel rooms and game tickets, which the company marketed as complete packages inclusive of airfare. The total investment was US$500,000.
Singh said Travel Span spent the money buying up rooms, mostly in Guyana and Trinidad and that they had purchased a fair amount of tickets, but the packages had been left unwrapped since there were hardly any takers. This, he said, was a severe blow and resulted in a sizeable dent in the company’s local operations.
“World Cup was a very, very bad investment for us,” he said. Singh noted that this was the first blow and that it was followed shortly after by the entrance of Constellation Tours into the market.
Too many seats
Singh bemoaned the open skies policy that had defined the local airline industry around the time Constellation Tours entered the market, saying that it would have been prudent to evaluate and determine whether Guyana needed additional seats around that time given that Caribbean Airlines (then BWIA), North American Airlines and Travel Span were already operating.
“In a small emerging market like Guyana’s it is detrimental to create a situation where you have too many seats chasing too little passengers because everyone loses money… it then becomes an issue of mounting losses as airfares are lowered just to get people on board,” Singh commented.
He said that in retrospect, there was an under-capacity in 2005/2006 as there were too few seats in the market, but that 2007 turned out to be the year where there was over-capacity and hence the losses suffered by Travel Span and other local carriers. According to him, it was simply a case of too many seats on the market.
Though he only touched on it briefly and made no specific references, Singh said Travel Span had also had to put up with a great deal of negativity. He claimed that the company had been faced with persistent negativity throughout its operation as a carrier, noting that this eventually had taken precedence over whatever good was happening for them, and that it had become a burden in its own way.
When Travel Span suspended its flights, he said, it was a decision which had been taken after a long and thorough assessment of the situation faced by the company. Fuel prices were skyrocketing, and this was added to the escalating problem of losses the company faced. The decision to drop the carrier status was made, in essence to rethink strategies, cut costs and map out a way to remain in the market without sinking.
Singh said customers had been protected after the company changed its business plan, adding that Travel Span secured alternative flights for everyone who had been booked to travel on Caribbean Airlines and North American Airlines. Additionally, persons who sought refunds had been repaid.
In terms of its future, he said that since Travel Span had already been equipped with a travel agency within its structure the focus had shifted and they were moving forward in that direction. He said the company had managed to keep its clientele base.
Still alive
As part of its new business plan Travel Span worked out an arrangement with Delta Airlines where it booked block seats − seats that it paid for whether customers filled them or not. He said the aim was to make a profit in selling the seats, but that losses were also suffered. He was keen to point out that it was not a joint venture, but that there was some risk-sharing. This particular arrangement had been initiated when Delta started up operations here.
He said that they had also been able to negotiate with Sky Service flights to provide exclusive representation into Guyana and Toronto, and more recently they had signed a new contract with Jet Airways, which is a leading carrier operating from India into the US and Canada. The company was therefore in a position to arrange flights for passengers out of Guyana wishing to fly to India.
Further, he said, Travel Span had a good working relationship with Caribbean Airlines as they were among its leading seat fillers.
“The company is still functioning; it is weathering the storm, and basically it is still alive. There is a perception out there that we are dead but that is further from what is actually happening… it is important that we keep our presence here,” Singh said.
According to him, Guyana must have a local airline or at least the presence of a local company with a vested interest in being a bridge between here and the outside world, given the importance of this to the economy. He explained that if there was a free flow of passengers into the country the economy would benefit from a regular supply of foreign currency. Singh said the average visitor often spent around US$1500 while home on holiday or on vacation.
Economic indicators in the country were all positive when Travel Span entered the market Singh said, adding that the company might have taken a few heavy hits but that it would rise again.
Travel Span GT, emerged out of Travel Span Inc, which is a US corporation that has been in business operating for over 15 years out of New York. Singh, a Guyanese by birth, is also CEO and President for Travel Span Vacations and Amrals Travel.
Travel Span was first introduced in Guyana in 2005, and conducted a few chartered flights from Guyana to New York. However, Travel Span sought scheduled flights when its customer base increased.
