Peter Davies’s Heathrow slot sale under inquiry by Trinidad government

Air Malta chief executive Peter Davies is at the centre of a Trinidad government inquiry over his strategic sale of seven Heathrow slots previously owned by BWIA, the bankrupt airline he took over in 2006 and rebranded as Caribbean Airlines (CAL).

The probe was launched in May 2011 by Trinidad's new prime minister Kamla Persad-Bissessar, because the slots were sold for just GBP5 million (€5.8 million) to British Airways, back in 2006.

The present government believes the slots were undersold, given that BA had previously paid some €30 million in 2002 for seven pairs of slots at Heathrow back in 2002.

But Davies has told MaltaToday that BWIA had just one pair of slots, not seven, because the airline flew once every day of the week to Heathrow.

"When it was in opposition, the party-in-government believed BWIA had seven pairs of slots because the airline flew every day to Heathrow.

"When I sold Sabena's seven slots the airline had 49 flights a week to Heathrow, while BWIA had seven flights a week. The value of the slot was verified independently and put out on the market, attracting bids from British Airways and Virgin."

Davies told MaltaToday that the sale of Air Malta's slots at Heathrow were not part of the airline's plans for its restructuring programme.

BWIA restructuring

In 2006, Davies was entrusted with the restructuring of BWIA, which he downsized from a 1,800 workforce to 550, and rebranded as Caribbean Airlines (CAL).

The slot sale came with a code-share arrangement with British Airways, to fly from Port of Spain to Gatwick.

Apart from determining whether the slot sale was in line with BWIA's strategic plan, the inquiry is also investigating alleged breaches of government procurement procedures, whether the award to BA was impartial, and also whether there is any evidence to suggest impropriety on the part of any individual or entity which contributed to the award of the contract.

The controversial sale of the slots, which BWIA held since the 1960s, also raised other allegations of conflict of interest for Davies. According to a senator from Persad-Bissessar's ruling party, the UK consultants Catelli plc priced the Heathrow slots that BWIA sold to BA. According to senator Wade Mark, the same firm benchmarked the sale of the Heathrow slots owned by SN Brussels - when Davies was its CEO - to British Airways.

In 2002, BA paid €30 million for seven pairs of slots owned by Belgian carrier SN Brussels Airlines at Heathrow, while SN Brussels would sell seats under its flight code on BA services on the Brussels-Heathrow route.

Airport 'slots' are coveted landing and departure rights, which grant airlines space at particular times and days. The slots are also price controlled. There is great demand for these slots in busy airports like Heathrow, which makes them valuable assets for airlines.

Restructuring go-to man

In 2002, Davies was entrusted with the restructuring of Sabena, Belgium's failed flag carrier, which went on to form a successful merger with Virgin Express. Davies is credited with having transformed bankrupt Belgian airline Sabena into a profitable carrier from 2002 to 2005.

In 2006 he joined the ailing BWIA, the national carrier for Trinidad and Tobago, to recommend a new airline - Caribbean Airlines - to replace BWIA.

He then resigned from his position as CEO of Caribbean Airlines on 30 September 2007, but remained as a strategic advisor to the airline. His successor was Philip Saunders, who was then vice-president commercial at Star Alliance, the world's largest airline alliance. Today Saunders is chief commercial officer at Air Malta.

Under Davies and Saunders, Caribbean Airlines registered a net loss of US$18.9 million at the end of 2007, but then registered a pre-tax profit of US$7.9 million on revenues of US$231 million for the year ending 2008.

Air Southwest crash

Shortly before joining Air Malta with a €500,000 salary package, Davies attempted to revitalise the UK regional airline Air Southwest which he joined as managing director in September 2009.

The Plymouth-based airline stopped all its flights in September 2011 because low demand had made its UK routes financially unsustainable.

Under Davies, Air Southwest was sold to Eastern Airways in December 2010 to broaden its sales channels. When Air Southwest's former owner, Sutton Harbour plc, also closed down Plymouth Airport, which it owned, Eastern Airways announced it would be quitting the airline, which employed 135.