US shuts EZjet down

Nov 10, 2012 News

– thousands stranded, seeking refunds

In a move that was sudden, but not unexpected, the US government has suspended the operations of EZjet Air Services, leaving thousands of Guyanese passengers stranded between Trinidad, Canada and the US.

In trouble: Founder/former CEO, Sonny Ramdeo

The suspension is related to huge sums of monies that EZjet allegedly owes to Swift Air, a US-based company that conducted the charter flights. Passengers also turned up for flights yesterday at the Cheddi Jagan International Airport (CJIA) but were told the flight to New York was cancelled.
Scores of passengers later descended on the Airline’s Brickdam offices yesterday, demanding their refunds. Meanwhile, the Guyana Government says it is talking to a number of airlines to provide relief.
According to the Guyana government, it was notified of the US Department of Transportation (DOT) suspension yesterday and this triggered an automatic response of suspension here by the Guyana Civil Aviation Authority (GCAA).
Since starting its flights last year, there have been questions about EZjet; its source of financing and whether its financing structure would have allowed it to survive.
Government and EZjet accused Kaieteur News and Opposition politicians of scaring away passengers. But, the fact is that the Guyana Government had ignored the obvious questions about the airline and, instead of conducting necessary inquiries, had backed the company.
Recently, its Chief Executive Officer, Sonny Ramdeo, resigned after a US healthcare company sued EZjet and the official for allegedly stealing over US$5.4M and passing some of the monies through the bank accounts of the airline.
Ramdeo had vowed to defend the charge and to return as CEO. Just two weeks ago, Acting CEO Rosalinda Rasul had said that the airline was in a healthy financial position and was not indebted to anyone.
In a statement posted on its Facebook account yesterday, EZjet blamed mismanagement and financial hardship for its woes.
However, the financial difficulties leading to the collapse of the charter flights has been in the forefront of public concern for a number of weeks now.

EZjet’s CEO (ag), Rosalinda Rasul

The company said that it has “temporarily suspended its operations due to financial hardship created by its vendors and agents owing EZjet, as well as some mismanagement.”
Total lies!
EZjet, in its defense, accused Swift Air and another service provider, Dynamic Airways, of abandoning passengers on Wednesday in Trinidad.
“Swift Air also forced EZjet to cancel its flight scheduled for November 2 and November 3 due to the fact that they abandoned passengers at the JFK airport and took another job flying for the Boston Celtics while inconveniencing EZjet’s passengers.”
EZjet said that Swift Air owes it US$800,000 which includes charges relating to using a substitute aircraft, ground services, hotel stays for passengers, food and other amenities during delays. “While EZjet has invoiced Swift Air for reimbursement of these charges, the Company has not paid any of EZjet’s invoices.”
In its Facebook statement, EZJet accused the previous aircraft operator, Dynamic Airways, that helped it start the charter, of owing over US$1.5M which included a US$800,000 cash security deposit.
“EZjet is in the process of seeking legal action against Dynamic Airways for recovery of the sums owing. These outstanding balances, coupled with the poor collection of ticket sales from the travel agencies, have left EZjet in a financial strain.”
New investors needed
EZjet said that it is in the process of seeking new investors with the hopes of restarting its Guyana services.
In a statement, yesterday, the Ministry of Trade and Tourism said that there may be some 25,000 to 30,000 advance bookings for the months of November and December 2012.

Public Works Minister, Robeson Benn

However, while this claim of 25,000-30,000 bookings sounds impractical, such reservations, if true, could not spell financial trouble unless, as Rasul said, there was mismanagement. Such charge however is new but not unexpected given everything else that has been unearthed recently.
Government disclosed that it has commenced talks with Caribbean Airlines to assist with extra flights. A team from that airline is expected in Guyana today to meet with government.
“This meeting will focus on finding solutions that would result in stability in airfares as well as availability of additional capacity to fill the void that would be created by the exit of EzJet.”
Benn said yesterday that the government was “unhappy and disappointed” that its efforts to bring low cost air fares to Guyana have not worked well.
While EZjet had deposited US$200,000 ($40M) security deposit with government, it is still too early to determine whether this would be enough for the reported thousands of passengers who would have booked flights for the Christmas season.
Minister Benn insisted that background checks or due diligence, similar to what the US would have carried out, were conducted on EZjet.
Benn disclosed that his ministry became aware last week that EZjet was experiencing a situation after local suppliers start demanding cash up front.
A stranded passenger said, “Benn and the Government should have seen these signs and warned us of the dangers to our hard earned finances.” This sad comment may be the epitaph to the entire episode.