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Letter: The missing Argyle Airport feasibility studies
Published on January 5, 2016 Email To Friend    Print Version

Dear Sir:

As the New Year begins and yet another promise that Argyle International Airport (AIA) will finally be ready to send and receive planeloads of tourists non-stop to and from New York, London, Toronto and other large cities in North America and Europe is only a few months away, it is a good time for some retrospective reality checks.

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The first of these is a personal one. I had no intention to write anything about AIA, despite my longstanding skepticism about the project based on extensive holiday travel throughout the Caribbean archipelago and visits to nearly all our mainland tourist sites (save the remote and hard to reach Falls of Baleine).

Then I read a thought provoking piece on the I-Witness News site written by Herbert “Haz” Samuel, which made my blood boil and prompted me to compose the first of my critiques of AIA which, ironically, was posted on the very same day as a rebuttal to Mr Samuel’s essay by Dr Rudy Matthias, chairman and CEO of the Argyle International Airport Development Company, titled “It’s a beautiful story worth telling – a response to Mr Herbert A. Samuel”.

The second retrospective reality check is the length of time it has taken between the conception and completion of AIA and the implications of this for its feasibility. The long promised success of the airport, based on the expectation that it would transform the mainland of St Vincent (hereafter called St Vincent Island or SVI) into a premier international holiday destination capable of tripling current air arrival numbers to 250,000 within two years, according to minister of tourism Cecil McKie, rests on its initial conceptualization and justification in Prime Minister Ralph Gonsalves “historic” speech at the Methodist Church Hall on Monday, August 8, 2005, in which he argued that since his Unity Labour Party’s election to office on March 28, 2001, his government has been:

“Pushing vigorously for the building of an international airport at Argyle to such an extent that this project has started already [my italics], though the actual construction is yet to commence”.

So, part of the second reality check is that work on bringing AIA to its present state began over 14 years ago, not from the beginning of the earthworks, which commenced over seven years later on August 13, 2008, (following a lengthy period of relocating most of the 135 houses that fell within the airport zone). This is in not much out of line with many large construction projects around the world, which often require lengthy planning, designing, consulting, lobbying, surveying, financing, zoning, among other requirements, before a ceremonial shovel scoops up the first mound of dirt.

Indeed, it is during this pre-construction phase – in our case some seven years – that the viability of the project, the second part of this reality check, is repeatedly questioned and challenged, a process that sometimes results in its abortion. For example, large condominium housing projects all around the world are regularly cancelled when not enough potential homeowners buy units in the building(s) prior to any construction activity. (Those who have made down payments are reimbursed according to the provisions of the purchase agreement they had signed.)

What this means is that issues that arise during the pre-construction phase are simply part of the larger feasibility study such ambitious building efforts require. In the case of cancelled condominium projects, the failure to pre-sell a sufficient number of units is a clear sign that it would be foolhardy to proceed any further.

This brings me to the third retrospective reality check.

Perhaps the most telling and most dissected words in the prime minister’s historic speech are the following:

“(1) Does St Vincent and the Grenadines really need an international airport?

“(2) And if we need one, can we afford one?

“Fundamentally, both questions are inter-related. Having studied this issue for many years, it is clear to the ULP administration and its leadership that the full realisation of the potential of our country’s growth and development hinge on an international airport, among other vital considerations.

“The requisites of economic diversification and regional and international competitiveness demand an international airport. Our country’s tourism potential would not be fully realised unless we build an international airport. And tourism is likely to be our main foreign exchange earner for a long time to come… Foreign investors often shy away from St Vincent and the Grenadines when the limitations of air access arise due to the absence of an international airport… Moreover, air access difficulties constitute a practical brake on the movement of our nationals who reside in North America and Europe in returning to their homeland as frequently as many of them would like…

“In replying to the query: Can we afford an international airport? I retort with another: Can we afford not to have an international airport? … I realise that the international airport in the short-to-medium term will not be able to generate enough revenues to pay for the costs of its construction. However, in the long-run it will be economically viable. In any event, without it we are likely to be severely hampered in our thrust for further economic development.”

Herbert Samuel has already carefully dissected and successfully debunked some of the logical and other shortcomings in these and other assertions in the prime minister’s address in the essay referred to above. I have questioned many of their underpinnings as well, including the false rationale for building AIA, the poor potential of AIA for increasing our tourism numbers, and the fallacy that “air access difficulties constitute a practical brake on the movement of our nationals who reside in North America and Europe in returning to their homeland as frequently as many of them would like’’.

What I neglected to mention in these essays was that the prime minister presented no evidence that “Foreign investors often shy away from St Vincent and the Grenadines” because we have no international airport. On the contrary, the absence of an international airport has never prevented foreign interests from investing heavily in tourism development in our enchanting Grenadines for over four decades. Nor did it prevent foreign investors from building factories to manufacture export items at Campden Park and elsewhere during the 1960s and later before the cheaper Asian labour market drew them away.

Nor does Dr Gonsalves’ statement that “the international airport in the short-to-medium term will not be able to generate enough revenues to pay for the costs of its construction” mean very much, even assuming that he was referring to the spin-off revenue from building an international airport, given that airports all over the world, including major hubs, are chronic money losers as stand-alone facilities.

If by the short-term Dr Gonsalves means three years and by the medium-term ten years, he failed to present any evidence that the costs of building, running, and servicing the huge debts on the airport would at least be balanced by the large employment, business profit, and taxation gains to the SVI tourist and allied sectors. Again, my own analysis, presented in 20 essays (see below), suggests the AIA will never produce anything close to a net value-added benefit to our economy.

More important still, the prime minister’s rhetorical question: “Can we afford not to have an international airport?” suggests that he sees the need for an international airport as axiomatic, a self-evident truth that brooks no counter reply, and hence needs no careful study.

If this axiom is truly self evident, then my third and central retroactive reality check, a search for what appears to AIA’s missing or lost economic feasibility studies, is unnecessary. This is compounded by the apparent lateness of my search: how can I possibly want to investigate the feasibility of a project that is nearly complete?

But what if Dr Gonsalves’ axiom is not an axiom at all but a groundless conjecture that needs to be substantiated on logical and empirical grounds before it can be accepted as foundational? If so, what I perceive as the looming failure of an ill-conceived airport adventure will necessitate a careful and thoughtful post mortem – including a detailed forensic audit – especially when no lessons seem to have been learned from the failure of the James F. Mitchell Airport in Bequia, a decaying facility now serviced mainly by a few tiny aircraft flying out of Barbados.

So, rather than being years behind the time, as some might contend, I may actually be well ahead of myself: a comprehensive examination of the failure of AIA would logically begin with an analysis of why various feasibility studies that purportedly supported the building of the airport were so terribly wrong.

What then is a “feasibility study” and why is it needed? Briefly, it is a study and resultant report that “aims to objectively and rationally uncover the strengths and weaknesses of a … proposed venture, opportunities and threats present in the environment, the resources required to carry through, and ultimately the prospects for success. In its simplest terms, the two criteria to judge feasibility are cost required and value to be attained”. As in my example of condominium developments, feasibility studies are needed to allow for the abandonment of unaffordable or unsustainable building projects before they are even started.

That environmental impact and technical assessments, the latter dealing mainly with the location of the airport, were carried out prior to its construction are not in doubt, an observation Mr Samuel also agreed with. What seems to be missing or lost is a detailed analysis of the economic feasibility measures of constructing an international airport on the mainland regardless of its location.

Economic feasibility refers to the commercial pluses and minuses that the proposed project will yield. It includes identification and quantification of all the financial gains and losses on the various sectors that may be impacted. This assessment typically involves a cost/benefits analysis.

In claiming that AIA’s economic feasibility studies may be missing or lost, I refer to the same essay written by Mr Samuel who categorically stated that “…there had been no economic feasibility analysis performed on the proposed [AIA] project” and that Dr Gonsalves “neatly sidestepped the absolute first requirement for a publicly-funded development project in modern times [in his 2005 address] that there must be an analysis and assessment of the costs and the offsetting benefits of the [AIA] enterprise.”

In his rebuttal, AIA CEO Dr Matthias vigorously tried to shoot down these claims by unequivocally stating that there were indeed several economic feasibility studies of AIA, some of which were referred to by the prime minister in his 2005 speech:

“This discussion on the economics of developing an international airport on mainland St Vincent, presented on pages 7 and 8 of the Hon. Prime Minister’s speech, was also informed by an updated report prepared in 2005 by Marshall Macklin and Monaghan (MMM), the Canadian consulting firm referred to earlier. They were again retained in 2005 by the government to update the cost, and other matters, contained in their 1998 report entitled ‘St. Vincent Airport Development, Phase 1, Final Report’. For public information, the Hon. Prime Minister’s speech is made available on IADC’s website.

“If, for whatever reason, the author chose to ignore the economic discussion in the same speech from which he quoted so heavily, in researching for his lengthy paper, surely, he could have inquired into the extant studies to which the speech referred. Can anyone be considered a serious professional ignoring publicly available information and making reckless and bold assertions that contradict factual information in the public sphere?”

As a “serious professional” myself, I carefully perused the publically available reports referred to by Dr Matthias, plus the prime minister’s 2005 address, each of which can be accessed at the SVG government embassy website (and invite readers, regardless of their preconceptions, biases, or political affiliation to do the same so they can make their own informed assessments). My conclusion is that none of them referenced, let alone carefully evaluated, the two key issues identified by the prime minister in his 2005 address: the need for an international airport and the affordability of such an airport based on cost-benefits considerations.

The evidence for my conclusion is as follows:

1. The prime minister’s 2005 address (as referred to above). Both Mr Samuel and I have shown that what Dr Gonsalves said in 2005 can in no way be considered as forming even a sliver of an economic feasibility study.

2. Kocks Consult GmbH, St. Vincent Airport Development, Pre-investment Study Inception Report, 1993. This 25-page study commissioned by the James F. Mitchell government was concerned mainly with site selection feasibility, the main topic of the 12 studies that preceded it, and contains a single unsubstantiated and inane sentence declaring that, “demand [for a new international airport] will itself be largely stimulated by supply of appropriate airport infrastructure,” an “if you build it, they will come” fairy tale contradicted by the examples of countless international airports around the world that have been built to meet pre-existing growth in demand.

3. Kocks Consult GmbH, Argyle International Airport Project Environmental Impact Assessment Final Report, 2008. This 253-page study commissioned by the Dr Ralph E. Gonsalves government simply elaborated on its technical and environment aspects of the 1993 Report. The Report’s only statement about the economic viability of the project was that:

“According to the conviction of the GoSVG (Government of SVG) the requisites of economic development and regional and international competitiveness demand an international airport allowing direct access from and to markets in North America, Canada and Europe” (p.20).

Parroting Dr Gonsalves 2005 speech, this statement is about as far removed from a rational, evidence-based, and objective cost/benefits analysis as part of a larger economic feasibility study as one could imagine. But this was not Kocks Consult’s fault. It was the fault of the guidelines provided to them by the Ralph Gonsalves regime.

4. Marshall, Macklin and Monaghan [MMM], Phase 1, Final Report – Airport Development St Vincent, 1998. Also commissioned by the Mitchell government, the 339-page MMM study comes closest of all airport studies to being an actual economic feasibility analysis based on cost analyses of different airport and runway configurations at several SVI site locations. But a critical limitation of the study was the absence of any benefits analysis based on a well-founded predicted increase in vacation and other visitors, new hotel development, other business expansion, increased employment, and so on. Still, the Canadian consultants argued against building a new airport and concluded that the only economically viable cost option was a limited renovation of the existing E. T. Joshua Airport, a position contrary to Dr Gonsalves assertion in his 2005 speech that “All of the studies generally show a recurring theme of the technical unsuitability and lack of financial and economic viability for the expansion of the E.T. Joshua Airport at Arnos Vale.”

According to Rudy Matthias, MMM was “… again retained in 2005 by the government to update the cost, and other matters, contained in their 1998 report” but I could find no such update to ascertain whether the consultants had reversed their earlier stance.

Should we be surprised that the single largest and most expensive project in the history of SVG was implemented without a proper economic feasibility study while ignoring the findings of the closest approximation to one, the MMM report? Not really. The same holds true for the Egyptian Pyramids, the Roman Coliseum, nearly all Olympic stadia and allied facilities ever built, most other modern sports facilities, and many costly yet underused or redundant international airports – nearly all built with borrowed public funds in the absence of much public consultation either mainly to pacify the masses with a circus-like shock-and-awe display of wealth and grandeur or to satisfy the vanity of the ruling elite.

But there is a fundamental difference: SVG is not an empire like ancient Egypt or Rome; nor is it a large modern nation eager to increase its local and international prestige even if this involves building underused money-losing public facilities. We are a poor, highly indebted, revenue-challenged country with 6,000 people on Poor Relief and some 40 percent of able-bodied adults unemployed or underemployed whose misguided AIA project has largely been funded by massive borrowing.

So, where are the missing economic feasibility studies? Ask Ralph … and his political predecessors, each of whom set the terms of reference for at least 15 different airport studies.

Better still, ask me. There are no genuine economic cost-benefit studies (save those posted on this site and elsewhere by commentators like Mr Samuel, myself, and perhaps a few others) for one simple reason: any objective study by competent and independent consultants would have concluded that the economic benefits of building such an international airport anywhere on SVI would be overwhelmed by its costs.

All the juvenile landing of pint-sized aircraft on an unfinished runway, bible quoting and scriptural exegesis, chest pounding and other histrionics, pretentious ground kissing, and mock crying in the world by the Honourable Dr Ralph E. Gonsalves will never change this fact.

***
This is the 21st in a series of essays on the folly of the proposed Argyle International Airport.

My other AIA pieces may be found at:

Get ready for a November election in St Vincent and the Grenadines! But which November?
Lessons for Argyle International Airport from Canada's Montreal-Mirabel International Airport
Lessons for Argyle International Airport from the cruise ship industry
Lessons from Target Canada for Argyle International Airport in St Vincent
Lessons from Trinidad and Tobago for Argyle International Airport
The dark side of tourism: Lessons for Argyle Airport
Why Argyle won't fly: Lessons from Dominica
Ken Boyea and the Phantom City at Arnos Vale
Airport envy Vincie-style
Fully realising our country's tourism potential
Airport without a cause
The unnatural place for an international airport
The Potemkin Folly at Argyle
False patriotism and deceitful promises at Argyle
Airport politics and betrayal Vincie-style
Phony airport completion election promises, Vincie-style
Is Argyle International Airport really a ‘huge game-changer for us’?
Has the cat got your tongue, prime minister?
More proof that Argyle won't fly
Our very own Vincentian cargo cult at Argyle

C. ben-David
 
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Comments:

Observer:

"Missing Argyle Airport Feasibility Studies". So we are building the largest capital project in the history of SVG, without relevant and vital studies. Ops! Makes no sense to me.

Why would someone approached friendly governments, agencies, and banking institutions seeking funding for a project of this magnitude, and do not have the proper documents?

What to do with all those private jets that's been parked on the Tarmac, for days on the Grenadines Island of Canouan? Vincentians, we can't let this opportunity passed us by. Linking SVG with the international community via proper air transportation. On the horizon is Chocolate, and Coffee production. C.ben-David, Vincentians are more educated than before. Thanks to Dr Gonsalves and the ULP for preparing us for the task ahead. So my brother please don't try to pull a fast one on us like your (Twin) brother Peter Binose.

We will continue to support development and progress in our BELOVED SVG. I am please to update you guys on continued progress within the Health Sector. Yesterday I had an opportunity to travel the Leeward course of the Island. To see what's taking place down there. I'm pleased with the progress so far on the Buccament Polyclinic. Another magnificent project! Go, go, ULP! Improve the country for all a we.

Wait a minute, I just ran into "JUSTICE" somewhere down the road. I sent him to meet the NDP cause they are protesting for justice. Story changes faster than a speeding bullet.

Peter Binose:

David where are you? Isn't it exciting? Argyle airport according to Gonsalves in November last is due to open in February 2016. There will be 10 wide bodied jets flying in every day with 400 passengers on each of them.

People will be able to fly into Saint Vincent directly from their home town in Canada, the UK and America, even if they do not even have an airport.

Gonsalves said last year he has $400 million in cash to complete the airport so he will not need to borrow another cent from petrocarib, isn't that spiffing news David. I am sure you will be rejoicing at the good news David.

I hope all you in the Diaspora are rejoicing at being able to visit us in only 5 weeks time directly from any bus stop close to where you live.


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