THEY STARTED IT: WORLD AIRWAYS AND RITETIME

UNCLAS SECTION 01 OF 02 LAGOS 000337

SIPDIS

STATE PASS DOT FOR KEVIN SAMPLE

E.O. 12958: N/A
TAGS: EAIR ECON CASC SOCI ASEC AMGT NI
SUBJECT: THEY STARTED IT: WORLD AIRWAYS AND RITETIME
TRADE ACCUSATIONS

REF: LAGOS 83


1. (U) Summary: World Airways and Ritetime Aviation and
Travel Service executives called on Mission personnel
February 9 and 10, respectively. Both groups related
the series of events leading to World's December 2003
decision to suspend its scheduled charter flights
between the United States and Nigeria. Their accounts
differ wildly. Mission personnel recommended that the
two sides meet to discuss their differences, but
reconciliation does not seem likely, particularly with
heavily damaged reputations and anywhere from $1.3 to
$2 million at stake. Not surprisingly, the 75
passengers still holding tickets for February and March
World Airways flights will have to make alternate
travel arrangements. End summary.


2. (U) World Airways executives say the company's
booking agent, Ritetime Aviation and Travel Service,
owes the company nearly $2 million in back payments.
This, they say, was the major reason behind the
airline's December 2003 decision to suspend all flights
between the United States and Nigeria. Ritetime's late
payments reached such high levels in late 2003 that
despite bank assurances that the payments would be made
(note: the airline's managers now believe some of these
letters were forged),World executives deemed the
company's financial exposure too great to continue
flying. World says it delivered a notice of
cancellation to Ritetime on December 15 and refused to
fly beyond the December 31 expiration of the firms'
contract. Company executives understood this would
leave hundreds of passengers stranded, but they decided
they could not continue operating without being paid.
They claim they had no control over Ritetime's ticket
sales and had no way of knowing how many people would
be affected by the cancellations. They admit having
made regrettable business decisions, but they lay much
of the blame for the companies' fall-out at Ritetime's
feet.


3. (U) Ritetime's account differs wildly. Company
executives admit owing World only $1.3 million and say
they explained several times that the idiosyncrasies of
the Nigerian financial system (namely, that all
payments are made in cash) would necessarily make
payments late. Ritetime executives also take issue
with World's use of funds, particularly where catering
services and the handling of excess baggage are
concerned. They object to World's decision to provide
an MD-11 freighter to carry December travelers' extra
bags to Nigeria, saying the company could have saved
money by putting the bags on future flights. World
executives, for their part, say this would have taken
much too long and insist they had no control over the
amount of extra baggage accepted by Ritetime when
passengers checked in. Ritetime managers believe World
was solely responsible for transporting passengers and
bags.


4. (U) Ritetime executives say they regret having left
people stranded in December and January, but they put
the blame squarely on World's shoulders, claiming their
contract expired not on December 31 but on January 31.
Ritetime executives also say the two firms agreed in
late 2003 to extend their contract to November 30,
2004, something World did not mention. World
executives said, however, that they believed the
contract's third page had been substituted since
Nigerian Central Bank officials reported a bank account
in World Airways' name that company executives knew
nothing about. World executives expected to discuss
the matter with bank officials this week.


5. (U) Surprisingly, Ritetime executives believe they
may be able to reconcile with World and resume
operations later this year, perhaps as early as March.
They expressed dismay at their counterparts' refusal to
talk, saying repeatedly they believed they could reach
an agreement if World would come to the negotiating
table.


6. (U) World executives show no signs of accommodation.
They have no desire, they say, to continue working with
Ritetime, and they plan to take legal action to recover
their money. In the meantime, World is looking for a
new booking agent. Executives say they hope to re-
enter the market later this year, perhaps as early as
June. Next time, they say, they will present a
position paper to GON officials, enlist the support of
the Nigerian Civil Aviation Authority (NCAA),and
handle passengers' reservations themselves. World
executives say a Monday morning meeting with NCAA
officials went well, and they expect to have the GON's
support if they decide to resume operations in Nigeria.


7. (U) Comment: Both firms' reputations were heavily
damaged by World's decision to suspend operations.
Hundreds of passengers were left stranded in the U.S.
and Nigeria, a fiasco that was widely covered by the
media on both sides of the Atlantic. Most returned
home in mid-January, but a handful, mostly people who
were unaware of World's cancellations, remain in Lagos.
Both World and Ritetime executives say they are working
to refund the passengers' money or make alternate
travel arrangements. Given the companies' damaged
reputations, World's financial losses, and the latter's
animosity toward Ritetime, reconciliation is a pipe
dream. Mission personnel urged the two sides to meet,
but it seems unlikely that World will agree. Their
next meeting will probably be in court. End comment.

HINSON-JONES