US embassy cable - 04LAGOS337

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