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Was Mike Henry right about Virgin Atlantic deal?
Reports have emerged that the loss-making Italian national carrier, Alitalia, recently fetched a record sum of more than 30 million pounds sterling for a pair of prime take-off/landing slots at Heathrow airport in London, England. This was part of 92 million euros (67 million pounds), which Alitalia pulled in from three separate deals involving nearly a quarter of its Heathrow slots.
The record deal sharply contrasted the US$5 million which Air Jamaica recently fetched for some of its prime slots at the same airport from Virgin Atlantic Airways in a deal, which was brokered under the previous People’s National Party (PNP) administration and has since been supported by the present Jamaica Labour Party (JLP) government.
Of immediate significance was that anything like the amount taken in from the Alitalia deal could have impacted significantly on Air Jamaica’s extensive debt portfolio. Similarly, assertions from numerous quarters that Virgin boss, Sir Richard Branson, must have laughed all the way to the bank with the Air Jamaica deal have no doubt picked up credence.
The position taken by Transport & Works Minister Mike Henry on the Virgin Atlantic deal cost him the Air Jamaica portfolio. This was after he vehemently opposed the deal, contending that his research had pointed to the US$5 million price as a “giveaway” to the British carrier. He insisted that the new government should fully review the deal it inherited, including the entire financial and logistical implications, plus all the available options, before deciding on the Virgin deal. But instead, Henry’s stand-off, including him snubbing Branson on the latter’s arrival in Jamaica on the inaugural Virgin flight to Jamaica under the deal, resulted in Prime Minister Bruce Golding abruptly relieving the transport minister of the responsibility for Air Jamaica.
‘Open Skies’ treaty
Henry had postured the position that intense competition for take-off and landing slots at Heathrow — one of the world’s most congested airports, which handles more than 67 million passengers a year on only two runways — was sharply sending up the value of the slots. This he tied to the ‘Open Skies’ treaty, which was negotiated earlier this year, and is to come into effect at the end of March 2008.
From that date, the treaty will grant any US or European carrier the right to fly from any point in the US to any point in the European Union (EU), thereby ending previous anti-competition restrictions. The restrictions had, in the case of Heathrow airport, limited access to the lucrative direct routes between Heathrow and the US to only four airlines — British Airways and Virgin Atlantic from the United Kingdom (UK), and American Airlines and United Airlines from the US.
True to Henry’s assertions, reports out of London have confirmed that the value of take-off and landing slots at Heathrow has more than doubled within the last two years. Demand was said to have been strong from not only US carriers but also from fast-rising airlines from India and the Middle East, and from home-based UK carriers like British Airways and Virgin Atlantic.
Even more than Henry predicted, the price for a prime pair of daily peak hour early morning slots — the hours most convenient for services arriving from the US —0 has climbed above 30 million pound sterling.
Efforts to get a comment from Henry proved futile yesterday, as he was reported to be travelling overseas. However, in a letter to a local newspaper last week, he stated that he had got past the disappointment he had over the outcome of his stance on the Air Jamaica/Virgin deal.
Political watchers, in commenting on the Alitalia deal, pointed to what they suggested was a clear indication of the informed and astute approach that was taken by Minister Henry, which they said had now left the country to ponder how things could have gone had his position been at least fully accommodated by the government.
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Reports have emerged that the loss-making Italian national carrier, Alitalia, recently fetched a record sum of more than 30 million pounds sterling for a pair of prime take-off/landing slots at Heathrow airport in London, England. This was part of 92 million euros (67 million pounds), which Alitalia pulled in from three separate deals involving nearly a quarter of its Heathrow slots.
The record deal sharply contrasted the US$5 million which Air Jamaica recently fetched for some of its prime slots at the same airport from Virgin Atlantic Airways in a deal, which was brokered under the previous People’s National Party (PNP) administration and has since been supported by the present Jamaica Labour Party (JLP) government.
Of immediate significance was that anything like the amount taken in from the Alitalia deal could have impacted significantly on Air Jamaica’s extensive debt portfolio. Similarly, assertions from numerous quarters that Virgin boss, Sir Richard Branson, must have laughed all the way to the bank with the Air Jamaica deal have no doubt picked up credence.
The position taken by Transport & Works Minister Mike Henry on the Virgin Atlantic deal cost him the Air Jamaica portfolio. This was after he vehemently opposed the deal, contending that his research had pointed to the US$5 million price as a “giveaway” to the British carrier. He insisted that the new government should fully review the deal it inherited, including the entire financial and logistical implications, plus all the available options, before deciding on the Virgin deal. But instead, Henry’s stand-off, including him snubbing Branson on the latter’s arrival in Jamaica on the inaugural Virgin flight to Jamaica under the deal, resulted in Prime Minister Bruce Golding abruptly relieving the transport minister of the responsibility for Air Jamaica.
‘Open Skies’ treaty
Henry had postured the position that intense competition for take-off and landing slots at Heathrow — one of the world’s most congested airports, which handles more than 67 million passengers a year on only two runways — was sharply sending up the value of the slots. This he tied to the ‘Open Skies’ treaty, which was negotiated earlier this year, and is to come into effect at the end of March 2008.
From that date, the treaty will grant any US or European carrier the right to fly from any point in the US to any point in the European Union (EU), thereby ending previous anti-competition restrictions. The restrictions had, in the case of Heathrow airport, limited access to the lucrative direct routes between Heathrow and the US to only four airlines — British Airways and Virgin Atlantic from the United Kingdom (UK), and American Airlines and United Airlines from the US.
True to Henry’s assertions, reports out of London have confirmed that the value of take-off and landing slots at Heathrow has more than doubled within the last two years. Demand was said to have been strong from not only US carriers but also from fast-rising airlines from India and the Middle East, and from home-based UK carriers like British Airways and Virgin Atlantic.
Even more than Henry predicted, the price for a prime pair of daily peak hour early morning slots — the hours most convenient for services arriving from the US —0 has climbed above 30 million pound sterling.
Efforts to get a comment from Henry proved futile yesterday, as he was reported to be travelling overseas. However, in a letter to a local newspaper last week, he stated that he had got past the disappointment he had over the outcome of his stance on the Air Jamaica/Virgin deal.
Political watchers, in commenting on the Alitalia deal, pointed to what they suggested was a clear indication of the informed and astute approach that was taken by Minister Henry, which they said had now left the country to ponder how things could have gone had his position been at least fully accommodated by the government.
GO BACK
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