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'Open skies' devalues Virgin deal
published: Wednesday | March 19, 2008
WESTERN BUREAU:
With the dawn of 'open skies', air carriers at London's Heathrow Airport are fetching more than four times the amount that Air [COLOR=orange! important][COLOR=orange! important]Jamaica[/COLOR][/COLOR] reportedly received when it sold its slots to Virgin Atlantic Airways approximately eight months ago.
Continental Airlines has reportedly paid US$209 million (£105 million) for four pairs of slots, according to a United States Securities and Exchange filing cited by a report in The Mail on Sunday, while Air Jamaica is said to have earned £5.1 million (approximately J$700 million) on the sale of seven slots.
The Air Jamaica route was sold to cut annual losses of US$25 million, making the London route the national carrier's top lossmaker.
It was reported in the Financial Times that GB Airways, Air France and Alitalia sold the slots to Continental which will pay US$116 million for the summer season and an additional US$93 million for the next winter schedule.
Commenting on the new developments, Air Jamaica Chairman Shirley Williams noted that while in opposition, the Jamaica Labour Party (JLP) said the slots ought not have been sold, and "we maintain our stand, and are now vindicated because we could have gotten more than US$209 million for the seven slots".
Value should have been anticipated
She said the decision to sell was a precipitous one, "Everybody in the industry knew the open skies agreement was coming, so we should have anticipated the value of the slots."
However, a former member of the Air Jamaica board said the slots were irregular and did not have the same value. "The Air Jamaica slot wasn't a prime slot. It wasn't in the morning, they had different arrival and departure time each day. Air Jamaica slots had different arrival and departure on different days."
The board member said it, therefore, consumed a lot of plane hours, sitting and waiting for take-off, while reducing available [COLOR=orange! important][COLOR=orange! important]flying[/COLOR][/COLOR] hours.
"We could just not afford to continue to lose what was then US$2.5 million per month."
The [COLOR=orange! important][COLOR=orange! important]European [COLOR=orange! important]Union[/COLOR][/COLOR][/COLOR]-US Open Skies Agreement comes into effect on March 30, after being signed in Washington, DC on April 30, 2007.
The agreement allows any [COLOR=orange! important][COLOR=orange! important]airline[/COLOR][/COLOR] of the European Union and any airline of the United States to fly between any point in the European Union and any point in the United States. Airlines of the United States are also allowed to fly between points in the European Union. The near-bankrupt Italian airline Alitalia has sold some of its coveted landing slots at London's Heathrow Airport for a record £30 million, said a report from the Financial Times in December 2007.
published: Wednesday | March 19, 2008
WESTERN BUREAU:
With the dawn of 'open skies', air carriers at London's Heathrow Airport are fetching more than four times the amount that Air [COLOR=orange! important][COLOR=orange! important]Jamaica[/COLOR][/COLOR] reportedly received when it sold its slots to Virgin Atlantic Airways approximately eight months ago.
Continental Airlines has reportedly paid US$209 million (£105 million) for four pairs of slots, according to a United States Securities and Exchange filing cited by a report in The Mail on Sunday, while Air Jamaica is said to have earned £5.1 million (approximately J$700 million) on the sale of seven slots.
The Air Jamaica route was sold to cut annual losses of US$25 million, making the London route the national carrier's top lossmaker.
It was reported in the Financial Times that GB Airways, Air France and Alitalia sold the slots to Continental which will pay US$116 million for the summer season and an additional US$93 million for the next winter schedule.
Commenting on the new developments, Air Jamaica Chairman Shirley Williams noted that while in opposition, the Jamaica Labour Party (JLP) said the slots ought not have been sold, and "we maintain our stand, and are now vindicated because we could have gotten more than US$209 million for the seven slots".
Value should have been anticipated
She said the decision to sell was a precipitous one, "Everybody in the industry knew the open skies agreement was coming, so we should have anticipated the value of the slots."
However, a former member of the Air Jamaica board said the slots were irregular and did not have the same value. "The Air Jamaica slot wasn't a prime slot. It wasn't in the morning, they had different arrival and departure time each day. Air Jamaica slots had different arrival and departure on different days."
The board member said it, therefore, consumed a lot of plane hours, sitting and waiting for take-off, while reducing available [COLOR=orange! important][COLOR=orange! important]flying[/COLOR][/COLOR] hours.
"We could just not afford to continue to lose what was then US$2.5 million per month."
The [COLOR=orange! important][COLOR=orange! important]European [COLOR=orange! important]Union[/COLOR][/COLOR][/COLOR]-US Open Skies Agreement comes into effect on March 30, after being signed in Washington, DC on April 30, 2007.
The agreement allows any [COLOR=orange! important][COLOR=orange! important]airline[/COLOR][/COLOR] of the European Union and any airline of the United States to fly between any point in the European Union and any point in the United States. Airlines of the United States are also allowed to fly between points in the European Union. The near-bankrupt Italian airline Alitalia has sold some of its coveted landing slots at London's Heathrow Airport for a record £30 million, said a report from the Financial Times in December 2007.
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