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EDITORIAL - Time for a cold, hard look at Air Jamaica
published: Thursday | October 26, 2006 <DIV class=KonaBody>
As this newspaper predicted last week, the directors of Air Jamaica have taken to the Government a new plan for restructuring the airline, which is to be considered by a subcommittee of the Cabinet.
Precisely what the managers of Air Jamaica want and what they offer in return have not been made public, but we can safely assume that whatever it is they have asked for includes lots of money. For that is the constant of Air Jamaica, a seemingly insatiable appetite for cash from the Jamaican taxpayer.
In the past, Jamaicans have even with gritted teeth been willing to absorb more than a US$1 billion of the airline's losses over the past dozen years - over US$700 million of which came during a period when Air Jamaica was ostensibly in Private sector control. Since the Government regained ownership of the airline at the end of 2004, it has already had to cover over US$220 million in losses, and by year-end that figure will have surpassed US$300 million. This, of course, does not include the other operational subsidies, including the state's assumption of its debts as contingent liability, that are enjoyed by Air Jamaica.
Jamaicans been been generous to the airline, primarily for two reasons. The first, for the ordinary citizen, there is a sense of pride that goes with the airline; it is one of those potent symbols of national achievement. This 'feel good' factor was particularly strong in the 1990s during private sector management, when Air Jamaica assumed this expansive persona.
At a policy level, the argument of Air Jamaica's strategic economic role has won support: it is an important catalyst for the tourism sector, assuring aviation seats in and out of the island, which would not be the case with its absence. However, there has been no detailed and rigorously empirical research and analysis to determine Air Jamaica's net benefit to tourism and the economy and what would be the real impact if it did not exist.
It seems that this work needs to be done and for ministers, when they come to analyse the latest reorganisation plan, to tell the Air Jamaica managers that they should not come expecting a cheque - blank or otherwise. Indeed, we need to begin to ask of ourselves and of Air Jamaica whether Jamaican taxpayers can, and should be willing, to afford this financial burden. Should it not be allowed to be one of the victims of the fallout in what is an exceedingly difficult global industry?
The fact is that US$1 billion, or over J$66 billion, is an awful lot of money, which, if it was available, would be sufficient to fund the proposed overhaul of the education system, with cash left to put into health and security. Indeed, $66 billion is nearly as much as the entire on-budget allocation for infrastructure over the past decade.
The long-standing, knee-jerk reaction that the sky will fall in to crush tourism in the absence of Air Jamaica is no longer an adequate response to any suggestion that we might have to do without a national airline. It is time that this option be placed firmly on the table along with the possibility of Air Jamaica perhaps merging with other regional airlines. <HR>The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.</DIV>
published: Thursday | October 26, 2006 <DIV class=KonaBody>
As this newspaper predicted last week, the directors of Air Jamaica have taken to the Government a new plan for restructuring the airline, which is to be considered by a subcommittee of the Cabinet.
Precisely what the managers of Air Jamaica want and what they offer in return have not been made public, but we can safely assume that whatever it is they have asked for includes lots of money. For that is the constant of Air Jamaica, a seemingly insatiable appetite for cash from the Jamaican taxpayer.
In the past, Jamaicans have even with gritted teeth been willing to absorb more than a US$1 billion of the airline's losses over the past dozen years - over US$700 million of which came during a period when Air Jamaica was ostensibly in Private sector control. Since the Government regained ownership of the airline at the end of 2004, it has already had to cover over US$220 million in losses, and by year-end that figure will have surpassed US$300 million. This, of course, does not include the other operational subsidies, including the state's assumption of its debts as contingent liability, that are enjoyed by Air Jamaica.
Jamaicans been been generous to the airline, primarily for two reasons. The first, for the ordinary citizen, there is a sense of pride that goes with the airline; it is one of those potent symbols of national achievement. This 'feel good' factor was particularly strong in the 1990s during private sector management, when Air Jamaica assumed this expansive persona.
At a policy level, the argument of Air Jamaica's strategic economic role has won support: it is an important catalyst for the tourism sector, assuring aviation seats in and out of the island, which would not be the case with its absence. However, there has been no detailed and rigorously empirical research and analysis to determine Air Jamaica's net benefit to tourism and the economy and what would be the real impact if it did not exist.
It seems that this work needs to be done and for ministers, when they come to analyse the latest reorganisation plan, to tell the Air Jamaica managers that they should not come expecting a cheque - blank or otherwise. Indeed, we need to begin to ask of ourselves and of Air Jamaica whether Jamaican taxpayers can, and should be willing, to afford this financial burden. Should it not be allowed to be one of the victims of the fallout in what is an exceedingly difficult global industry?
The fact is that US$1 billion, or over J$66 billion, is an awful lot of money, which, if it was available, would be sufficient to fund the proposed overhaul of the education system, with cash left to put into health and security. Indeed, $66 billion is nearly as much as the entire on-budget allocation for infrastructure over the past decade.
The long-standing, knee-jerk reaction that the sky will fall in to crush tourism in the absence of Air Jamaica is no longer an adequate response to any suggestion that we might have to do without a national airline. It is time that this option be placed firmly on the table along with the possibility of Air Jamaica perhaps merging with other regional airlines. <HR>The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.</DIV>