Tweet
.... extortion??
Encourage competition and if you must spend money... do so on marketing, not direct subsidies to private companies.
A nail in Air Jamaica's coffin
published: Thursday | September 11, 2008
By Dennie Quill, Contributor
How can Tourism Minister Ed Bartlett claim that the Govern-ment's guarantee to American [COLOR=orange! important][COLOR=orange! important]Airlines[/COLOR][/COLOR] will not affect Air Jamaica? Not only will it affect Air Jamaica's current operations, it is likely to drive away potential investors. Having seen the lucrative Heathrow route given away for peanuts, I can understand why folks are angry at this latest deal with American, for they see it as a direct threat to their beloved Air Jamaica.
The current imbroglio over the agreement suggests the operatives at the Ministry of [COLOR=orange! important][COLOR=orange! important]Finance[/COLOR][/COLOR], who have a mandate to make the carrier divestment-ready by March 2009, are not in synch with the tourism team at Knutsford Boulevard.
Tourism destinations succeed or fail depending on reliable airlifts, a fact that [COLOR=orange! important][COLOR=orange! important]American [COLOR=orange! important]Airlines[/COLOR][/COLOR][/COLOR] is now exploiting in the face of tough times for the airline industry. The other airlines are expected to follow [COLOR=orange! important][COLOR=orange! important]suit[/COLOR][/COLOR]. So American et al are waving a big stick over small island nations which depend on tourism for their survival. American has done it to countries like Antigua, Santo Domingo, Aruba and Grenada. Note that none of these territories have a national airline so it was easy to aim a dagger at their hearts.
Struggling airline
But Jamaica has a struggling airline which the taxpayers continue to subsidise and which I submit only exists to support tourism and the Reggae Boyz and do the occasional hurricane evacuation. It's raison d'être was never to make money.
Here is how the US Virgin Islands responded to threats of reduced routes by American Airlines and demand for revenue guarantee from Continental and JetBlue. Their government immediately sought audience with Delta airlines, which has since doubled its flights to the island. The government then countered the airline's demands by initiating what they term 'marketing partnerships' with Delta, US Airways, American and Spirit. The deal will see the Virgin Islands spending US$1.6 million on advertisements in each of these airline's key cities. They have designed ads for newspaper and [COLOR=orange! important][COLOR=orange! important]radio[/COLOR][/COLOR] as well as bus wraps, billboards and signs at airports. By being creative, tourism officials in the US Virgin Islands have kept the revenue-guarantee seekers at bay. More pertinent than the response by the US Virgin Islands is whether Jamaica got the best deal it could in the circumstances.
Contingent guarantee
Let's look at two of the routes that are the subject of the contingent guarantee - Chicago and Miami. I can understand that Bartlett and his team were excited post-Olympics, by the fact that American would begin non-stop service between Chicago and Beijing starting in April 2009. However, the carrier has just changed the timetable to April 2010 instead and I am pretty sure it did not consult Jamaica in making this decision.
In the scheme of things, with the airlines facing high-operating costs and tough competition, they go where there is demand. This ex-plains why American started a service from Kingston to Fort Lauderdale this year, despite the fact that Air Jamaica and Spirit are already servicing this route. American needed no revenue guarantee here, for it knows a good gateway when it sees one.
Clearly, the tourism ministry is concerned about having regular and reliable airlifts to Jamaica. And, perhaps, Bartlett is a bit scared of not acting early. However, could the negotiating team have found more palatable ways of enticing American to remain in the market? For example, would it be cheaper to waive airport landing fees during the off-season? And if a revenue guarantee is the only way, shouldn't local hoteliers be called on to offer some support since they are the main beneficiaries? The smart tack is to provide incentives to the airlines serving the region rather than pay for empty seats, for if we capitulate to American, be sure the others will also demand similar consideration.
Encourage competition and if you must spend money... do so on marketing, not direct subsidies to private companies.
A nail in Air Jamaica's coffin
published: Thursday | September 11, 2008
By Dennie Quill, Contributor
How can Tourism Minister Ed Bartlett claim that the Govern-ment's guarantee to American [COLOR=orange! important][COLOR=orange! important]Airlines[/COLOR][/COLOR] will not affect Air Jamaica? Not only will it affect Air Jamaica's current operations, it is likely to drive away potential investors. Having seen the lucrative Heathrow route given away for peanuts, I can understand why folks are angry at this latest deal with American, for they see it as a direct threat to their beloved Air Jamaica.
The current imbroglio over the agreement suggests the operatives at the Ministry of [COLOR=orange! important][COLOR=orange! important]Finance[/COLOR][/COLOR], who have a mandate to make the carrier divestment-ready by March 2009, are not in synch with the tourism team at Knutsford Boulevard.
Tourism destinations succeed or fail depending on reliable airlifts, a fact that [COLOR=orange! important][COLOR=orange! important]American [COLOR=orange! important]Airlines[/COLOR][/COLOR][/COLOR] is now exploiting in the face of tough times for the airline industry. The other airlines are expected to follow [COLOR=orange! important][COLOR=orange! important]suit[/COLOR][/COLOR]. So American et al are waving a big stick over small island nations which depend on tourism for their survival. American has done it to countries like Antigua, Santo Domingo, Aruba and Grenada. Note that none of these territories have a national airline so it was easy to aim a dagger at their hearts.
Struggling airline
But Jamaica has a struggling airline which the taxpayers continue to subsidise and which I submit only exists to support tourism and the Reggae Boyz and do the occasional hurricane evacuation. It's raison d'être was never to make money.
Here is how the US Virgin Islands responded to threats of reduced routes by American Airlines and demand for revenue guarantee from Continental and JetBlue. Their government immediately sought audience with Delta airlines, which has since doubled its flights to the island. The government then countered the airline's demands by initiating what they term 'marketing partnerships' with Delta, US Airways, American and Spirit. The deal will see the Virgin Islands spending US$1.6 million on advertisements in each of these airline's key cities. They have designed ads for newspaper and [COLOR=orange! important][COLOR=orange! important]radio[/COLOR][/COLOR] as well as bus wraps, billboards and signs at airports. By being creative, tourism officials in the US Virgin Islands have kept the revenue-guarantee seekers at bay. More pertinent than the response by the US Virgin Islands is whether Jamaica got the best deal it could in the circumstances.
Contingent guarantee
Let's look at two of the routes that are the subject of the contingent guarantee - Chicago and Miami. I can understand that Bartlett and his team were excited post-Olympics, by the fact that American would begin non-stop service between Chicago and Beijing starting in April 2009. However, the carrier has just changed the timetable to April 2010 instead and I am pretty sure it did not consult Jamaica in making this decision.
In the scheme of things, with the airlines facing high-operating costs and tough competition, they go where there is demand. This ex-plains why American started a service from Kingston to Fort Lauderdale this year, despite the fact that Air Jamaica and Spirit are already servicing this route. American needed no revenue guarantee here, for it knows a good gateway when it sees one.
Clearly, the tourism ministry is concerned about having regular and reliable airlifts to Jamaica. And, perhaps, Bartlett is a bit scared of not acting early. However, could the negotiating team have found more palatable ways of enticing American to remain in the market? For example, would it be cheaper to waive airport landing fees during the off-season? And if a revenue guarantee is the only way, shouldn't local hoteliers be called on to offer some support since they are the main beneficiaries? The smart tack is to provide incentives to the airlines serving the region rather than pay for empty seats, for if we capitulate to American, be sure the others will also demand similar consideration.
