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British Airways has signalled plans to approach Jamaica for a similar deal on airlifts granted to American Airlines, saying otherwise it might be forced to cut flights to make the destination more profitable to fly.
British Airways is not saying that Jamaica is a lossmaker, only that it is "barely profitable" and the least lucrative of its Caribbean destinations.
"In fact, this year, I think we may make a loss," said Simon Talling-Smith, BA's newly appointed executive vice-president for the Americas in an interview with Wednesday Business.
Model deal with AA
"Kingston has always been a route where we struggled to make money and when you compare it against other Caribbean destinations, it probably makes less money," he said.
Talling-Smith, whose appointment suggests that British Airways is willing to fight for its regional markets in a period of downturn for commercial aviation, said that the deal that Jamaica has with AA is "a good model" for securing airlifts.
The arrangement, which requires American Airlines to bring new business to Jamaica out of the Chicago gateway, will see the Government compensating the carrier with US$4.5 million if load factors fell below certain levels.
"If that deal was a way to secure British Airways presence in Kingston and Jamaica, then that is definitely a conversation which we will have," he said.
The airline has not yet put a proposal to government, according to minister of tourism Ed Bartlett.
But Bartlett, on Tuesday, said he would be amenable if the airline could bring certain guarantees to the table.
"We are amenable to discussions where we are increasing airlifts and are securing new markets," said the tourism Minister.
He adds that those talks will likely take place around November 10-12 when he is scheduled to visit London, a trip that already includes a meeting with BA.
British Airways, which has been flying to Jamaica for 60 years, says it commands 70 per cent of the London to Kingston market. It currently operates three flights per week between Kingston and London.
But new rivalry as well as rising costs and falling travel markets worldwide has forced a new look at the conduct of business.
"We are taking a look at our entire world network and that includes the Caribbean and actually Jamaica," said Talling-Smith.
"Our business is in trouble just like every airline in the world is and we have to re-evaluate that network. The figures don't look good and therefore we have to work out either how can we make them better, how can we work with the government to improve the figures on this route or what do we need to change about the route," he said.
The UK carrier, he adds, is projecting flat profits this year.
"Unlike last fiscal year for BA, which was a bumpy but healthy year, we have gone from one of our best years ever to this year is going to be one of our poorest and we may not even make a profit because of our network," said the BA executive.
The British airline posted a pound875 million operating profit in 2007, which CEO Willie Walsh described as "outstanding" in light of spiralling fuel prices and the dramatic economic slowdown worldwide.
This was achieved by growing total revenues 3.1 per cent to pound8.8 billion, reducing operating costs by 0.7 per cent to pound7.9 billion and cutting back on employee costs by 4.9 per cent to almost pound2.2 billion.
Talling-Smith said BA wants to explore with Jamaica several measures to improve BA's service to the island, such as a smoother connections between Kingston and Montego Bay.
Bartlett would not say what new markets it would be looking to British Airways to help Jamaica break into, but it is understood that Jamaica sees promise in untapped markets in places like Russia, elsewhere in Europe and potentially China.
john.myers@gleanerjm.com
http://www.jamaica-gleaner.com/glean...business3.html
British Airways is not saying that Jamaica is a lossmaker, only that it is "barely profitable" and the least lucrative of its Caribbean destinations.
"In fact, this year, I think we may make a loss," said Simon Talling-Smith, BA's newly appointed executive vice-president for the Americas in an interview with Wednesday Business.
Model deal with AA
"Kingston has always been a route where we struggled to make money and when you compare it against other Caribbean destinations, it probably makes less money," he said.
Talling-Smith, whose appointment suggests that British Airways is willing to fight for its regional markets in a period of downturn for commercial aviation, said that the deal that Jamaica has with AA is "a good model" for securing airlifts.
The arrangement, which requires American Airlines to bring new business to Jamaica out of the Chicago gateway, will see the Government compensating the carrier with US$4.5 million if load factors fell below certain levels.
"If that deal was a way to secure British Airways presence in Kingston and Jamaica, then that is definitely a conversation which we will have," he said.
The airline has not yet put a proposal to government, according to minister of tourism Ed Bartlett.
But Bartlett, on Tuesday, said he would be amenable if the airline could bring certain guarantees to the table.
"We are amenable to discussions where we are increasing airlifts and are securing new markets," said the tourism Minister.
He adds that those talks will likely take place around November 10-12 when he is scheduled to visit London, a trip that already includes a meeting with BA.
British Airways, which has been flying to Jamaica for 60 years, says it commands 70 per cent of the London to Kingston market. It currently operates three flights per week between Kingston and London.
But new rivalry as well as rising costs and falling travel markets worldwide has forced a new look at the conduct of business.
"We are taking a look at our entire world network and that includes the Caribbean and actually Jamaica," said Talling-Smith.
"Our business is in trouble just like every airline in the world is and we have to re-evaluate that network. The figures don't look good and therefore we have to work out either how can we make them better, how can we work with the government to improve the figures on this route or what do we need to change about the route," he said.
The UK carrier, he adds, is projecting flat profits this year.
"Unlike last fiscal year for BA, which was a bumpy but healthy year, we have gone from one of our best years ever to this year is going to be one of our poorest and we may not even make a profit because of our network," said the BA executive.
The British airline posted a pound875 million operating profit in 2007, which CEO Willie Walsh described as "outstanding" in light of spiralling fuel prices and the dramatic economic slowdown worldwide.
This was achieved by growing total revenues 3.1 per cent to pound8.8 billion, reducing operating costs by 0.7 per cent to pound7.9 billion and cutting back on employee costs by 4.9 per cent to almost pound2.2 billion.
Talling-Smith said BA wants to explore with Jamaica several measures to improve BA's service to the island, such as a smoother connections between Kingston and Montego Bay.
Bartlett would not say what new markets it would be looking to British Airways to help Jamaica break into, but it is understood that Jamaica sees promise in untapped markets in places like Russia, elsewhere in Europe and potentially China.
john.myers@gleanerjm.com
http://www.jamaica-gleaner.com/glean...business3.html
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