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EDITORIAL - Air Jamaica's fundamental problems
published: Monday | November 13, 2006
Its lessor having been paid US$2 million, an Air Jamaica aircraft seized at the Miami International Airport last Wednesday, has since been returned to the fleet.
The action by the company has not only embarrassed the airline and the Jamaican Government, but caused a cancellation of flights and a severe disruption of Air Jamaica schedules. But the Miami episodes point to a more fundamental issue which has been raised recently in these columns and demands hard, honest debate.
And having looked at the matter, we have to arrive at the inevitable conclusion: that Jamaica cannot afford to maintain Air Jamaica - certainly not in its current form. In that regard, it is incumbent on the management directors and management of Air Jamaica to place the facts before the owners and for the Government to take the hard, but practical decisions.
In the process, we have to make the links between our decision, based to a not insignificant degree on sentiment, to afford Air Jamaica, and the price we have to pay elsewhere. Part of that price, if we choose to make the appropriate links, was highlighted in the press this past weekend: Jamaica's ranking in the United Nations Human Development Index.
The fact is that during a decade, up to end of 1994, when Air Jamaica was ostensibly under private ownership, it cost the country's taxpayers nearly $1 billion to keep the airline flying. We embraced its losses by scrimping on investment in health care, education and on-budget infrastructure development. But by the end of this year, with the airline having been back in government ownership for two years, the company will have lost another US$300 million. And if the truth be told, this accumulated deficit of US$1.3 billion doesn't capture the whole story. There is significant unaccounted for expenditure that has gone into Air Jamaica.
Now, the Government has restated its decision to provide a subsidy of US$30 million (approximately J$2 billion) a year to keep Air Jamaica airborne and has told the management to restructure the company to operate within that frame. We question, in the context of the international aviation industry and Air Jamaica's own history, whether it is achievable for the airline on its debt and operational trajectory to be salvageable as an on-going operational entity.
We have in the past, justified and continue to justify the taxpayers propping up of Air Jamaica on the grounds that it is a strategic resource; it flies nearly half of all passengers and one-third of the tourists to Jamaica. It has opened routes that other carriers did not fly and in its absence, we claim, Jamaica's vital tourism business would be short of airlift.
Maybe such arguments were strong in the past, but now they reject the reality of the global environment, growing competition and the effort by firms to pursue business wherever it exists. It is hardly credible to believe that without Air Jamaica, the country's tourism business would collapse.
If we let the private sector do the job, some of the resources that are freed can be invested in health, education, infrastructure, the justice system and the kinds of things that will improve our quality of life and lift Jamaica on the Human Development Index.
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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.
published: Monday | November 13, 2006
Its lessor having been paid US$2 million, an Air Jamaica aircraft seized at the Miami International Airport last Wednesday, has since been returned to the fleet.
The action by the company has not only embarrassed the airline and the Jamaican Government, but caused a cancellation of flights and a severe disruption of Air Jamaica schedules. But the Miami episodes point to a more fundamental issue which has been raised recently in these columns and demands hard, honest debate.
And having looked at the matter, we have to arrive at the inevitable conclusion: that Jamaica cannot afford to maintain Air Jamaica - certainly not in its current form. In that regard, it is incumbent on the management directors and management of Air Jamaica to place the facts before the owners and for the Government to take the hard, but practical decisions.
In the process, we have to make the links between our decision, based to a not insignificant degree on sentiment, to afford Air Jamaica, and the price we have to pay elsewhere. Part of that price, if we choose to make the appropriate links, was highlighted in the press this past weekend: Jamaica's ranking in the United Nations Human Development Index.
The fact is that during a decade, up to end of 1994, when Air Jamaica was ostensibly under private ownership, it cost the country's taxpayers nearly $1 billion to keep the airline flying. We embraced its losses by scrimping on investment in health care, education and on-budget infrastructure development. But by the end of this year, with the airline having been back in government ownership for two years, the company will have lost another US$300 million. And if the truth be told, this accumulated deficit of US$1.3 billion doesn't capture the whole story. There is significant unaccounted for expenditure that has gone into Air Jamaica.
Now, the Government has restated its decision to provide a subsidy of US$30 million (approximately J$2 billion) a year to keep Air Jamaica airborne and has told the management to restructure the company to operate within that frame. We question, in the context of the international aviation industry and Air Jamaica's own history, whether it is achievable for the airline on its debt and operational trajectory to be salvageable as an on-going operational entity.
We have in the past, justified and continue to justify the taxpayers propping up of Air Jamaica on the grounds that it is a strategic resource; it flies nearly half of all passengers and one-third of the tourists to Jamaica. It has opened routes that other carriers did not fly and in its absence, we claim, Jamaica's vital tourism business would be short of airlift.
Maybe such arguments were strong in the past, but now they reject the reality of the global environment, growing competition and the effort by firms to pursue business wherever it exists. It is hardly credible to believe that without Air Jamaica, the country's tourism business would collapse.
If we let the private sector do the job, some of the resources that are freed can be invested in health, education, infrastructure, the justice system and the kinds of things that will improve our quality of life and lift Jamaica on the Human Development Index.
--------------------------------------------------------------------------------
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.