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Trinidad Guardian
Caution needed on airlines link-up
Today's Editorial
Published: 19 Dec 2009
Today's Editorial
The news that the Jamaican Government has deemed Caribbean Airlines to be the preferred bidder for Air Jamaica should receive a cautious welcome from those who have dreamed for decades about the establishment of a single regional air carrier. It is indicative of the importance of Air Jamaica to our neighbour to the north that the country’s Prime Minister, Bruce Golding, took the time to fly to Port-of-Spain on Wednesday to hold talks with local officials on the future of the two airlines. Mr Golding’s unannounced visit took place on the eve of his presentation to Jamaica’s Parliament on the country’s US$1.3 billion loan agreement with the International Monetary Fund, which had been insisting that the loss-generating Jamaican air carrier be sold in order to ease the continuing burden of US dollar subsidies on the country’s treasury.
It would appear that some kind of commitment was provided by the folks in Port-of-Spain and that that commitment was enough for Prime Minister Golding to take to the bank. While it is clearly in Jamaica’s immediate national interest that it rid itself of the financial burden of continuing to operate the 100 per cent state-owned national carrier, the uncomfortable question that must be asked is whether it is in T&T’s national interest that 100 per cent state-owned Caribbean Airlines Ltd (CAL) acquire Air Jamaica. It matters not how the answer is framed, turned or spun, it simply would not be prudent for the Manning administration to take T&T’s diminishing store of foreign savings to purchase equity in an airline that has wracked up losses in the hundreds of millions and is burdened with considerable debts. The Government here should also be quite cautious on the issue of providing a guarantee for new loans for Air Jamaica and should completely avoid any proposal that speaks to the issue of T&T taxpayers assuming the Jamaican carrier’s debt.
While T&T is in a far better financial shape than Jamaica, it is no longer at the stage where it can afford to be profligate with taxpayers’ money. This situation is compounded by the fact that Caribbean Airlines continues to receive transfers from the Ministry of Finance amounting to $495,370,500 in the 2008 and 2009 fiscal years. The fact is that for the relationship between CAL and Air Jamaica to work it must be very firmly rooted in plans and proposals that make commercial sense for both airlines. It may be that this would mean Caribbean Airlines taking over the management of a new Air Jamaica, one that has been freed of all of its legacy obligations involving high salaries, unprofitable routes and poor management decisions. There must also be a very clear thinking on the issue of whether a single regional air carrier, given the huge costs involved in the creation of such an enterprise, is absolutely necessary.
The only way the relationship between the two airlines is going to work is if those on both sides of the aisle are convinced that they either swim together or they drown. On the issue of whether a single regional carrier is a necessity, it is instructive to note that the Government of Barbados has not had an equity stake in an international carrier for years but this has not stopped it from developing one of the most successful tourism economies in the region. Finally, wherever the flight between CAL and Air Jamaica takes us, it is vitally important that there be transparency and accountability right throughout the journey. This is vital given the lingering concerns among interested parties of both airlines about the sale of landing slots at Heathrow to British Airways and Virgin Air.
Caution needed on airlines link-up
Today's Editorial
Published: 19 Dec 2009
Today's Editorial
The news that the Jamaican Government has deemed Caribbean Airlines to be the preferred bidder for Air Jamaica should receive a cautious welcome from those who have dreamed for decades about the establishment of a single regional air carrier. It is indicative of the importance of Air Jamaica to our neighbour to the north that the country’s Prime Minister, Bruce Golding, took the time to fly to Port-of-Spain on Wednesday to hold talks with local officials on the future of the two airlines. Mr Golding’s unannounced visit took place on the eve of his presentation to Jamaica’s Parliament on the country’s US$1.3 billion loan agreement with the International Monetary Fund, which had been insisting that the loss-generating Jamaican air carrier be sold in order to ease the continuing burden of US dollar subsidies on the country’s treasury.
It would appear that some kind of commitment was provided by the folks in Port-of-Spain and that that commitment was enough for Prime Minister Golding to take to the bank. While it is clearly in Jamaica’s immediate national interest that it rid itself of the financial burden of continuing to operate the 100 per cent state-owned national carrier, the uncomfortable question that must be asked is whether it is in T&T’s national interest that 100 per cent state-owned Caribbean Airlines Ltd (CAL) acquire Air Jamaica. It matters not how the answer is framed, turned or spun, it simply would not be prudent for the Manning administration to take T&T’s diminishing store of foreign savings to purchase equity in an airline that has wracked up losses in the hundreds of millions and is burdened with considerable debts. The Government here should also be quite cautious on the issue of providing a guarantee for new loans for Air Jamaica and should completely avoid any proposal that speaks to the issue of T&T taxpayers assuming the Jamaican carrier’s debt.
While T&T is in a far better financial shape than Jamaica, it is no longer at the stage where it can afford to be profligate with taxpayers’ money. This situation is compounded by the fact that Caribbean Airlines continues to receive transfers from the Ministry of Finance amounting to $495,370,500 in the 2008 and 2009 fiscal years. The fact is that for the relationship between CAL and Air Jamaica to work it must be very firmly rooted in plans and proposals that make commercial sense for both airlines. It may be that this would mean Caribbean Airlines taking over the management of a new Air Jamaica, one that has been freed of all of its legacy obligations involving high salaries, unprofitable routes and poor management decisions. There must also be a very clear thinking on the issue of whether a single regional air carrier, given the huge costs involved in the creation of such an enterprise, is absolutely necessary.
The only way the relationship between the two airlines is going to work is if those on both sides of the aisle are convinced that they either swim together or they drown. On the issue of whether a single regional carrier is a necessity, it is instructive to note that the Government of Barbados has not had an equity stake in an international carrier for years but this has not stopped it from developing one of the most successful tourism economies in the region. Finally, wherever the flight between CAL and Air Jamaica takes us, it is vitally important that there be transparency and accountability right throughout the journey. This is vital given the lingering concerns among interested parties of both airlines about the sale of landing slots at Heathrow to British Airways and Virgin Air.