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EDITORIAL - Air Jamaica future shrouded in secrecy
published: Friday | May 25, 2007
Air Jamaica is not a private company whose actions and activities are solely the business of a handful of shareholders. The airline belongs to the Jamaican people, who, over a long period, have had to pay dearly for its existence. Indeed, taxpayers have covered nearly US$1billion of its losses over the past dozen years or so.
Moreover, taxpayers have been asked to fork out another US$60 million or so a year over a three-year period in the latest round or re-organisation by the airline, which the management says will finally bring the carrier to viability. But unlike when listed and privately held companies make such capital calls, Air Jamaica's shareholders are being asked to put up this cash almost totally in the dark.
There have been the broad sketches of a business plan, but it is severely lacking in detail. What is essentially management by director/management fiat has been apparent again in recent days over the decision by Air Jamaica to cut flights to London and to enter a code-sharing arrangement with Sir Richard Bronson's airline, Virgin Atlantic.
This deal has been widely reported in London; it is well known in the international travel and aviation industry; and it has apparently been alluded to by Jamaica's High Commissioner to Britain, Burchell Whiteman, during a briefing of Jamaicans in England. Yet at home it appears to be some big secret.
Indeed, on Tuesday, even after Virgin Atlantic had announced is plans to increase flights to Jamaica in October and British newspapers were speculating on the reasons why Air Jamaica did not enter a code-share pact with British Airways, Air Jamaica's chairman, O.K. Melhado, was being coy about the matter, suggesting that no deal has been done. He told this newspaper, "We're looking at all sorts of things ... The airline has not done well and we are looking at all aspects of our operations."
It is no secret that Air Jamaica has not done well. So, it is right that the management review all aspects of its operations, including the London route, in which it reportedly loses US$25 million a year. Indeed, this newspaper has been on record in suggesting the most radical solution of closing the airline and totally eliminating the losses. Other carriers, we believe, will fill the vacuum and Air Jamaica's departure is unlikely to be as detrimental to the island's tourist industry as many in the sector contend.
But our position does not obviate the need for facts. It seems to us that it makes eminent sense for the airline's management to tell the shareholders, the taxpayers of Jamaica, what decisions have been made on their behalf. What is the big secret?
For notwithstanding our own position about the future of the airline, if the decision is to keep it, Air Jamaica must be afforded the best opportunity for commercial success, otherwise it will continue to be a burden on taxpayers. In that regard, its shareholders should know what the terms of the code share agreement with Virgin are satisfied that access by Mr Bronson's route information does not prove detrimental to Air J's viability. And, there is the little matter about Air Jamaica's slots at Heathrow and whether they were "sold" to whom and on what terms.
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: Friday | May 25, 2007
Air Jamaica is not a private company whose actions and activities are solely the business of a handful of shareholders. The airline belongs to the Jamaican people, who, over a long period, have had to pay dearly for its existence. Indeed, taxpayers have covered nearly US$1billion of its losses over the past dozen years or so.
Moreover, taxpayers have been asked to fork out another US$60 million or so a year over a three-year period in the latest round or re-organisation by the airline, which the management says will finally bring the carrier to viability. But unlike when listed and privately held companies make such capital calls, Air Jamaica's shareholders are being asked to put up this cash almost totally in the dark.
There have been the broad sketches of a business plan, but it is severely lacking in detail. What is essentially management by director/management fiat has been apparent again in recent days over the decision by Air Jamaica to cut flights to London and to enter a code-sharing arrangement with Sir Richard Bronson's airline, Virgin Atlantic.
This deal has been widely reported in London; it is well known in the international travel and aviation industry; and it has apparently been alluded to by Jamaica's High Commissioner to Britain, Burchell Whiteman, during a briefing of Jamaicans in England. Yet at home it appears to be some big secret.
Indeed, on Tuesday, even after Virgin Atlantic had announced is plans to increase flights to Jamaica in October and British newspapers were speculating on the reasons why Air Jamaica did not enter a code-share pact with British Airways, Air Jamaica's chairman, O.K. Melhado, was being coy about the matter, suggesting that no deal has been done. He told this newspaper, "We're looking at all sorts of things ... The airline has not done well and we are looking at all aspects of our operations."
It is no secret that Air Jamaica has not done well. So, it is right that the management review all aspects of its operations, including the London route, in which it reportedly loses US$25 million a year. Indeed, this newspaper has been on record in suggesting the most radical solution of closing the airline and totally eliminating the losses. Other carriers, we believe, will fill the vacuum and Air Jamaica's departure is unlikely to be as detrimental to the island's tourist industry as many in the sector contend.
But our position does not obviate the need for facts. It seems to us that it makes eminent sense for the airline's management to tell the shareholders, the taxpayers of Jamaica, what decisions have been made on their behalf. What is the big secret?
For notwithstanding our own position about the future of the airline, if the decision is to keep it, Air Jamaica must be afforded the best opportunity for commercial success, otherwise it will continue to be a burden on taxpayers. In that regard, its shareholders should know what the terms of the code share agreement with Virgin are satisfied that access by Mr Bronson's route information does not prove detrimental to Air J's viability. And, there is the little matter about Air Jamaica's slots at Heathrow and whether they were "sold" to whom and on what terms.
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.
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