Give us vision lest we perish...

[Willi]

Why we so blighted with dibi-dibi leadership?


'Air Jamaica more naive than a virgin'
By Al Edwards
Friday, June 01, 2007


The recent sale of Air Jamaica's slots at London's Heathrow Airport to Virgin Atlantic marks the further demise and diminution of the national carrier, knowledgeable airline sources contend.
But the sale of the airline's most profitable gateway was worsened by the fact that neither its senior management nor the minister of finance considered it necessary to inform the Jamaican public in a timely fashion, leaving that to the British media, the airline industry watchers told the Caribbean Business Report.

"Air Jamaica is more naive than a virgin," said one analyst who was making an obvious pun on Virgin Atlantic which has reportedly paid just under US$12 million for the slots which have been assessed by the experts to be worth anywhere between US$50 million and US$75 million.
Last week, head of Airports Authority of Jamaica, Dennis Morrison said that the Heathrow route cost Air Jamaica US$20 million a year in losses and this was the main reason for its exit from the London slot.
"Air Jamaica has not been able to reduce its hard costs and this latest move will hardly make a difference to that fact," predicted Tony Minvielle of Barclays Capital.
"Air Jamaica has significantly reduced its advertising and marketing spend and it has no clear plan to grow the airline and increase its revenues," he insisted. "This latest move in selling those Heathrow slots sends a signal to the world that Air Jamaica is shrinking.
"Nevertheless it's a great deal for Branson's Virgin Atlantic and he got those slots for a steal. With more hotel rooms available and even more under construction driven by Spanish firms, Branson will be quids in when arrivals pick up," said Minvielle.
He suggested that Air Jamaica had a very loyal passenger base which had proven to be its unique selling point. "But it is not a reliable airline and its competitors know this and are exploiting it. Hence you see Spirit now has two flights to Kingston and two flights to Montego Bay whereby before it was just one flight a week," he said.
A former senior Air Jamaica executive disclosed that the London route accounted for 23 per cent of Air Jamaica's revenues, earning the airline US$70 million a year. He said that when the Air Jamaica Acquisition Group (AJAG), led by Gordon 'Butch' Stewart, took over the airline in 1994, "we spent an inordinate amount of time developing that London route, eventually putting on daily routes".
"Heathrow is a prized gateway and everyone is fighting to get those slots. We returned to London, Heathrow after being out in the cold for 11 years. We began with three lousy slots that saw passengers landing in the wee hours of the morning. We worked well with the London Airport Authority and added more flights with better times as we established a very good reputation at Heathrow. To lose them to Virgin is very disheartening after all the work we put in developing them," he said.
As Air Jamaica racked up losses of US$300 million over the last two years, the national airline has been forced to cut routes, and has gone to the government "cap in hand", according to the executive, for further financial bailouts. "It has also suffered the ignominy of having one of its aircraft seized for failing to honour lease obligations. The sale of the Heathrow slots is a further nail in the coffin."
One would have thought that the onus to be more transparent, more forthcoming with the public would have been heightened.
Heathrow, regarded as one of the world's most important airports, is viewed as the main gateway into Europe. "To lose those slots diminishes the airline and cuts off the vital revenue stream of the European visitor market and those wishing to connect with loved ones in the Diaspora," the CBR source insisted.
A British expatriate in Jamaica who also did not want his name called, complained that the fact that Virgin Atlantic would be flying into Gatwick Airport and not Heathrow would be unpopular with most passengers out of Jamaica.
"It could mean that many people would end up having to take the train for the 30 or 40 miles into London from Gatwick. This adds cost and time to their journey."
But Virgin Atlantic's chairman, Richard Branson insisted that his new code share agreement with Air Jamaica represented a good deal for all Jamaicans, saying it would prevent airfares being increased by a monopoly carrier and go some way to ensure that Jamaican travellers to London would not be left high and dry should the monopoly carrier pull out of the route.
According to Branson, Air Jamaica had approached both Virgin and British Airways at the same time and both found it "a most appealing proposition".
"When it became clear to us that British Airways might be the frontrunner, we made our representations to the Jamaican government about the need for traveller choice, market competition and a fresh code share arrangement between ourselves and Air Jamaica," said Branson.
Virgin will begin using the new route in October of this year and will operate two flights weekly between London Gatwick and Kingston, in addition to its existing two flights a week between Gatwick and Montego Bay, using a Boeing 747 on the route and offering 190,000 seats.
On the question of disclosure of the sale to the public, the former Air Jamaica executive accused the finance minister, Dr Omar Davies; the minister of transport, Robert Pickersgill; the chairman of Air Jamaica, OK Melhado; and Air Jamaica's CEO Michael Conway of not sharing details of the deal with the Jamaican public in a timely manner.
He recalled that back in 1994, AJAG took control of the ailing government-controlled carrier and transformed it by offering on-time /no line services, more routes and imbuing it with a value-added culture that saw a flying chef, red carpet treatment and other marketing initiatives.
He noted that prior to taking over the airline, AJAG had been unaware that Jamaica fell under a Category 2 status which cost AJAG $300 million, although it was a matter that was entirely Government related.
"AJAG then rationalised the fleet, introduced new Airbus planes and turned the corner. Air Jamaica was set to fly into profitability. But then came the events of 9/11, 2001, which devastated the commercial aviation industry. Even American Airlines came close to going under and it was touch and go for a while," he said.
"While the other airlines in the United States were getting help from their government with security, cockpit modification and insurance, Air Jamaica was left to fend for itself. Government being the joint venture partner in Air Jamaica was the worst form of partner and any help offered was too little too late."

[Willi]

The airline executive said that eventually AJAG "got sick and tired of the political games and wanted out at any cost". "After 10 years, under AJAG, Air Jamaica's losses came to US$700 million. What did it leave behind, what could its successors build upon? Well, a rationalised fleet with new aircraft; pioneered new routes; a tried and tested hub in Montego Bay; a talented management team led by Chris Zacca; marketing initiatives that found favour with the public and a well-respected brand."
Asking whether the airline had prospered in the post-AJAG period under government control, the executive said there were now less aircraft as it continued to rely on wet leasing chartered aircraft; it had seen its load factor decline by 15 per cent due to its unreliability (from 78 per cent to 63 per cent).
"Its on-time reliability performance has discernibly declined. It now has 100 cancellations a month - that's three flights a day. In just under two years Air Jamaica has received financial assistance in excess of US$500 million while chalking up losses of US$300 million. This year the government has promised to guarantee further financial aid to the tune of US$125 million. It isn't hard to see that government control has not worked for the airline.
Commenting on the state of affairs at Air Jamaica, a former colleague of Will Rodgers lamented his recent resignation from the airline, noting that 'Butch' Stewart and Rodgers were both instrumental in setting up that Heathrow route, going into the ethnic communities and adding more flights to London. At one stage, thee were nine flights to London a week.
He said Rodgers was one of Butch's closest advisors who knew the industry "like the back of his hand" but his departure from the airline was due to a management team "incapable of internal criticism and one that spurned his advice".
The airline industry analysts said things would get worse before they got better, and pointed to the latest tourism arrival figures showing that visitor count had declined.
With the pound and euro gaining at the expense of the US dollar, Jamaica was an attractive proposition for Europeans, so losing slots at Heathrow would have a negative impact on visitor arrivals as Heathrow was deemed the gateway of Europe, they argued.
The analysts said that over the last 12 years, the tourism industry had come to depend on Air Jamaica. Working together they had made an invaluable contribution to the economy and had put Jamaican interests first. This would no longer be the case with both Virgin and British Airways being the dominant carriers.
"John Rollins once told 'Butch' Stewart that it was the expansion of Air Jamaica's routes that helped him make the decision to build the Ritz-Carlton in Montego Bay," said one analyst.
Last week, the Jamaica opposition party expressed alarm over the developments. Spokesman on tourism, Edmund Bartlett warned about the adverse impact the decision to sell the Heathrow slots would have on one of the country's top earners of foreign exchange.
"The daily service offered by Air Jamaica to both Montego Bay and Kingston will be replaced by a mere two flights a week to Kingston operated by Virgin Atlantic and from a far less popular departure point, London Gatwick," Bartlett told Montego Bay Rotarians. "It represents a loss of 1,953 seats a week to the tourist hub."
Bartlett pointed out that the move meant that Jamaica's regional competitors in the tourism industry were now enjoying more flights than Jamaica from the UK destination.
"This is nothing to be proud about when one considers that Barbados welcomes 10 British Airways flights a week, seven Virgin Atlantic flights and three from British Midland. Even Antigua and St Lucia can now boast of better-scheduled flight options than Jamaica, allowing the consumer choice and flexibility. Jamaica is the loser as a result of this decision," said Bartlett.
"By selling these slots, the government of Jamaica has relinquished the historical right that Jamaica owned for its national carrier to fly from the airport. They cannot be obtained again and should in some eventuality Air Jamaica decides to return to trans-Atlantic service they will be obliged to do so from Gatwick or Stanstead," added Bartlett.
The analysts moreover noted that the Spanish were increasingly making their presence felt in Jamaica's hotel sector. Over the last five years, six hotel companies had built a total of 10,000 rooms at a cost of over US$1.3 billion.
"Air Jamaica's presence in the north-east corridor would have played a part in attracting many of the Spanish hotel companies to Jamaica. There is a prevailing view that the Spanish are looking to bring more Europeans to their hotels in Jamaica and no doubt this latest move by the Jamaican government is being watched very closely," said one analyst.
The former Air Jamaica executive said since the end of 2004, Air Jamaica's directors had yet to devise a plan that seemed likely to bear fruit for the airline.
"They have, however, succeeded in extracting more money from the government to resuscitate the fortunes of the national carrier. If plans to improve the fortunes of the airline should fail, then an Air Jamaica, minus those Heathrow slots, presents a diminished proposition to a potential buyer. Air Jamaica's senior management style has been characterised by a lack of transparency and accountability. The country can ill afford to lose close to US$500 million in three years from an ailing airline," he insisted.

[Lazie]

Well, it is clear there is no vision.