Air Jamaica and tourism

[Karl]

Air Jamaica and tourism
Michael Burke
Thursday, June 07, 2007


One good thing about Air Jamaica and its present predicament is that neither the government nor the Opposition has expressed the view that the airline should be sold. But there are many people in Jamaica who are of the view that it should be.
Michael Burke

The fact is that all airlines in the world have their financial problems. If airlines sold out every time they had financial problems, there would be no aeroplanes for anyone to travel on.

Why do airlines have financial problems? Because sometimes the aeroplanes have to run nearly full or almost empty. One day a plane may be filled with passengers coming from New York but the next day it may not have many passengers flying back. And yet the plane has to return to New York because passengers are waiting there to take the aircraft either to Jamaica or wherever else.

One issue of the Royal Bank of Canada newsletter in either 1979 or 1980 addressed the matter of airline finances. I kept the newsletter for many years but I have misplaced it, and the Internet is not helping me with this. That particular issue spoke about the financial problems that just about every airline faces. And we have seen some signs of that here in Jamaica.

Up to 20 years ago, British Overseas Airways Corporation (BOAC) flew from Jamaica to London. In the 1980s BOAC merged with British European
Airways (BEA) to become British Airways. Why do you think they merged? In recent times British West Indian Airways (BWIA) and Leeward Islands Air Transport (LIAT) merged to become Caribbean Airlines. Again, why do you think they merged?

Pan American Airways made stops in Jamaica between the 1950s and 1960s. They pulled out, returned and pulled out again. Lufthansa (German) airlines once came here. And there were others which no longer fly to Jamaica. But few of them are out of existence. I recall that at one time in the 1970s Air Jamaica had a fleet of 13. The sale of seven planes in the late 1970s caused a reduction of the fleet to six.

Air Jamaica should never be sold. And if we can help it, we should never merge with any other airline.

The reason is our tourism product. Many argue that Barbados and the Bahamas depend on tourism as much as Jamaica, but they do not have aeroplanes. However, a closer study will show that Jamaica needs an airline far more than either Barbados or the Bahamas.

Thanks to our crime and violence reputation, Jamaica needs an added incentive to bring tourists here. I will explain with an example. I know the wonderful health benefits of the world-famous radioactive spa at Bath Fountain in St Thomas. But I am also a realist and I know that most Jamaicans prefer Negril's beaches in Westmoreland to Bath Fountain in St Thomas.

Let's suppose one had a choice of going to Negril or Bath Fountain, and the point of departure for either is Kingston. To get to Negril 161 miles away one would have to take public means of transportation complete with all of their vagaries. But to get to Bath Fountain 44 miles away an air-conditioned luxury bus is provided free of cost. Some may decide to go to Bath Fountain because of the added incentive of the luxury bus.

And this is the predicament in which Jamaica finds itself. Barbados, the Bahamas and many other Caribbean islands have white sand beaches as we have in Jamaica. Although most Caribbean countries have growing crime problems, none has the crime reputation in international circles as Jamaica. It is because of creative public relations that we get any tourists at all. And one tool in our public relations kit is Air Jamaica.

As I see it, even if Air Jamaica runs at a loss, it should be treated as an overhead cost in the overall tourism plan. It is like the elevators in a building of business offices or a hotel or whatever. We do not pay to take the elevator because they are seen as an overhead cost in the entire business.

Fortunately, the issue of whether Air Jamaica should be sold or not is "not on the cards", although it is being hotly debated all over Jamaica.

At the same time, Air Jamaica must get its act together. There will be little or no support for the airline if there are continuous mishaps with passengers' baggage. Half of the credit union contingent on the recent Credit Union League cruise went and returned from Miami by Air Jamaica. We were the first to check in on the return flight four hours before boarding time. Yet we had problems getting our bags and someone who had several boxes perhaps "greased someone's palm" to get them.

The Air Jamaica staff who had to appease the passengers privately told me that it was a never-ending problem with the plane coming from Miami. One of them begged me to write about it. I am in favour of Air Jamaica, but things like baggage mishaps only fuel the fire of the airline's detractors. Saying that it happens all over the world with other airlines is no excuse.

[Karl]

Virgin Jamaica?

Virgin Jamaica?
P Sean Morris
Saturday, June 09, 2007


There have been tectonic shifts in the airline industry in recent months, and either cunningly or not, the Jamaican authorities noticed and perhaps decided to make a strategic move to reposition airlift to the island, especially from Europe. The acquisition by Virgin Atlantic of Air Jamaica's slot should serve as a move to form a greater strategic alliance between Virgin Atlantic and Air Jamaica. In other words, it is an opportunity in the making for Jamaica to get rid of the loss-making airline and court Virgin to form a new airline - Virgin Jamaica.

For an airline that is operating at an annual loss that could fund more hospitals and local social amenities, rather than selling the Heathrow slot, which is a prized commodity, it would have served the authorities better to sign an agreement with Virgin Atlantic to establish a new national airline. The benefits would be profound: a slice of Jamaica would still be kept flying, but a new airline tapped in the global position of the Virgin Group, giving Jamaican travellers more destinations and more important, Jamaica could be served as a hub for further expansion into South America. The former Nigeria Airways saw the birth of Virgin Nigeria where Nigerian investors own 51 per cent and the remainder by the Richard Branson-led Virgin group. This is a formula which the current shareholders of Air Jamaica could adopt.

There have been two significant developments in the Transatlantic Air Transport industry in March that will greatly benefit Virgin as it seeks to build a "global airline". First, the US and the European Union agreed to an open skies agreement that will see the full liberalisation of the transatlantic route, allowing any airlines from both sides to fly into each other's territory unrestricted. Second, the US Department of Transportation finally approved Virgin Group to set up Virgin America that will service US cities and beyond. The approval was delayed because of several factors, including US regulations, that require US citizenship and control for a domestic airline.

Owing to the EU-US open skies agreement, it is expected that there will be further consolidation in the airline industry with mergers and acquisitions, competition for slots at Heathrow, further strategic alliances, possible low-budget airlines flying from Europe to the US, and the possibility of a "global airline". The latter, though not far-fetched, for example, through the likes of British Airways, American Airlines and others combining, which are currently members of Oneworld Alliance; the other major global alliance being the AirFrance/KLM-led Skyteam. All these factors make sense for Air Jamaica to reposition itself, if management recognised that in the future it will just not be able to sustain viability but will continue to lose out because of competitive pricing and other factors. Consumers, no matter how patriotic, will choose to cross the Atlantic on pricing, not sentiment.

The government, nonetheless, was engaged in talks with the British authorities to come to terms with the impact of the open skies agreement in terms of flights between both countries. Though the arguments as published talk largely in technical terms to an unsuspecting taxpayer about "Air Policy".

In the scenarios created, a Virgin America and Virgin Jamaica would have access to more gateways both in Europe, US and Latin America, via its parent, Virgin Group. In the future, Virgin America would under the US-Jamaica open skies agreement be able to offer more flights to Jamaica, further upping the tempo on Air Jamaica.

Not only would competition be an issue, but planes which are being refurbished to enter Air Jamaica's fleet, would face the possibility of having to deal with technical standards with the US Federal Aviation Authorities, while Virgin America would bask in its new fleet. On the other hand, a Virgin Jamaica would be able to benefit from new fleet and avoid some of the potential technical irregularities, and the Jamaican government or private investors could negotiate to own a slice of the new airline. The chairman of the National Air Policy Committee recently shed some light on the direction in which the government wishes to move, and mentioned time for the full liberalisation of gateways between Europe and Jamaica in order to give the national airline a transitional period, should those proposals be accepted by both sides.

The only problem is that the market does not allow a competitor time to get fit, but rather drives him out of the market.

P Sean Morris is a PhD candidate in Law. A Jamaican, he writes out of Helsinki, Finland.
p.sean.morris@gmail.com

[Mosiah]

Absolute crap! "Although most Caribbean countries have growing crime problems, none has the crime reputation in international circles as Jamaica."

That's because no country has the level of crime we do. To say that everywhere has rising crime is exactly what's preventing us from solving the problem.

Much of his other arguments are also silly and ignorant. His elevator analogy is one such silly statement. If Otis stopped supplying a particular builder, Schindler would step right in to fill the gap.

[Assasin]

What I want to know is why is spirit, NorthWest, Virgin and so many airlines fighting to fly to Jamaica? A so them love lose money? Even British Airway wanted our loosing London route.

Even when Air J full we still a lose money so what is Mr.Burke talking about?

[Assasin]

Another thing is the Airlines that went into Bancruptcy are all making money now, from Delta, Continential and all a them. They took the oppurtunity to make themselves better. When is it Air J going to make some profit?

[Peter R]

As far as I know LIAT is STILL independent of Caribbean Airlines (CA). CA was only formed by the TT govt in order to shut down BWIA with all its deadwood which was a drain on the country. BWIA in its 60 odd year history made a profit in only a few of those years. They sold off some planes, sold their Heathrow slot as Air JA just did and are only maintaining the Miami, NYC, Toronto and London (Gatwick) routes as regular runs, got rid of all the rich perks to many staff, let some pilots go etc., rehired staff on different terms. So now when yuh go Piarco yuh BWEE fren jus cyaan skip yuh in de line like before nor bump some other passenger for juh just so. And as far as I have experienced (my family has flown a total of about ten flights this year and ALL have been on time or ahead of schedule). It will be interesting to see their results at the end of this year.

The point is if some airlines can be run at a profit what is to prevent Air Jamaica from being profitable too? Is the money lost by the JA govt subsidising deadwood in Air JA worth it to the tourism sector and by extension the people of Jamaica? Or is this subsidy only benefitting a chosen few?

I say trim the fat and create a lean machine. If Spirit can can run to JA at its rates (I'm assuming they're profitable), with US staff/pilots and using equivalent equipment wha happen to fi wi airline?

pr