What is happening with Air Jamaica?
“We are working now to see if we can get partnerships to share in the cost of operating Air Jamaica. We have had some discussions but I think that those discussions have not quite materialised, so I think Air Jamaica is back on the market. We are still seeking to find a partner. We are not interested in selling off Air Jamaica in full. Jamaica will always maintain a significant interest in Air Jamaica but we need partnerships to keep the airline alive,” – Minister of Tourism, Hon. Edmund Bartlett (Nov. 17 JIS press release)
I have previously written about the lunacy of selling Air Jamaica to Indigo Partners, owners of the budget airlines Spirit and WizzAir, due to the poor fit, difference in clientele, poor customer service record of Spirit and expected pullout of all-inclusive hotels on marketing partnerships.
I also wrote Don Wehby while he was at the Ministry of Finance to find out why an IPO (initial public offering) of Air Jamaica shares could not be undertaken instead of a sale seeing as how so many Jamaicans claimed to be willing to purchase stock in the airline. His answer was simple: The Jamaican Stock Exchange cannot take such a large offering. Air Jamaica’s debt was about US$1.2 billion and the offering would have to take place on a larger exchange such as the NYSE or London Stock Exchange. He did however admit that the government would retain about 20% ownership and would consider offering some of that stock via the local stock exchange after the completion of a sale.
I appreciated the answer (he replied within 3 days). Since then I have revisited the old idea of leasing the airline just like how Sangster International Airport is leased to MBJ to be run privately and profitably. This is much preferred to selling off our assets, especially under such bad market conditions.
It seems that based on our Tourism Minister’s statement quoted above, the government is now back to the “we keep, you lease” idea and looking for a partner knowledgeable in running profitable airlines.
Virgin gets my vote.
They already have a codeshare with Air Jamaica to Gatwick, 7th Heaven miles are earned on Virgin Atlantic, they bought our Heathrow slots (at a steal), Virgin America has launched, their service level is comparable to Air Jamaica and most importantly, they are VERY interested in the Caribbean.
Spirit has the highest complaints of any US domestic carrier in the USA with more than 5 million passengers: 14.3 per 100,000. Second place went to US Airways with 2.0 per 100,000, a whopping seven times difference between worst and second-worst.
American Airlines could work but they consistently lose to Air Jamaica at the World Travel Awards for Best Airline to the Caribbean.
British Airways is probably still upset about the Heathrow slots.
Caribbean Airlines is practically owned by Trinidad and I don’t see Jamaicans supporting a move to work with them based on how Trinidad has treated Jamaican companies while “invading” our island.
JetBlue has shown real interest in Jamaica but has no experience with the UK and European markets.
The Government of the day needs to give us a proper update and not just a quote from a press release, as well as a high level strategy overview: Is it for sale or are they looking for a partnership?
Written by David Mullings
Tags: Air Jamaica, Caribbean Airlines, Jamaica, JetBlue, lease, sale, Trinidad, Virgin Atlantic
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5 Responses to “What is happening with Air Jamaica?”
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Please do not sell OUR AIR JAMAICA we need to invest in this wonderful and Great Country of ours .The Jamaica diaspora in the UK USA and Canada want to invest and buy shares to keep our airline in the hands of Jamaicans we will do our very best ,because if we let it go that will be nothing leave for us to called our own.Please tell us what we need to do to keep it working for us ?God Bless our and watches over a great airline and the service it gives to us oveer the years.
As a Jamaican living abroad and a frequent flyer I cant help but wonder if its time Air J to reinvent itself. Perhaps its time to abandon the “National Airline” model and pursue the “Global Carrier”framework? It’s interesting that we make comparisons between Air J bargain basement airlines such as US Airlines and AA. Meanwhile what are the REAL players in air travel up to? Whats going on at Singapore Airlines or Emirates and Ethihad? Qatar Airways: World’s 5-star Airline… now there’s a vision one can get on board with!
The past Chairman of now defunct Eastern Airlines has always said that the airline business is fun to work in but makes a very poor investment. One of the reasons the Eastern pension plan was in such good shape when the company was bankrupt was that no pension funds were in airline stock. The reality with Air Jamaica is this: it is a way of getting visitors to Jamaica to fill hotel rooms. As such it should be owned by the beneficiaries, eg: hotels,tour operators, attractions, etc. A formula should be worked out and the airline turned over to a board appointed by tourism interests. Each year any shortfall in operating revenue should be paid by the owners proportionately. Otherwise fold the company, and forget the very expensive national pride. We’re proud enough as it is!
Your comments about the level of complaints at Spirit are well made. However, your ideas about leasing Air Jamaica to another operator are wide of the mark.
Air Jamaica is a huge lossmaker. It loses approximately US $140 million per year, all of which has to be found by the Jamaican government through underwriting the airline to borrow yet more money. Over recent years, Air Jamaica has managed to amass a huge debt of US $1.2 billion
What Jamaica needs is to get rid of this huge loss-maker. It is a luxury that Jamaica cannot afford to keep. You must realise that if it was leased to another operator, and nothing else changed, Jamaica would still have to support the airline to the tune of US $140 million a year.
This money that Jamaica does not have, and borrowing even more money is the road to ruin.
The ideal owner for Air Jamaica would be an established airline that would ruthlessly trim back costs and routes until it not only breaks even, but makes a profit that is commensurate with its new owner’s investment in the business. The Jamaican government is going to have to learn to stop interfering and dictating which routes should be operated. If the demand is there, the routes will be profitable and the new owners will operate them. If there is not sufficient demand, the routes should no longer be operated.
You might say that this could be achieved even if Air Jamaica was still owned by the government, but leased to another operator. But history has shown that the Jamaican government lacks the courage to make the necessary savings, and is particularly reluctant to close routes. So leasing would be no better for Jamaica than the current situation.
Sell Air Jamaica now.
AS I ALWAYS SAY.. AIR JAMAICA AND OTHER JAMAICAN GOVERNMENT ENTITIES.. SHOULD NOT BE SOLD!..WHY” BECAUSE WHOSOEVER BOUGHT IT WILL NOT MOVE IT . THEY WILL REMAIN SAME PLACE.. BUT THEY WILL MAKE PROFIT. AND HUGE ONES AT THAT.. I HAD USE THE (JTC) JAMAICA TELEPHONE COMPANY.. WHEN IT WAS OWNED BY THE GOVERNMENT OF JAMAICA.. AND UNLIKE ALL JAMAICAN GOVERNMENT ENTITIES.. THEY WERE ALLOWED TO BE RUNS INTO THE GROUND BY CRONIES OF EITHER POLITICAL PARTIES.. BY PEOPLE WHO WERE HIRED TO RUN THEM WHO HAVE NO REAL MANAGEMENT SKILLS.
WHILE MONEY FROM THOSE ENTITIES WERE BEING USED TO DO POLITICAL FAVORS.. THERE WAS NO ACCOUNTABILITY IN ANY OF THESE ENTITIES.. AND THAT’S WHAT OUR REAL PROBLEMS ARE.. WHY WOULD FOREIGNERS BOUGHT THE SAME PRODUCT AND THEN TURN AROUND AND MAKE HUGE PROFIT FROM IT?… THIS IS WHAT WE SHOULD BE ASKING OUR LEADERS!.. THIS SHOULD INDICATE TO US THAT OUR LEADERS HAVE NO INTEREST OF KEEPING ANY THING THEY CANT GET MONEY OUT OF.. THEY HAVE NO IDEA OF WHAT IT MEAN TO BE ACCOUNTABLE AND THE NEED OF REAL MANAGEMENTS IN THESE ENTITIES…
WHEN WE SELL OFF EVERY THING .. WHAT WILL WE DO WHEN FOREIGNERS DENIED US THINGS WE NEED?.
TONY POLSON.
YOU HAVE NO CLUE OF WHAT IT MEAN TO HAVE REAL MANAGEMENT AND ACCOUNTABILITY.. SO TO YOU IS SELL. THEN WHAT?… YOU HAVE POORER COUNTRY THAN OURS . WHO HAVE AIRLINES. WE HAVE NO IDEA WHAT IT MEAN TO HAVE PRIDE IN OUR COUNTRY AND WHAT IT SHOULD REPRESENT!. CORRUPTION BLIND THE MOST OF US…