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

5 comments so far
francineb Posted by: francineb November 25, 2009 at 4:52 pm