Air Jamaica's Death Knell?

I read with further disappointment the intention of Air Jamaica to shed 6 of its 15 planes and drop 6 routes from its service schedule this year (Jamaica Observer January 28, 2009). This is sheer madness and it would be better for Air Jamaica to close down completely, and thereby entirely avoid the risk of running a loss in the future – as this seems to be its SOLE objective. How ironic that the Government of Jamaica wants to retain the name and brand of Air Jamaica in its proposed plans to sell the airline yet it is reducing the company to a “ghost” of an international airline with this reductionist strategy.

Air Jamaica, despite pleas from the Diaspora population in the UK, sold it London route (for peanuts to Virgin by the then Minister of Finance of the previous administration) back in 2007. This was another bad commercial decision by a civil servant. We Jamaicans in the UK are now suffering the consequences. Virgin flights in December 2009 to Kingston are costing £983 per person for its cheapest economy seat and BA is charging £1,158 per person – CHEAPEST ECONOMY. Their planes (Boeing 747’s and 777’s) will be fully booked nevertheless, and mostly by members of the Jamaican Diaspora in the UK. This is what Air Jamaica gave up when it dropped the London route. Now it wants to ditch the Miami route and others.

The problems facing Air Jamaica with its operating loss are not so much its COSTS of operation as using the INCORRECT BUSINES MODEL for running an airline in the 21st Century. No doubt this is what the Air France consultants will tell them when they arrive in Jamaica, spend several months and charge for their fees. Space does not permit me to elaborate on the possible solutions, but as a consultant myself one knows that to solve a problem one should start with correctly defining the realities of the issue. Here are a few basic points:

Point One – Air Jamaica is a Diaspora Airline.

Point Two – Air Jamaica cannot and should not compete head-to-head with US based carriers.

Point Three – Air Jamaica will require FURTHER investment to turn it around (note the distinction between “cost” and “investment”).

Point Four - Current economic global environment means it’s unlikely to get a private buyer / investment, even in a cut-down version it is now pursuing.

Point Five – In determining the cost of running an airline one should look at the FULL ECONOMIC cost and benefit analysis, not just bottom line profits.

Point Six - The Caribbean has been in need of a proper regional airline for some time now.

A possible new business model involves thinking outside the realms of conventional, conservative - dare I say it – archaic, public sector thinking in Jamaica. So we could, for example, swallow our national pride, people, and merge Air Jamaica with Caribbean Airways and let the Caribbean benefit from a properly sized international airline that can serve the region and its peoples well. (One can do all sorts of fancy things with marketing, like co-branding etc, if we feel the need to keep the name of Air Jamaica alive).

To be sure, if we continue along this path proposed of cut, cut, cutting Air Jamaica we will be killing it slowly in any event. The loss to the economy of JAMAICA will be catastrophic as such actions further weaken the economic contributions from its Diaporan population whose hard earned income will flow increasingly to the likes of BA and Virgin, good airlines though they are.