Moving Back to Jamaica

A blog about my Move Back to Jamaica after 20+ years of living in the US. Most of the articles focus on the period from 2005-2009 when the transition was new, and at it's most challenging.

Sunday, May 06, 2007

Should We Keep Air Jamaica?

I am no expert in the airline industry, but it seems to me that the losses that Air Jamaica has been racking up in recent years are reason enough to close it down.

The arguments that I have heard for keeping it open strike me as spurious, as argued in the Observer and Gleaner newspapers.

They sound to me as if the authorities are unwilling to believe that the free market works, and that as long as there is a profit to be made, airlines will continue to fly into Jamaica. The evidence strongly suggests that they are increasingly willing to fly here for smaller and smaller margins -- the evidence being the recent cut in the cost of a seat from say, Kingston to Miami from US$400 + to less than US$200, where it has been for some time.

Given the US$120 millions loss it made in 2005, and a similar amount expected last year, I have to think that we could that same money (much less in fact) to attract other countries to use the country as a destination. Heck, if we even subsidized them in might be cheaper than continuing this losing game.

However, at the moment it seems that pride is trumping economics, and that we as a people are unwilling to admit the defeat of the airline, and the loss of face that we think would follow.

Also, a recent study showed that the benefit to the country of having Air Jamaica was in the millions of dollars, but this is beside the point. There is no argument that we need airlift for the success of our economy. However, does it need to be provided by Air Jamaica?

It's just that there must be a point at which the losses overcome the loss of face -- it's not US$120m, obviously.

What is it?

2 Comments:

At 5/07/2007 7:46 PM, Anonymous Common Sense said...

Airline business is not a good investment and a country which is in financial distress is throwing money after a losing proposition. Other islands without national airlines have very good tourist arrivals coming via other airlines or charter flights. Why spend millions propping up an airline which will never break even. National pride is one thing, financial folly is disaster. The restructuring plan to bring in old plans and change out existing fleet is a joke. Old planes break down often, require more maintenance etc. Since Spirit Airlines began service from Ft Lauderdale, fares have dropped whereas in the past Air Jamaica and American were content to match fares. Air Jamaica cancels flights at will and is rarely ever on time. If there is a market other airlines will fill the need and do a better job. Time to cut our losses.

 
At 5/10/2007 4:22 PM, Blogger Mushtaq said...

The Jamaica Observer had a feature on Spirit Airlines in regards to their low price low frills approach. Air J may need to revisit its plan. Here is the link to the article below or you can follow the link from my blog.
http://www.jamaicaobserver.com/magazines/Business/html/20070327T220000-0500_120974_OBS__WE_COMPETE_ON_PRICE_.asp

 

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