The Editor, Sir:

Yet again the IMF has called on the government to close the doors of Air Jamaica because of the burden on taxpayers.

More importantly, the Fund has concluded our national airline will never be a financially viable enterprise. This is not the first time the IMF has taken this position, and one has to wonder if there is a hidden agenda, perhaps to embarrass the Government.

A purely financial assessment of Air Jamaica from 1969 to present supports the conclusion drawn by the fund. The airline has not, and if we are being honest with ourselves, will never be a viable business venture. Yes, there is a valid point to be made about the airline's contribution to Gross Domestic Product, and other macro indices. The question then becomes one of policy not economics.

In recent times we have seen the airline transition from government, to a joint venture, back to government. During this roller coaster period there have been predictions as to when the airline would become financially sound. Several business plans later, taxpayers are responsible for keeping the airline from being grounded. We have witnessed personnel changes, equipment changes, management changes and yet annual deficits run in the billions of dollars. Clearly, we have not been able to come up with a winning formula.

Painting a rosy future

Consultants and business planners have consistently painted a rosy future for the airline, however, at the end of the day we have been greeted with another round of layoffs. The cycle of euphoria followed by a hard dose of economic reality has finally come home.

Rather than commissioning a study to determine whether the ownership of the airline by the government makes any financial sense, business planners were sent to the drawing board to produce the ultimate viability plan. Rather than performing the much needed surgery, the Government elected to use the less costly band aid approach. Now, we will end up spending more than the original plan called for, when taxpayers are called on to finance the annual deficit the airline will accrue because of the choice of the 'less costly plan'.

The current restructuring plan has no chance of making the airline viable. The airline is structurally unable to position itself in the market place to take advantage of economies of scale. For example it has decided to compete with major carriers with almost unlimited cash reserves for the Caribbean markets out of North America. Are we being subsidised by these governments for those routes?

Fleet change

The management has proposed a fleet change, a proposal which is absolute madness, and in reality, a ploy to convince the government that, but for the equipment the airline would be a financial success. Most of the discount carriers fly the same equipment and are able to make a profit. The airline should concentrate on improving service and schedules before using limited resources to acquire new aircraft in a market where they are constantly losing ground because of poor service.

The Government must step up to the plate and say where Air Jamaica fits in its developmental plans. The issue of viability, is not in question. The airline is, and will remain insolvent. The question is whether the contribution to the economy outweighs the annual deficit. While we are being honest with ourselves, the true subsidy is in the region of U.S. $150 million annually, not US$30 million. Let us start with this premise, and end with the conclusion that the projected 2009 viability forecast is but an illusion.

I am, etc.,

KIRK BARROW

kabarrow@hotmail.com

Kingston 10

Via Go-Jamaica