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Stabroek News

Airone Ventures going after 'national carrier' status - But says won't compete with Air Jamaica
published: Friday | December 21, 2007

John Myers Jr., Business Reporter


Air Jamaica is the only Jamaican carrier with national status. - File

Airone Ventures Limited (AVL), a start-up airline seeking a home in Jamaica, is petitioning the Government for 'national carrier status', but insists it won't be entering the market as a rival to Air Jamaica.

Airone's chief executive officer, Peter Delany, said the airline, which is awaiting a permit from the Civil Aviation Authority to roll out its services, would be positioning as the first Caribbean low-cost carrier.

"What we are offering is a different product to a different class of persons than Air Jamaica," said Delany. "We would not see ourselves as competitors to Air Jamaica."

Air Jamaica's 'champagne service'

The national carrier, at one time, under private ownership by the Butch Stewart-led AJAG group, had sold itself as a 'champagne service' offering bubbly to its high-paying customers, as well as the on-board services of a chef.

Much of those trappings disappeared when the carrier reverted to government ownership, and while the carrier is currently big on price deals, its competitors remain the likes of American Airlines.

Delany was anxious to publicly declare Airone's intentions, saying already there was concern in and outside government circles about the carrier's impact on Air Jamaica.

As outlined in its proposal to the Jamaican authorities, AVL said there was a large and growing market for short low-cost holidaymakers, and that its target for business would be ethnic diaspora and cost-conscious tourists.

The airline projects that it can bring more than 300,000 new passengers to Jamaica within its first year of operation and increase that number to 600,000 by year two.

It has named Digicel as its marketing and sales partner.

AVL's management is scheduled to meet with the CAA board next Thursday, to hear submissions from the public about its licence application.

The deadline for those submissions expired on December 12.

Plans for operation

Airone plans to operate flights between Jamaica's two international airports, and gateways in the United States.

Delany said Airone was still awaiting government's response on its request for national carrier status.

But, the airline has signalled that it would shift its operational base to another country if denied.

The company is registered in Jamaica, but is owned by St. Lucia-based Airone Holdings Limited.

"Due to our investment and timelines, without a commitment from Jamaica for designation of Airone as a national carrier, we would have to set up in either Trinidad or Barbados," said its business plan.

Benefits for Jamaica

With its base in Jamaica, AVL argued that it would generate some 220 new skilled jobs in the first year of operation, contribute 2.0 per cent to gross domestic product and a minimum of US$65 million in taxes to the Government, not including those to be had from new employment opportunities and third-party service providers.

Delany said, however, that Airone was optimistic that its request would be approved.

"Unlike foreign carriers, we cannot pull out of the market when it doesn't suit us, as we are a Caribbean airline for the Caribbean and we want Jamaica to be our home," Airone said in its business proposal.

He argued that the airline's business model as a low-cost carrier would tap into a vibrant market that was currently under-served, with the U.S.-based Spirit Airways dominating in that segment of the travel market.

So far, Spirit's operation appears to be successful because less than two years into its regional operation,, it has overtaken Air Jamaica as the leading carrier of passengers from the U.S. to the island, according to figures compiled by the U.S. Bureau of Transportation.

Below market prices

Airone plans to enter the market with below market prices, slashed by up to 80 per cent.

The airline will fly two Boeing 737-300 aircraft, which it will lease for between US$200,000 and US$400,000 per month and gradually expand to five within two years.

Delany declined to say, however, how much Airone was investing inside Jamaica.

But one experienced player in the aviation industry estimated that AVL would need at least US$80 million to roll out its services.

"We required a particular level of funding and that funding we have achieved without any difficulty and is now sitting on deposits being used towards the start-up," said Delany.

The Airone CEO is a trained pilot and was a former director of the Irish aircraft leasing company, GPA. He also worked as a vice-president of a joint-venture company that partnered with Airbus to develop the A320 aircraft, and was a member of the team that established AirAsia, which is considered currently to be the most profitable airline in the world.

john.myers@gleanerjm.com

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