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EDITORIAL: Airlift deal sensible, but ...
published: Tuesday | September 9, 2008

The dribbling controversy over Jamaica's revenue-guarantee deal with American Airlines is symptomatic of what happens in the absence of transparency and when governments, unwittingly or otherwise, fail to trust people with the facts.

Or, perhaps it is that the tourism minister, Edmund Bartlett, is genuinely not in command of the information rather than being deliberately opaque. In any event, the behaviour would be just as egregious, given the responsibility of governments to keep the citizenry properly informed.

Economy dependent on tourism

The development, insofar as it has been pieced together, is that Jamaica, whose economy wrests primarily on tourism, wants to ensure maximum airlift into the island. That is an eminently sensible policy goal. At issue is how to accomplish this in a soft global economy, which is having a negative impact on international travel, and high oil prices that have caused a spiral in the cost of aviation fuel.

The upshot is that several of the world's leading airlines are losing money by the bucket loads. They have been attempting to stanch the red ink by cutting flights and reducing services. American Airlines falls within this bracket, reducing frequency on many of its routes and slashing several in the Caribbean.

Jamaica, in this environment, has decided, over a one-year period, beginning in November, to compensate American Airlines to maintain, or increase flights to the island, rather than risk a reduction in frequency. The agreement includes a new direct service to Jamaica from Texas' Dallas/Fort Worth Airport and increased frequencies from Miami and Chicago, the latter being routes on which the government-owned Air Jamaica currently flies.

There are questions, however, about the precise structure of the deal and what will be the impact on Air Jamaica, which taxpayers now support to the tune of around US$300 million a year, taking into account direct subsidies and coverage of its losses. So, while on the face of it, the arrangement is worthy of support, there is need for more and better particulars.

For example, Minister Bartlett declared in a statement issued by his ministry: "As part of the agreement, American will not fly to Jamaica if less than 65 per cent of the seats are taken. Jamaica will therefore only be required to pay the 10 per cent revenue if the load factor is less than 75 per cent."

Is this to suggest that from one day, or one week to another, flights out of Dallas/Fort Worth will be on or off, on the basis of whether American meets or fails to meet the 65 per cent load factor? This, of course, would be ludicrous, causing chaos for travellers and, it would appear, undermining of the very intent of the deal - an increase in the availability of seats. This seeming illogic demands clarification.

Another issue deserving of amplification is Air Jamaica's load factors on those routes on which it flies but are to be subject to the deal with American Airlines. Does the agreement imply that there is room for both, even with an expanded capacity?

We can only assume that the Government is intent on doing what is in the best interest of Jamaica, which it can assure people by laying out all the facts.


The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.

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