Nicholas dismisses REDjet as serious rival
Steven Jackson, Business Reporter
George Nicholas III, chairman of Caribbean Airlines/Air Jamaica rejects the view upstart carrier REDjet can be called an airline and insists that the regional carrier, which is owned by two governments, will refrain from entering a price war.
CAL will mainly compete by improving service and tripling the Air Jamaica fleet from four to 14 aircraft within a year, Nicholas said Wednesday in a Financial Gleaner interview in New Kingston during a two-day sojourn to Jamaica this week.
"Our fares are reduced and may reduce further. But if it becomes a game of how low can you go, we are prepared to wait a while," Nicholas said.
The fare differences are substantial. In May, CAL quoted the fare for a Jamaica to Barbados flight at US$296 round trip, tax included, while REDjet priced the same flight at US$112.
REDjet, which chose Barbados has its home base after rejection from Jamaica where it first sought national status, is a low-cost airline which quotes fares in double digits.
It gained approval this week to fly to Trinidad and Jamaica - the two owners of CAL - following court action and three months of delays by authorities in both countries.
REDjet is still building out routes, with opportunities opening up even further this week with reports by Bahamian paper The Tribune that Western Air had halted service to Jamaica saying pre-emptively that it could not compete with CAL's plan to introduce a three-flights-per-week service between Nassau and Kingston.
Nicholas said the new Air Jamaica fleet will include nine Boeing 737-800s, four ATR turbo-props, and at least one long-haul aircraft for the United Kingdom, possibly a Boeing 777.
The fleet will be one less than the 15 aircraft operated by Air Jamaica in 2007. CAL officially acquired majority stake in Air Jamaica in May 2011 after a year of operating as a consolidated airline, with the Jamaican Government holding 16 per cent.
Nicholas declined to disclose costs associated with the airline leases but said that Air Jamaica would make a profit this month, then likely return to a loss by yearend.
The average age of the fleet will be about five years old, he said. Contrastingly, he asserted that rival REDjet's fleet of MD planes are old.
"You have planes that you lease," he said. "It's not an airline; we have to be serious about that. This is a father-and-son team that came from Europe and decided to set up," he said. "I do not consider them an airline."
REDjet's chief executive and chairman is Irishman Ian Burns.
REDjet, when asked for comment, chose not to directly address Nicholas' assertions about the age of its fleet and its status as a serious player.
"REDjet is the Caribbean's only low fares airline and proudly operates using our consumer-focused model with a commitment to providing the lowest fares on every route, on every flight," the company said via email late yesterday.
"Ninety-eight per cent of REDjet's passengers stated that REDjet was excellent value and would fly with REDjet again. We believe this makes REDjet the most popular airline in the region for consumers."
REDjet operates two MD aircraft, serial numbers 49471 and 49469, formerly belonging to American Airlines, according to its website.
The first flight for both planes was in 1987 based on information from two separate online databases, including Berlin-based Planespotters and Airfleets.
"These aircraft underwent a two-month programme of checks, maintenance and upgrades to ensure we develop a safe operation in Barbados," said REDjet online.
Nicholas said the Air Jamaica brand will be retained and that its planes would not assume the branding of CAL. The increased Air Jamaica fleet will eliminate its "heavy" dependence on code sharing with US charters which caused "some trouble," he said.
And, it would allow the airline to add additional countries, including Turks & Caicos, Dominica Republic, United Kingdom, and possibly Cuba, said the CAL chairman.
Additionally, it will add new US routes this year, including Orlando and Chicago.
Nicholas praised the airline's legacy of operating for over six decades with some of "the great aviators". He said more pilots and staff will be hired to operate the larger fleet.
Air Jamaica operated 11 routes in 2010, but that's been cut to five, according to the Economic and Social Survey Jamaica published in April by Planning Institute of Jamaica.
The routes terminated included Orlando, Baltimore, Havana, Curaçao, Chicago, and Grenada, while operations continued on New York, Philadelphia, Fort Lauderdale, Nassau, and Toronto routes.
The reduction of its operations resulted in a 40 per cent drop in revenues, from US$257 million in 2009 to US$154 million (J$13.2 billion) in 2010, while operating with less passenger seats filled than year-earlier levels.
Additionally, it resulted in Jamaica's air-travel ranking nose-diving five spots below the soaring Trinidad & Tobago (T&T) to 107 of 192 countries, amid the acquisition of its majority stake in local carrier Air Jamaica, according to an index published last month by Global Traveller.
The top five nations were Germany, France, the United Kingdom, United States and Turkey. It was the first time that Jamaica dropped behind T&T and coincided with the shedding of six routes by Air Jamaica last year in preparation for acquisition by T&T-based Caribbean Airlines.