Government could pay over $133 million in AA deal

The Government could be asked to pay more than $133 million to American Airlines as part of a revenue guarantee airlift agreement signed last November.



American Airlines made the arrangement with the government to service the Miami, Dallas and Chicago routes to Montego Bay.



Officials from the Tourism ministry and related agencies were responding to questions during the sitting of the Public Administration and Appropriations Committee of Parliament yesterday.



As part of the accord, the US carrier is expected to transport thousands of passengers to Jamaica.



However, there was a decline in bookings and American Airline recorded a shortfall of US$1.5 million up to July 31, this year.



This was confirmed by Executive Director of Jamaica Vacations Limited (JAMVAC) Lionel Reid.



The Tourism Enhancement Fund (TEF), had provided letters of credit to secure the agreement with the US carrier on behalf of JAMVAC.



The total guarantee was set at US$3 million.



Committee Chairman, Dr. Wykeham McNeill, observing that the loss for Miami and Dallas occurred during the best of the tourism season, questioned whether the country could lose the entire US$3 million that was guaranteed.



Acknowledging that this was possible, Reid indicated that the country had no choice at the time it entered into this arrangement with American Airlines.



He told the committee that at the time the deal was signed the airline was about to withdraw its service from Dallas.



Pressed for further detail about the implications of the loss by the airline, Director of the Jamaica Tourist Board (JTB) John Lynch said the agreement will end early next month.



Lynch stressed that there would be no disruption in the service to Jamaica.



However, committee member Ronald Thwaites wanted Mr. Lynch to support his claim with figures.



Late last year, Tourism Minister Edmund Bartlett had said that despite putting up the money for the American Airline guarantee, the deal might not cost the country \"one cent\".