Is Air Jamaica in trouble? Philip Dinham is back this month with an editorial on Air Jamaica's future strategies.
Commentary Jamaica Magazine

Jamaica’s Luxury Airline Checks In Sick

Air Jamaica began it’s operations in April,1969, with non-stop flights from Kingston and Montego Bay, Jamaica to New York and Miami. At that time, the airline was owned by the government of Jamaica, with a minority interest held by Air Canada, which provided the equipment, technology, training, pilots and some top management. Through a “buy-back” agreement, the Jamaican government acquired the airline by the end of the following decade.

Through the years, Air Jamaica has expanded its routes, services and flight schedules. In 1970 and 1971, new gateways were established in Toronto and Philadelphia. Later, flights to Europe and other Caribbean destinations were introduced. In February 1982, service to Baltimore/Washington was inaugurated and the following year, the Atlanta-Jamaica route opened. In 1991, Air Jamaica established twice-weekly service from Jamaica to Nassau in the Bahamas, to fill the gap left by the modified British Airways service to the region. In 1992, Air Jamaica began the first scheduled non-stop service from Orlando to Jamaica.

In November of 1994, after lengthy talks and negotiations, Air Jamaica was privatized. At present, 70% of the airline is owned by the Air Jamaica Acquisition Group, comprised of Jamaican business men. The government holds 25% with 5% of the stock reserved for employee investment. The agreement between the government of Jamaica and the investor group provide that the airline maintain national carrier status.

As the newly privatized national airline of Jamaica, Air Jamaica set performance targets for itself that are putting it on par with the best products in the Caribbean. “We have taken what is essentially a good product and we have brought it up to speed.” said Gordon “Butch” Stewart, the airline’s new Chairman. “The job is by no means complete, but we believe that it is a viable business proposition and that it can pay its way and turn a profit. Our objective is simple and straightforward: To make Air Jamaica a productive, efficient and profitable carrier, which offers a quality of service that is second to none. The new Air Jamaica is designed to be professional, with a Jamaican flair, a national carrier that all Jamaicans can be proud of.” says Stewart.

The first few months were exciting ones for the new Air Jamaica. The national carrier created a new livery (distinctive color scheme), refurbished interiors, eye-catching signage at the airports it serves and upgraded service on the ground and in the air. It can be perhaps summed up best with the thought that our new look is a clear message to our customers and our competitors that Air Jamaica is a new airline that faces the future with confidence.

Air Jamaica’s main objective was to become the finest airline in the Caribbean. With new innovative service features such as its prize winning love bird hospitality, with Executive flying chef, onboard service was completely redesigned, as fresh cultural meal presentations, champagne breakfasts in both first and main cabin, as well as wine or beer with all meals transformed the airline. Air Jamaica’s special concierge service at airports was well received, as was its new frequent flyer program. The airline showed us all that it was committed to delivering excellence in customer service with the friendly warmth that Jamaica has always been renowned. Up until late December 2001, Air Jamaica employed close to 2,000 people, with an emphasis on improving productivity, as expansion was the buzz word.

Shocking News

The honeymoon was not to last for too long, downturn in airline travel after the September 11, 2001 terrorist attacks and a far from positive recovery in the US economy, the airline was up against economic forces that was destabilizing major world industries. On Friday March 14, 2003 came the unexpected disclosures, a 7% reduction in staff complement was announced as just a first step measure by Chief operating officer Chis Zacca. The man who had spearheaded the rise to new heights, was the one who delivered the bad news. In light of a fall off in bookings and poor economic forecast for the world economy, Zacca stated the airline had reached the end of the growth curve and would have to cut it’s expenses to stay alive.

Jamaicans world wide were saddened yet moved with ambivalence to the news. By Monday March 31, 2003, the over 400 weekly flights were cut by 52 flights. The rest of the ground crew, flight attendants, pilots, sales and administrative staff, all workers were asked to take a cut in wages or take a leave of absence to help keep the down scaled operations steady and afloat.

Customers who have supported the airline and benefited it the most, have been the toughest critics of top management, who they believed ran the national carrier amuck and forced the downsizing of the airline. It is true that Air Jamaica is heavily indebted and unclear about it’s ability to sustain it’s operations in the long run. Rising jet fuel costs and declining bookings in the pre-Iraqi war hours spurred much uncertainty and anxiety amongst the management.

Alan Chastenet the Vice President of Marketing and Sales, recently stated that the airline is at a turning point and it is not alone, as most other airlines, British Airways, KLM and even regional carrier BWIA out of Trinidad and Tobago, have made similar cuts and are faced with an ominous future.

It is a fact that major US carriers have had to return to their government for capital injection on several fronts, Delta, US Air and American were given much help when their flight schedules were trimmed after US gateways were closed for days to domestic and international flights.

US Air in fact, filed Chapter Eleven bankruptcy and recently, American averted this measure which allows companies the ability to run their operations without paying their creditors immediately. Just yesterday, Air Canada filed similar status under Canadian law, Chastenet is quick to point out that this facility is not afforded to Jamaica’s national airline and only further complicates the future of the carrier.

On June 1, 1995, the new Air Jamaica expanded it’s North American route system by introducing daily service from Ft. Lauderdale to Montego Bay and Kingston. According to Chairman Gordon “Butch” Stewart, the Ft. Lauderdale route signaled to many, including major competitors, that the love bird was serious about it’s intentions. The flag ship carrier’s growth and development plan was tempered with excellent public relations imaging and effective marketing maneuvers. Quarter after quarter, Jamaican and Caribbean nationals were greeted with innovation and awesome creative marketing programs that lifted the morale of everyone associated with the airline.

Deflated Optimism

Before long Newark, Washington D.C., Phoenix and Houston in the US, Grenada, St. Lucia, Barbados and Belize in the Caribbean and Manchester in England signaled that the airline service was writing history, becoming a major third world carrier with first class operations.

This brings us to the question of if Jamaicans have been deceived. The restructuring plan delivered by Mr. Zacca has unveiled an ailing airline who will sooner than later need relief from it’s former owners, the government of Jamaica. The public has greeted this idea of bail out by government in a schizophrenic manner, as most cannot believe that after putting such a high class production of service and ingenuity while capturing the greater portion of the traffic into the Island, that the little piece of Jamaica that flies was really at a point where it will fold. As a caller to a talk show in Miami put it, “The government of Jamaica more so today, with it’s own economic burdens, cannot manage an airline of the size and extensive operations of Air J.”

Air Jamaica is a major contributor to the economy of Jamaica, flying more people annually to the Island from it’s gateways, than any other airline. It’s Air Jamaica, who in late 2002, accounted for the majority of passenger and air cargo traffic to the Island. It’s cargo operations are deeply involved in the growth of Jamaica’s industrial development and international commerce. Jamaica’s agricultural produce to the winter markets in North America as well as unassembled export materials (generally clothing items), use the airline to distribute their products to markets throughout the United States.

The airline maintains a fully-computerized reservations centre in Jamaica, with links to most major reservations systems. Operating as many as 14 aircraft, 2 MD, two Airbus A-321’s, four wide-bodied airbus A-310’s, six Airbus A-320’s and a total lift of over 2,400 seats on a daily basis, the airline also has an A-340 airbus which is used on the Trans-Atlantic run to the United Kingdom. This makes Air Jamaica the youngest and most modern fleet in the Caribbean region.

Undoubtedly it was the move to the private sector, the airline’s emphasis on service, a totally customer-friendly carrier, which advanced the airline’s capacity for cutting edge performance. “We will continue to fine tune the product so that we may offer our vacationing and business customers the best value for their money.” says Chairman Gordon “Butch” Stewart.

This is a honorable goal by Stewart but will it be justified in a climate of cutbacks? Jamaicans have been paying through their teeth to fly what is now a luxury carrier, as tickets to Kingston or Montego bay are now at an unprecedented high level by Air Jamaica’s standard. Passengers have seen major competitors become their preferred choice, as Air Jamaica fares have maintained seasonal highs even during downturn in travel.

It was Air Jamaica who introduced check-in desks at Island hotels. Passengers were able to check their luggage through to their final destination, get a boarding pass and a seat assignment while paying their departure tax in the Caribbean. The airline has allowed all inclusive Stewart’s hotels, Sandals, Beaches and Jamaican chain Superclubs to deliver an elevated luxury to their elite clientele. This is a nice added perk to traveling to the Caribbean and has boosted the Stewart hospitality brands. However, some Jamaicans remain furious as they question the inefficiency of the airline’s operations. It is true that the airline did have problems paying taxes owed to the government and has spent wildly, buying new multi- million dollar airlplanes as if they were going out of style. Stewart and his acquisition group, (while running a tighter ship at “Air J” where the GOJ has no stake) has, as some put it, raped the resources of the airline and plugged it into his other establishments and keeps begging tax payers to bail him out. Over their 7 years of ownership of the airline, the Acquisition Group has been like professional mendicant, groveling before government consistently. The whining did subside ahead of election 2002 yet it’s on again as a US 30 million dollar capital injection is being requested to allow for greater liquidity in the short to medium term.

Sell Out

Has “Butch” Stewart subsidized his Hotel operations while selling out the low budget Jamaican? It’s a thought provoking question that remains alive, for Jamaicans are today forced to fly lower priced American and Continental back home. The Air Jamaica brand, government funded or not may survive but simply at a premium to the visitors who want to experience Jamaican hospitality which has become prohibitive to our own indigenous people. The airline today offers code-share alliance with Delta Airlines, that does let people from all over the world easily and effortlessly travel to Jamaica and the Caribbean on Air Jamaica.

Air Jamaica’s major competitor on the Jamaica route out of Kingston and Montego Bay is American Airlines, offering some 6 flights off the Island to the major US gateways of Miami and New York. American Airlines dominated the market on these routes in 1995, capturing some 84 % of passengers to and out of Jamaica. The Stewart led privatized group did meet their goal of turning around the airline, capturing a high of 76% of the market share for passengers traveling out of the two major gateways and 84% of Jamaicans traveling from the Island to the United States. By late 2002, American had cut back airlift on both routes when they cut one daily JFK-KIN, JFK-MBJ flight, as well as trimmed MIA-KIN flights in February 2003. A/A is now counter surging and once again, from all indications, are on a rebound at the expense of Air Jamaica.

The Love Bird’s major competitors in the Caribbean, BWIA, who had first offered much resistance in keeping their rival out of established markets in the region, did succumb to cutbacks and restructuring to remain in flight. However, last week Friday, Prime Minister of Trinidad and Tobago, Patrick Manning indicated that his finance minister was in explosive meetings to determine the future of the airline. Manning, in a firm statement just hours after the meeting, said that BWIA’s senior management team was carefully told that the government is prepared to see the airline go under unless they can sufficiently provide a new working plan that is profitable.

Jamaicans may not have the luxury of allowing their symbol of nationalism, tourism health and linkage that support economic infrastructure to go under. Same time, Jamaica cannot afford to keep a fancy airline spiraling unendingly while most of it’s citizens remain unemployed and submerged in a conflicting cycle of poverty, far removed from the hospitality which is so boastful about delivering.

About the author

Phil Dinham