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February 7, 2012
Why can't JALPA's application fly? PDF Print E-mail
Thursday, 11 February 2010 00:00

The divestment of Jamaica’s national carrier, Air Jamaica, has become an issue of major significance with Jamaicans at home and abroad. Most, including people who have never traveled on the airline, are resisting its sale to an overseas entity, particularly to Trinidadian-owned, Caribbean Airlines.

It’s not that most Jamaicans disagree that the airline should be divested. They realize that it is unprofitable and a liability to the government, but there is significant national pride in the airline, which most accept as a “little piece of Jamaica”.

As a coconut vendor operating outside Norman Manley Airport said, “Every time mi see a Air Jamaica plane landing or taking off me feel proud; no matter how business slow.” This pride exists, irrespective of reports of the airline’s financial losses. But, business is business and the emotional surge will not make the airline viable. It must operate as a viable business entity; but by whom?

Since its inception in 1969, the airline has hardly operated as a profitable venture. What has kept it flying is financial support from succeeding Jamaican governments.

One of the problems that have plagued the airline is that it never kept to its original business plan – a nationally-owned airline serving Jamaica and Jamaicans living in large Jamaican overseas communities in New York, Miami, Toronto and London.

Rather, both the Jamaican government and its former private operators tried to transform the airline into a carrier serving the Jamaican tourism industry with routes to and from Jamaica, and other tourist destinations in the Caribbean. This created vast multiple routes which escalated operational expenses like leasing a larger fleet and employing a larger staff. This system was unsustainable.

Over the past two years, the airline dropped several routes, returned leased planes, laid off staff, resulting in the containment of losses. But, still, the airline remains a drain on the national budget. Therefore, it should be sold to a private entity, without financing from the Jamaica government.

For well over a year, the committee responsible for the airline’s divestment has been locked in a non-transparent cocoon. This created rumors as to who the potential buyers were and the process of sale. Last summer, it was strongly rumored that Fort Lauderdale-based carrier, Spirit Airways was the buyer. Then late last year, word was that it was Caribbean Airlines. The government confirmed negotiations with CA, but also said last week that the outcome of a deal with CA would be delayed until April, prompting rumors that the negotiations with the Trinidadians are in jeopardy.

But, there is also the application from the Jamaica Airlines Pilots Association (JALPA), and some of the airline staffers. Despite the seeming validity of JALPA’s application, it was, according to Jamaica’s Minister of Finance Audley Shaw, submitted too late.

However, the postponement of the outcome of the negotiations with the Trinidadians assumes the deal is not concluded. Some people are, therefore, asking why the government can’t adjust the divestment rules to negotiate with JALPA. They argue that JALPA’s money is as valuable as CA’s, plus JALPA has an intimate knowledge of the airline’s operations, and its members are Jamaicans. They also ask, in the absence of transparency, is it true that the IMF is insisting that the airline be sold to non-Jamaicans? If this is so, why?  Outside of the divestment committee and the Jamaican government, no one knows.

As strong as emotions are to sell the airline to JALPA, if JALPA’s application missed the divestment deadline, and the government is involved in active negotiations with CA, they cannot possibly open new negotiations with JALPA. The government is committed to continue negotiating in good faith with the Trinidadians, unless those negotiations irrevocably break down.

If the negotiations do break down, then, of course, the government should consider JALPA’s proposal. Based on the mood to keep the airline Jamaican, and assuming JALPA has a viable financial, operational, managerial and marketing plan, there’s no reason why the government shouldn’t then negotiate with them.

If there is a realistic opportunity for the government to reopen new divestment applications and JALPA’s is not considered, this could be a serious problem. It would be very strange if the government, cognizant of the mood of Jamaicans regarding the airline’s divestment, and having the proposal from a viable Jamaican entity, refuses to consider its offer.

Jamaicans must now endure agonizing suspense until the minister makes his announcement in April. By then, anything could develop. Jamaicans are hoping that what develops is an opportunity for a Jamaican entity like JALPA to own and viably operate the airline.

 


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