When Hurricane Ivan the Terrible hit the Cayman Islands and left hundreds of Jamaicans in panic there following the battering Jamaica had received, something must have struck most of them forcibly. It was that their own national airline ran seven special evacuation flights to bring them home. No foreign airline was about to do any similar rescue, even if those were not preoccupied with their own survival concerns.
Many of the Cayman resident Jamaicans, I am reliably informed, could not afford the air fare. But Air Jamaica brought them home nevertheless. The point is not made to praise Air Jamaica's charity. It is simply a reminder that we take a vital national asset for granted. For welcome though the charity was, it is the survival of our economy which puts Air Jamaica's sterling worth in perspective.

Consider this. It is our tourist industry that is at the heart of our economy, being the greatest earner of foreign exchange.
And it is Air Jamaica which is at the heart of our tourist industry. The airline brings in 51 per cent of all visitors to the island. That is, our national airline brings more visitors to our shores than all the other airlines combined. On that basis, the collapse of Air Jamaica could be the collapse of, or very serious damage to, an ailing economy pressed with debt nearly two-thirds of its revenue intake. Yes, there are other airlines serving our country. All things being equal, they could rush in to fill the void of an Air Jamaica demise. But all things are not equal, especially after the infamous event of 9/11 and its disastrous effects on the airline industry.

Major airlines like American Airlines and Delta Airlines are facing survival problems requiring bailouts. Air Canada is threatened with bankruptcy. Now, guess where those airlines would cut their service first, in deciding whether to serve Jamaica or their own larger corporate market? It takes no genius to see the obvious. And if you are too simple-minded to see, remember that at least one major airline cut back service to the Eastern Caribbean the moment it was not sufficiently profitable. The Cayman Islands rescue mentioned above, reminds us what it means to have a national airline obligated to its citizens. Air Jamaica has shown itself responsible to serve even under conditions where foreign commercial airlines would fold or just quit.

Yet there are many among us who fail to see the simple logic of dependence on a national rather than a merely commercial airline. The logic is, we have a heavy dependence on foreign exchange and thereby on tourism, and thereby on a predictable and reliable national airline service. Failing to see the bigger picture, such critics berate the national airline for needing government assistance to survive. Never mind that it is strongly in the government's interest to maintain a viable economy by protecting its economic bedrock. Those myopic critics even fail to see that a loan guarantee by the government to our national airline is not the same as a cash bailout, which several airlines in the US received from the American Federal government after 9/11. Our Air Jamaica took salary cuts especially among the higher staff hierarchy but preserved the jobs of all staff. It did not add many to the unemployment line.

Commendably, what the national airline has done, is set itself to grow out of its indebtedness. Its setback in the progress it was making toward this goal is the same kind of setback the entire airline industry is now experiencing. And it is not over by any means. The recent steep rise in oil prices on the international market will continue to challenge the efforts of management in its push for profitability. I understand that Air Jamaica budgeted for jet fuel being at an average price of US 87 cents per gallon. Currently however, the price is averaging US$1.50 per gallon and rising. That means nearer twice the expenditure budgeted for and translates into J$2 billion more! You and I know that the airline cannot jump its ticket prices by the same ratio and survive the competition.

So the picture calls for understanding and sympathy from all of us potentially affected. And it calls even more for understanding and sympathy from those most directly affected. In that regard, it is disturbing to see what appears to be the intransigent position of the Air Jamaica pilots in their demand for higher pay. We hear that salary demands exceed a Jamaican prime minister's salary, and more significantly that of many of their foreign counterparts. Now, we value our pilots highly and agree they deserve to be well paid. But let me remind them of big-name airlines that are no more, and of former pilots begging for jobs in a depressed industry.
Remember the fate of Eastern and Avianca airlines. Note both Delta and Air Canada are now facing bankruptcy. Air Jamaica is not immune.

An Air Jamaica staff member tells me that it isn't that our pilots are not well paid. Rather, it is their need to meet a certain upscale lifestyle. How short-sighted of them if that is true. Our airline is proving its sterling worth. Its pilots must see the bigger picture and do no less. Jamaica Observer

I have heard rumours that AirJamaica will be closing down In an effort to lower its pilot costs. The airline has to lay off all its pilots and rehire them at a lower salary. If all the flights were so full and the airline was making all this money, where is it??

If AirJamaica has no money, then why is it flying relief missions for other countries???

Gees Domo, I didn't even know that airjamaica was heading closure. I want to know my self where all the money is going. And why lay off the pilots in an effort to rehire for lower salary? THis is crazy! We can't afford to loose a national airline. Maybe some of the money is going to the government and to an outside revenue source. Otherwise, I don't know.

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It would be very sad if Air Jamaica went bankrupt. It is the one airlines that I really enjoy flying. They take care of you! And they also take care of their people. I can't imagine an American airline flying their people for free.

This is sooo true. The give quality service, good food and I never ever heard or seen any terrorist attacks.

It would be very sad if they did go out man. Knowing that they represent Jamaica well even as the only air line we can 'own up' and call ours.

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That would be a real shame if it happened. But, THANK YOU, Domo for providing us with this information. I can barely afford to fly Air Jamaica as it is. This last time was the first time I didn't pay $500 for a ticket. I don't know where the money is going because Air Jamaica is always more expensive than the other American carriers.

I hope this is not true, because I just love Air Jamaica. Say it aint so Domo.

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Im just kitten feel my vibes

AirJamaica had a press conference yesterday and announced that they will continue and try to come up with a business plan to save money due to the fuel price increases. Although a major restructuring will have to take place, it looks like they can't afford to close down. Jamaica's tourist industry relies on AirJamaica too much.

Exactly. I am happy to hear the good news cause I shall be flying it till its wings drop off.

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Found this today and thought it was an interesting read: http://www.jamaica-gleaner.com/glean...business2.html


Air Jamaica's luxury service will continue
published: Wednesday | October 6, 2004



Zacca

Al Edwards, Financial Editor

DESPITE HAVING to slash costs by US$50 million in order to keep the national airline viable, Air Jamaica has no intention of drastically curtailing its in-flight luxury service and going the way of low fare carriers such Jet Blue and EasyJet.

Speaking with Wednesday Business earlier this week, Air Jamaica's chief executive officer Christopher Zacca said, "The fundamental basis of the product is 'the best service in the sky' and that will not change. That was the basis upon which we built Air Jamaica and we forecast demand based on that. The trick is for us as managers to find ways for us to aggressively deliver that product at a cost which is reduced in the face of external factors that are beyond our control such as the price of fuel."

He said the airline could achieve its aims, "By being very aggressive on our providers of supplies and on cost areas such as leases. But the bottom line is that the fundamental product design of high service in the skies will not change."

Mr. Zacca said there are no immediate plans to increase air fares and drew attention to Ameri-can Airlines' attempt to do so. He said that only two weeks ago it attempted to add an extra US$5 to US$10 on its ticket prices in the United States but was forced to rescind that because demand was soft.

He said airlines are finding it difficult to maintain price increases because of cut-throat competition among the carriers.

"It is now such a competitive industry that your prices cannot be much higher than your rivals, so unless everyone goes with a price increase it doesn't stick. With the price of fuel being what it is you wonder what the future holds. Demand is so soft now that you just can't raise your prices."

Air Jamaica is facing a fuel bill of US$105 million this year, a
significant increase on last year's US$73 million. It's new business plan is predicated on a US$45-$50 a barrel scenario. However, yesterday oil prices leaped above US$51 a barrel.

Oil analysts surmise that high prices have had little effect on the fastest oil demand growth in a generation this year, while concerns of potential supply disruptions as oil producers pump at full capacity has fed price gains.

Industrialists and policymakers around the world are watching the price of crude oil to see if record highs will threaten world economic recovery.

REMAINING VIABLE

Mr. Zacca said that it
was important that the country understood why it is important that Air Jamaica remains viable. He said that the airline rakes in US$1 billion a year and is responsible for carrying 51 per cent of all visitors to Jamaica. It is a vital fillip to the tourism sector that until Hurricane Ivan, it grew by 10 per cent and was set to have a record year as far as arrivals was concerned. Air Jamaica has costs of US$500 million a year with passenger revenues coming in at US$440 million. It now finds itself owing its local bankers US$100 million.

Mr. Zacca said that in 2001 Air Jamaica was on target to post its first profits but subsequent events put paid to that.

It is now undergoing cost cutting measures and is asking its staff for 'give backs' and to contemplate the possibility of salary cuts. Mr. Zacca said that Air Jamaica pilots are amongst the highest paid in the world and that the company has been in negotiations to trim their salaries but the pilots are instead insisting on a five per cent increase.

FACING REALITY

Responding to the question in light of the calamities to beset the industry and more particularly Air, Jamaica , is it extracting value from its pilots, Mr. Zacca responded: "We do get value from our pilots but with the state of the industry as it is now there is a need to cut their salaries. Everyone in this company has to face the reality that concessions have to be made. So far we have tried to share as much information with the pilots but it seems to be of no avail with them continuing to insist on increases."

The President of the Jamaican Airline Pilots' Association, Mr. Keith White in a letter to Wednesday Business said: "Air Jamaica has threatened us with replacement by foreign pilots if we do not accept a 25 per cent pay cut. Statements in the press about our salaries are not true. It has been said we are paid more than our competitors, for example, American Airlines. This too is not true. In fact, confronted with this claim we have suggested that we be offered American's pay contract and would match any concessions that their pilots gave. "This offer was not taken up because it would increase our package and cost Air Jamaica much more money. Air Jamaica's studies and studies done on our behalf by international agencies confirm that Air Jamaica's costs for crews is less than 10 per cent of the airline's costs. The industry average is 13 per cent. The pilots have a collective bargaining agreement with Air Jamaica which the company has breached twice. Air Jamaica may well be the first major Jamaican company to break a wage contract. We hope no other companies follow suit. This occurred in November 2003, just before the start of the winter tourist season. Our pilots to date have not taken industrial action."

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It's official. Air Jamaica is now back under the control of the Jamaican govt. Butch and his team are out. Dr. Vincent Lawrence and Aubyn Hill (former exec from NCB) are in control of the board and restructuring office respectively.

Read about it here...

Read more here...

Here's another article...

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"Blessed are ye, when men shall revile you, and persecute you, and shall say all manner of evil against you falsely, for my sake." - Matthew 5 v11 KJV

Very waggish indeed.

The interim board of directors of Air Jamaica are featured in this article.

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"Blessed are ye, when men shall revile you, and persecute you, and shall say all manner of evil against you falsely, for my sake." - Matthew 5 v11 KJV

Very waggish indeed.

Bwoy Bounty.. I was wondering if you own Air J..lol you know alot about them ha.

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Well if govt. tek it ova, an' mi a pay tax, den mi nuh own part a it too?

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"Blessed are ye, when men shall revile you, and persecute you, and shall say all manner of evil against you falsely, for my sake." - Matthew 5 v11 KJV

Very waggish indeed.

Do you think this is a good thing? I remember hearing that there was some corruption going on with the previous management.

I can't speak factually about corruption, but I do suspect that there was some mismanagement. Also, with a series of unfortunate events (no, not Leminy Snicket's ) with things like the 9/11 incident and the resulting reduction in air travel, skyrocketing fuel prices etc. Air J racked up some serious debt.

The govt. has said that their intention is to restructure the company so that it is commercially viable once more, with a view to sell the entity. Hence they got Aubyn Hill, the former bigwig from NCB, who has extensive experience and connections in the internation finance field (he was a top banker in Kuwait and Saudi Arabia for many years). They're hoping he can secure international funding for Air J and bring it to a state where it is an attractive investment for international interests.

With all that said, they've got their work cut out for them. I suspect that jobs will be cut, and changes will be made to promote greater efficiency. That may be a good thing, but they need to be careful about how they handle it. For many years, Air J staff have worked tirelessly and dilligently with very meagre renumeration. Govt. needs to ensure that these dedicated workers don't end up getting a raw deal in the end.

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"Blessed are ye, when men shall revile you, and persecute you, and shall say all manner of evil against you falsely, for my sake." - Matthew 5 v11 KJV

Very waggish indeed.