by John Hunter

Your analysis is intriguing but it rests on some shaky foundations:

1. Your friend asked you when was the last time YOU were on an empty Air J flight. If you only ever fly from New York to Kingston and Ft. Lauderdale to Kingston you would probably hardly ever see an empty flight. But that shouldn't be used to theorize that ALL Air J routes are similar. When Air J used to fly to Port-au-Prince and then Santo Domingo I had a couple relatives who went there (Santo Domingo) shortly before Air J cut those routes and they said they could count on their 4 hands collectively the amount of people on the journey from Kingston to Port-au-Prince and then to Santo Domingo. When Haiti had that free zone there used to be a fair amount of traffic. Then the free zone died and the traffic for Air J died with it. Air J also used to fly direct to Belize city but that route was NEVER full since it only really accommodated maybe 50-75 university students each year and a couple of other people visiting friends and family. The smart thing to do would have been to fly to Belize with a stopover in Cayman to maximize traffic, but who knows why they didn't do that. In any case it was recently stated that the Air J flights between Kingston and Nassau fly at 40-50% capacity. That is just about okay, but given the relatively strong Jamaican community in the Bahamas and the fact that you don't need visas (plus Air J is I think the only airline to operate direct flights between Kingston and Nassau) a 40-50% load capacity is pretty poor.

2. American Airlines (or some other American operator) always had flights from Miami to Kingston. They didn't just pick up the Miami-Kingston route when Air Jamaica dropped it. They only picked up the additional flight times, but not the route. If you don't believe me check out the Jamaican Civil Aviation Authorities own list of licences to foreign airlines: http://www.jcaa.gov.jm/ER/ECON%20REGS%20PERMITS/Scheduled%20Air%20Service%20operators%20into%20Jamaica%20as%20at%20December%205%20%202008.pdf . American Airlines had a licence for that route from 2007 and Air Jamaica never dropped that route until 2009. Amerijet also plied that route. The same applies to the Atlanta route. Delta had a licence to fly New York-Atlanta-Kingston-New York-Atlanta since 2008 (Air J didn't cut Atlanta until 2009) and both Delta and Continental flew from Atlanta to Mobay. How many flights did Air J make between Atlanta and Kingston in comparison to the Delta and Continental flights between Atlanta and Mobay or Kingston? Have you been on any of those Air J flights to say for certain they were 100% capacity?

3. As you rightly pointed out London, Atlanta and Miami have strong Jamaican communities, but is Air Jamaica expected to be profitable by catering only to these communities and not the wider population in those cities? The Jamaican communities in those cities are minuscule compared to the total population, so if only Jamaican expatriates were flying Air Jamaica while just about everybody else was flying AA, BA, Delta and Continental then how is Air J expected to make a profit year-round? This ties in with point #1. If you only fly at times when Air Jamaica is experience a lot of traffic by expatriate Jamaicans (around Christmas and a couple other times per year) then the impression you will get is of full flights. Even then I know for a fact that not all Jamaican expatriates fly Air J. I have relatives in northern England and they fly BA. It's not that they don't like Air J, but BA is more convenient because it has WAY more flights, plus living in Britain they could get miles for BA, not for Air J. So why would they throw away free miles gained from credit card purchases? Maybe if Air J worked out some deal to get miles being given out specifically for Air J for credit card users in Britain then they might see more business year-round.

4. The government wasn't involved in the day to day managing of the airline between 1994 and 2004 as the government only had a 25% stake. The airline remained so unprofitable that the government had to come back in to sustain the losses.

5. If you listened to or read the basis of the JALPA bid with only economics in mind you would find something fishy about JALPA's bid:

(i) they do not clearly state where they intend to get the money from or how they intend to get it. Currently what has been thrown around is that they have money from a number of private equity firms OR that they will use the money from the redundancy payments OR some combination thereof OR none of those things depending on what you read at any given time. Now would you do business with anyone who hasn’t clearly outlined where the money is coming from (different sources of revenue are given at different times) and whose main carrot is that the government won’t have to deal with Air Jamaica’s problems anymore? I’m sure governments past and present (both in Jamaica and abroad) have heard that particular line before only to find themselves being called upon to "do something" to "save" a "national institution" or a corporation that is "too big to fail".

(ii) on the television news the other night a JALPA representative gave extremely vague answers as to what JALPA would do with the airline (some would say he didn’t want to buss the secret plans, but given that they are talking about an airline and not some super-secret weapon during a war the need for secrecy is more than overblown). The clearest hint of what they JALPA (or at least JALPA’s rep) had in mind was when he said that one doesn’t "shrink into viability" and that they would intend to "expand into viability".

Even if there weren’t any audits for Air Jamaica since the 1970s enough information has been presented in the newspapers to show that this second bit of JALPA bid about "expanding" into viability seems to run counter to the proven loss-cutting measures recently implemented (in 2009 Air Jamaica only lost US$60 million as opposed to US$160 million in 2008) as well as running counter to what some other airlines are doing to stay in business, even right here in the region. For instance Cayman Airways used to have flights to Ft. Lauderdale, Houston and Orlando but simply had to cut those routes despite the fact that gut feelings would indicate that Ft. Lauderdale and Houston should be profitable routes for the Cayman Islands.

Incidentally, Dennis Chung at the Jamaica Gleaner seems to know something your friend doesn’t or he has access to some really privy information. As you can see from his article back in 2005 (see: http://www.jamaica-gleaner.com/gleaner/20050708/business/business2.html ) he refers to and analyses "the 2004 audited financial statements" for Air Jamaica.