jm017
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Air Jamaica "reviewing Business Model" Again.

Sun Dec 18, 2005 2:30 pm

In an article in the Jamaica Observer, the Government of Jamaica is reconsidering the business model they adapted very recently. Any ideas on what they need to do to be viable? Is expansion the answer? It didn't seem to work before. But that may have been because they focused on the wrong market (low-yield passengers). They seem to be focused on greater utilisation of their aircraft (and not on updating the fleet). But if they utilise aircraft on non-profitable routes, that's still no solution. Any ideas on which potential new routes would benefit them?

Thanks.
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kc135topboom
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RE: Air Jamaica "reviewing Business Model" Again.

Sun Dec 18, 2005 4:41 pm

Quoting JM017 (Thread starter):
Any ideas on what they need to do to be viable?

Get the 1988 Jamaican Olymipic Bobsled Team to advertise for them?
 
F27XXX
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RE: Air Jamaica "reviewing Business Model" Again.

Sun Dec 18, 2005 4:55 pm

Quoting JM017 (Thread starter):
Any ideas on what they need to do to be viable?

Get dem Jamaicans out de boardroom. Aaaaiiint noteen dey need less den a bunch of Jameeeeehcans sitin dere in da offissss goin "it goan be ok mon ..evryteen i-rieeeee ... no problems eeeere!"

Either that or have themselves featured on Donald Trump's Apprentice for some help. Deeeey gonna need it wid dat American Airlines doan dere all over da plaaace.

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garpd
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RE: Air Jamaica "reviewing Business Model" Again.

Sun Dec 18, 2005 8:36 pm

Quoting JM017 (Thread starter):
Any ideas on what they need to do to be viable?

Get a new fuel efficient longhaul fleet.
Will solve a lot of issues. That's according my bahamian buddy who flies for them every now and then.
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Lumberton
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RE: Air Jamaica "reviewing Business Model" Again.

Sun Dec 18, 2005 9:25 pm

Quote:
Under Lawrence, Air Jamaica announced that it would cut its fleet to 14 and, as a consequence, slashed several routes. More than 100 flight attendants and several pilots also lost their jobs. Most service frills were to be cut in the slimmed down carrier...Simultaneously, the government announced that it would provide a capped subsidy of US$30 million a year to Air Jamaica to meet specific debt payments, and the airline was able to raise a US$300 million, government-backed bond to write-down debt and meet operating costs.

Better figure out a way to generate some revenue fast. Cost cutting is nice, but parking aircraft ain't the way to make money. But then again, they can always go back for more subsidies....
"When all is said and done, more will be said than done".
 
whitehatter
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RE: Air Jamaica "reviewing Business Model" Again.

Sun Dec 18, 2005 9:52 pm

Quoting GARPD (Reply 3):
Get a new fuel efficient longhaul fleet.
Will solve a lot of issues. That's according my bahamian buddy who flies for them every now and then

and precisely where would the money come from?

Any fool can say "buy ten 788s and it'll solve the problems". Financing the deal would kill any economy benefit stone dead. JM is flat broke and would be loaded with lease or borrowing premiums on anything they tried to acquire.
Lead me not into temptation, I can find my own way there...
 
jm017
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RE: Air Jamaica "reviewing Business Model" Again.

Sun Dec 18, 2005 11:27 pm

Quoting GARPD (Reply 3):
Get a new fuel efficient longhaul fleet.
Will solve a lot of issues. That's according my bahamian buddy who flies for them every now and then.

This was my first thought. But that cannot happen. WhiteHatter is right: they simply cannot afford to do that.

I am beginning to think that the hub and maximal utilisation of aircraft are mutually incompatible.
"It's okay to cheat, if you just really don't like to lose."
 
jm017
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RE: Air Jamaica "reviewing Business Model" Again.

Sun Dec 18, 2005 11:34 pm

Quoting F27XXX (Reply 2):
Get dem Jamaicans out de boardroom. Aaaaiiint noteen dey need less den a bunch of Jameeeeehcans sitin dere in da offissss goin "it goan be ok mon ..evryteen i-rieeeee ... no problems eeeere!"

Either that or have themselves featured on Donald Trump's Apprentice for some help. Deeeey gonna need it wid dat American Airlines doan dere all over da plaaace.

Is this supposed to be funny? I suppose humour is relative.

To address the only statement worth commenting on, American Airlines is not the problem, although if JM cuts services further that will change. USAir and Spirit moving in on the high-yield routes to FLL is a problem.
"It's okay to cheat, if you just really don't like to lose."
 
dutchjet
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RE: Air Jamaica "reviewing Business Model" Again.

Mon Dec 19, 2005 1:28 am

JM cannot seem to make their airline work, depsite all of their attempts. JM has a few problems - first,they are a small airline from a small island nation which is very limiting......there is a limit to how many cities can support service to the island, second, the market is driven by tourism and there is a lot of choice, third, AA has dominated the caribbean for years and its hard competing against the big guy, fourth, CO and US have discovered the caribbean in a big way and have added service to the islands including Jamaica, and finally, the plan to turn MBJ into a caribbean hub (like the AA op at SJU) in cooperation with DL went nowhere. What is the status of JM's deal with Delta at this time?

I dont think that the problem is JM's fleet.....they are all Airbus and the A340 and A32X are very modern effecient airliners....swapping airplanes is not the answer. Many thought that additional longhaul would help JM - in addition to London, there was talk of service to Manchester and Frankfurt (did MAN ever happen?) but the markets are limited.....most Europeans head to the caribbean on charter flights that are included in package holidays that are sold for reasonable prices. Look at whats going on in the Dominican Republic for example.

Its tough being a small airline in a big world.....JM has flirted with BWIA for years and years, is the answer some type of merger which would create a single caribbean carrier?
 
Lumberton
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RE: Air Jamaica "reviewing Business Model" Again.

Mon Dec 19, 2005 1:35 am

Quoting Dutchjet (Reply 8):
JM cannot seem to make their airline work, depsite all of their attempts. JM has a few problems - first,they are a small airline from a small island nation which is very limiting.

Pardon me if this has been discussed before in connection with JM, but do they have any code share arrangements? An alliance of some sort would certainly seem to be indicated. IMO, even a merger with BWIA won't bring that much to the table, since they both compete for the tourism market outside of the Caribbean. I suspect AC, AA, CO, and US would be loathe to share the wealth here, but what about hooking up with some of the big Euro charters/carriers? What about South America? Could they develop a new market with pax from Brazil, Chile, Argentina, etc? Lots of disposable income here.
"When all is said and done, more will be said than done".
 
captaink
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RE: Air Jamaica "reviewing Business Model" Again.

Mon Dec 19, 2005 2:12 am

Quoting Lumberton (Reply 9):
even a merger with BWIA won't bring that much to the table, since they both compete for the tourism market outside of the Caribbean.

But JM and BW don't compete really on all of their routes. In the southern caribbean JM has the MBJ/KIN (connections) and JFK. BW is big in the southern carribean. I think a merger would just strengthen their route network over the caribbean. BW continues to serve MAN and LHR, and JM has a greater presence in the continental US. The two cannot continue to be these tiny carriers trying to compete with big boys like AA, CO and US. If we have a merger of JM and BW, coupled with additions like the regional airlines lets say LIAT, you would get a wonderful end product, with great coverage and expansion possibilities.

The governments of the caribbean have been toying with this idea for years. Politics would never allow it to pass in my opinion. What is going to happen is that JM and BW will continue to receive great infusions of cash, and continue to waste it. The never ending story of their lives..
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David_itl
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RE: Air Jamaica "reviewing Business Model" Again.

Mon Dec 19, 2005 3:44 am

Quoting Dutchjet (Reply 8):
there was talk of service to Manchester and Frankfurt (did MAN ever happen?)

see this thread
 
Lumberton
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RE: Air Jamaica "reviewing Business Model" Again.

Mon Dec 19, 2005 9:38 am

Regarding the possibility of a merger between JM and BW, Captaink wrote:

Quoting Captaink (Reply 10):
The governments of the caribbean have been toying with this idea for years. Politics would never allow it to pass in my opinion.

From the thread referenced by David_itl:

Quoting BWIA 772 (Reply 16):
IMHO it is clear that Caribbean aviation is in dire need of visionary leaders who can make these Caribbean airlines viable.

Yes, but it appears to me that JM has a "northern" orientation when it comes to target markets. What if they were to focus on a "north/south" strategy, i.e., include the South American market? Again, I can't recollect whether this has been discussed before, but clearly the competition is overwhelming them in their chosen markets. JM has great equipment, and a superb product (Jamaica!) to sell. Why not a little "out of the box" thinking? The trend isn't positive....
"When all is said and done, more will be said than done".
 
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garpd
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RE: Air Jamaica "reviewing Business Model" Again.

Mon Dec 19, 2005 8:28 pm

Quoting WhiteHatter (Reply 5):
and precisely where would the money come from?

Any fool can say "buy ten 788s and it'll solve the problems". Financing the deal would kill any economy benefit stone dead. JM is flat broke and would be loaded with lease or borrowing premiums on anything they tried to acquire.

Where there is a will there is a way.
Need I remind you of several rather large orders for aicraft by airlines that still onlty exist on paper? Kinfisher for example, merely a paper airline when they ordered a substantial number of Airbus machines.

Also some existing carriers with bank books not all that great have been ordering aircraft:

Air Canada, not all that great with the bank just now, yet Boeing are helping them finance their order.

Emirates also, massive, massive fleet expansion orders yet actualy very little income in relation to the ammount they order. All financed in very clever ways.

Continental, by far the most stable US legacy carrier, but still not in the best banking position, they ordered a healthy number of aircraft this year and look to order more next year.

Neither of these airlines seem affected by their orders.
If done properly the leasing/borrowing/purchase costs can be covered by the revenue's gained by a more efficient fleet.

My point is, Airbus and Boeing each offer extensive financing deals. If an airline needs new planes and either manufacturer feels it prudent to help them out, they'll do so. After all, the money gained over the years in spares and interest makes it worth it for the manifacturers.
Also, there are many other ways to aqcuire a new fleet. Leasing being one of them.
Or perhaps even buying second hand, plenty businesses out there able to finance just about anybody.
Again, I say that if done properly the leasing/borrowing/purchase costs can be covered by the revenue's currently made and also, if there is enough of a difference, the extra gained with the new efficient fleet.

If JM got their heads together with Airbus or Boeing or a lessor, they could and would get a new fleet.

Anything is possible. I'm not saying JM will go out and get a new fleet. All I am saying is that even being flat broke does not close the door to this possibility.

[Edited 2005-12-19 12:46:59]
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Speedbird2155
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RE: Air Jamaica "reviewing Business Model" Again.

Mon Dec 19, 2005 11:02 pm

Captaink,

I do agree that a great solution would be for JM and BW to merge and possibly include LIAT. It is unfortunate that politics continues to play such a large role in aviation in the Caribbean. This is been happening to the detriment of the airlines. I think that by combining the airlines, it will improve the marketing abilities and allow then to rationalise the route networks and offer routes and schedules that are just as competitive as the major international carriers. This would include offering tourists the ability to combine different islands in their holidays without the hassle of changing carriers but simply have everything done through one merged network. One thing that a merged carrier would have to focus on is improving the service and punctuality. This is critical to success. The level of service especially on the ground for both carriers can be dreadful, more so with BW. But for all this to happen, the governments need to take their hands off the airlines and let professionals do their job. The only government that was strong enough to recognise that their airline wasn't working was Barbados in the early 1990s and they made a decision to halt all flights. The airline still exists in name only and has managed to build up one of the most successful groundhandling and duty-free operations in the Caribbean. The decision received much criticism at the time from the then opposition, who since being in government have gone on to back that decision and have decided not to resume flying operations but rather seek to support others including BW and LIAT.
 
BWIA 772
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RE: Air Jamaica "reviewing Business Model" Again.

Tue Dec 20, 2005 2:25 am

The Caribbean is big enough to have a regional carrier. However governments will not be willing to join BW JM and LI into one airline. BW and LI were to merge but it is now clear that the planned merger will not happen which just shows the small minded mentality that our governments adopt when looking at the airline industry.

I will repeat what I said and that is that the Caribbean airlines are in desperate need for visionary leaders who can look past national pride and see the big picture.

Quoting GARPD (Reply 13):
If JM got their heads together with Airbus or Boeing or a lessor, they could and would get a new fleet.

It would be better if BW and JM did this together.


I will say that now is the opportunity for BW JM and LI to come together and actually form a comprehensive route network that would prove to be a serious competitor. However due to the politics of the region, national pride and the mentality of our leaders this will not happen.
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F27XXX
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RE: Air Jamaica "reviewing Business Model" Again.

Tue Dec 20, 2005 2:50 am

Makes you wonder why Cayman Airways has been able to hold their own for this long without becoming an embarassment to their countries like JM and BW have.

Hmmmmm....
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garpd
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RE: Air Jamaica "reviewing Business Model" Again.

Tue Dec 20, 2005 7:02 am

Quoting BWIA 772 (Reply 15):
It would be better if BW and JM did this together.


I will say that now is the opportunity for BW JM and LI to come together and actually form a comprehensive route network that would prove to be a serious competitor. However due to the politics of the region, national pride and the mentality of our leaders this will not happen.

United Caribbean Airways Big grin
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srbmod
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RE: Air Jamaica "reviewing Business Model" Again.

Tue Dec 20, 2005 7:06 am

Quoting Lumberton (Reply 9):
Pardon me if this has been discussed before in connection with JM, but do they have any code share arrangements?

They have a codeshare deal with DL. When JM slashed service @ ATL, DL took over most of the frequencies. Prior to the JM cutbacks, they wet-leased an 738 from DL to operate their morning ATL-MBJ flight for a time.
 
2travel2know
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RE: Air Jamaica "reviewing Business Model" Again.

Tue Dec 20, 2005 7:20 am

Air Jamaica should think HUB, HUB, HUB...
It has worked for CM, why JM should be too different?
Make MBJ a real regional hub and only operate KIN flights which are aimed for the KIN O/D market.
But JM has an identity crisis, It's neither a Leisure airline nor a Business airline.

I doubt JM and BW will ever accomplish something voluntarily. The dream of Jamaicans and Trinis working together is just a dream.. would look nice in paper, but both airlines (and their markets) are verymuch alike plus They both totally forget the potential passengers they could get south and in the biggest Caribbean Islands.

Quoting F27XXX (Reply 16):
Makes you wonder why Cayman Airways has been able to hold their own for this long without becoming an embarassment to their countries like JM and BW have.

KW is government owned, as such, it provides the service of keeping the islands linked to the outside world. Some marketing? maybe, but if they really wanted they could have made it into a big "hub" Caribbean Airline.
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BBJII
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RE: Air Jamaica "reviewing Business Model" Again.

Tue Dec 20, 2005 7:23 am

One solution on 1 route:

The LHR flight;

Most of JM's passenger's are to/from LHR, not much onward/inward connections.

Sell the LHR Slot to the highest bidder....move to LGW or STN.

There's a few million raised from the slot sale. LGW and STN are not:
1 - as busy
2 - as big
3 - night restricted.

therefore:
1 - taxi fuel is halved
2 - slots are cheaper
3 - delayed flights can operate at night

 wave 

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lucianflyboy
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RE: Air Jamaica "reviewing Business Model" Again.

Tue Dec 20, 2005 7:37 am

Quoting BWIA 772 (Reply 15):
However due to the politics of the region, national pride and the mentality of our leaders this will not happen.

I totally agree! Caribbean unity is something that has and is still being fought over. Sad to say, a LI/BW/JM merger will be long in coming if the governments have anything to say about it. Caribbean Star, 8B came along and is still there. They decided to set up shop in LIAT's living room (ANU) and made no apologies. Now, Caribbean Sun, is operating from SJU and code sharing to SVD along with US. There's talk of a 8B/ZQ merger and even RJ's somewhere down the road. I don't know how their service and profitability is but there are hanging around and could one day knock out the competition(LI).
 
trintocan
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RE: Air Jamaica "reviewing Business Model" Again.

Tue Dec 20, 2005 8:45 am

The Caribbean aviation scene- really and truly the more things seem to change the more they stay exactly the same. JM and BW are unlikely to co-operate because that requires the political will of the two Governments involved. The other problem that will be faced is that the two airlines are actually competing for tourists for their respective destination Islands. If one looks at the UK market, for instance, many pax for Jamaica fly JM while those for Barbados, Antigua etc. would go BW (let's leave out those cramped charters for the time being). If you consider that many of the visitors booking their holidays would have to choose between one Island and another it becomes clear that the Islands are competing for the visitors. Once you consider this you will see another reason there is little incentive to actually work towards a merger.

Add to this the difficulties of operating across the Caribbean (KIN and POS are over 1000 miles or 1600km apart after all) and the invariable need for two hubs and one sees the massive hurdles needed to create a truly regional carrier. It is possible but it needs a lot of work, like any good relationship and this sort of initiative has not been forthcoming. Until such a time scores of "new operating plans" will be hatched for JM and BW which will really be the same old things over and over again.

TrinToCan.
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Lumberton
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RE: Air Jamaica "reviewing Business Model" Again.

Tue Dec 20, 2005 9:10 am

Quoting 2travel2know (Reply 19):
They both totally forget the potential passengers they could get south and in the biggest Caribbean Islands.

Yes! I was hoping to get a response on my question earlier about a re-orientation of JM's marketing efforts. We have a consensus here that BW and JM won't merge, as well as the fact that new metal won't solve anything. So what to do?

Would the South American market work for JM?
"When all is said and done, more will be said than done".
 
2travel2know
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RE: Air Jamaica "reviewing Business Model" Again.

Tue Dec 20, 2005 9:40 am

Quoting Lumberton (Reply 23):
Would the South American market work for JM?

Some key major Southamerican cities may work, specially if JM is to offer from their hub quite a number of good US/CA/UK destinations.
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PHXinterrupted
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RE: Air Jamaica "reviewing Business Model" Again.

Tue Dec 20, 2005 9:50 am

Quoting GARPD (Reply 13):
If JM got their heads together with Airbus or Boeing or a lessor, they could and would get a new fleet.

As a shareholder, I hope Boeing continues to keep their distance from JM.
Keepin' it real.

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