PROFESSOR TREVOR Munroe is to be commended for the questions he posed to the leader of government business in the Senate regarding Air Jamaica's management structure and debt profile, questions which elicited from Senator Burchell Whiteman some shocking revelations.
During the past 10 years since its privatisation, Air Jamaica has accumulated losses of some US$580 million (J$36 billion) and currently owes the government US$236 million (J$15 billion), much of which is for statutory deductions. Since the September Twin Towers terrorist attack and the escalation of fuel prices, most international airlines have been bumping along in turbulent air. But Air Jamaica, it seems, seldom is able to operate at a profit for any prolonged period, despite the loyalty of most Jamaicans who are inveterate travellers.
A recent attempt at benchmarking Air Jamaica's performance against international standards has resulted in mixed signals, one of the more interesting being that pilots who fly for the national airline are paid more than their counterparts worldwide.
The public is assured that steps are being taken to reduce and eliminate future losses, but Senator Whiteman declined in Parliament to reveal what these steps might be. The minister claimed that Air Jamaica is a private company which it may well be, but only in the sense that it is not a public company quoted on a Stock Exchange and its Articles of Association may contain restrictive clauses inconsistent with such a listing. Semantics aside, the Jamaican government, representing the Jamaican taxpayer, owns only 25% of the equity of the company but has had to put up all of the loan financing either in cash or by way of guarantees. It is strange that the private shareholders have not correspondingly increased their capital contributions.
Privatisation, though valid as a principle of governance, does not always work as happened with the sugar industry which was divested to the private sector, but had to be repurchased by government. Perhaps the same strategy will have to be used in the case of Air Jamaica, the government converting its debt, including unpaid statutory deductions, to equity and thus watering down the private shareholders who are either unwilling or unable to pull their financial weight. This would also solve the government's ethical dilemma of calling on ordinary citizens to pay over statutory deductions while at the same time giving Air Jamaica a 'bligh'.
But regardless of where ownership of the national airline finally rests, what is needed is a management structure and operating strategy to make it profitable. The option of closing it down does not appear to be sensible in light of the important part it plays in reinforcing the success of Jamaica's tourist industry which, by all accounts, is about to break all records.
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