Dennise Williams, Staff reporter
STEWART
SPECULATION IS rife that Gordon 'Butch' Stewart will turn Air Jamaica Express, the former associate airline of the national carrier Air Jamaica, into a Caribbean low cost carrier.
According to its website, Air Jamaica Express has destinations within Jamaica, Cuba, Turks & Caicos, Grand Cayman, Nassau and the Dominican Republic.
The low cost carrier (LCC) business model has become the airline industry's answer to operating in a high cost environment that caters to budget conscience travellers.
And Air Jamaica Express could be just the ticket to giving travellers to the Caribbean and from within the Caribbean the opportunity to stretch their travel dollars.
The Financial Gleaner understands that John Lewis, the chief operating officer at Air Jamaica has been hired as chief executive officer of Air Jamaica Express.
Sources tell the Financial Gleaner that there are plans afoot to rename Air Jamaica Express and equip the carrier with a new fleet of second-hand 737 planes taken over from North American airline, US Air.
And that is a critical point because 737s are the favourite planes for LCCs. According to plane manufacturer, Boeing's website, "The Boeing 737 makes up more than 90 per cent of the combined fleets of the low-fare carriers around the world."
The website goes on to say, "737s use less fuel, and have lower engine maintenance costs and lower navigation and landing fees. The 737 maintenance costs are up to 35 per cent lower than other aircraft.
MORE FLIGHTS
The 737's reliability also means operators can use an aircraft for more flights on any given day, giving passengers more departure time choices and airlines the opportunities for more revenue. Besides this range flexibility, the 737 comes in four different sizes in the 100 to 200-seat market."
And with the reported new thrust of the airline, Mr. Stewart could very well join the ranks of other LCCs that made a profit virtually from day one.
Information provided by Boeing revealed that, "Virgin Blue, founded in 2000 by Sir Richard Branson as a low-fare airline for flights within Australia, had predicted a loss for its first three years, but instead came in with a profit of US$500,000 in its first seven months.
In 2000, WestJet, another LCC which began operations in 1996, became the second most profitable airline in North America and celebrated its 21st quarter of profitability."
And so, with a more efficient fleet, experienced staff, and numerous destinations and of course hotels at the various destinations, Air Jamaica Express could put up a serious challenge.
In fact, airline experts see an environment where flights between Miami and Kingston could cost only US$69.
Already in North America prices are coming down. On Feb 25 the New York Times reported that low cost carriers forced down airfare prices by 40 per cent.
Air Jamaica Express has come a long way from its roots as Trans-Jamaican Airlines in 1995. At that time it was a government-controlled carrier that focused on providing flights within Jamaica.
Back in November of 1995, the Air Jamaica Acquisition Group (AJAG), led by Gordon 'Butch' Stewart along with other private investors bought majority ownership from the government.
AJAG bought 52 per cent of Trans-Jamaican Airlines, John Cooke, a past chairman of Air Jamaica, controlled 15 per cent; former director of Air Jamaica, Delroy Brown, acquired 10 per cent; Trans-Jamaican Airlines employees held five per cent and the Government retained 18 per cent of the carrier.
PREFERENCE SHARES
The financing arrangement announced by Mr. Stewart called for the new owners to put down $40 million in cash with $84 million to be paid at a later date. Additionally the Government would receive preference shares from AJAG in return for debt that the Air Jamaica Express had accumulated.
And even though by February 2004 Air Jamaica Express came under the operational control of the national carrier Air Jamaica, also operated by AJAG at the time, it did not suffer the financial troubles of the national carrier. In fact, it was felt by industry insiders that Air Jamaica Express was profitable.
Now, with AJAG returning control of the national carrier to the Government, Air Jamaica Express is reportedly an entity on its own that can provide serious competition to its once close associate.
Messages left with Air Jamaica Express executives were not returned by press time.
