THE BUSINESS adage 'don't throw good money after bad' came about because history showed that managing directors, boards of directors and even governments become emotionally attached to failing enterprises and keep trying to prop them up until, at the point of collapse, 10 times more losses have occurred than if the plug had been pulled in the first instance.
With such emotional attachments, there will always be attempts at rationalisation to support them. In the case of Air Jamaica, the argument is that its demise will hurt Jamaica's reputation in the international financial markets and that, since the airline carries over 50 per cent of visitors to the island, shutting it down will deal a body blow to the tourist industry and the overall economy.
There are counter-arguments to these fears. Far from making it more difficult for Finance Minister Dr. Omar Davies to borrow money abroad, international creditors could well applaud the will displayed in getting rid of a losing enterprise and offer him even larger loans. As far as the tourist industry is concerned, there is another wisdom that says 'nature abhors a vacuum'.
Jamaica is such a strong brand as a tourist destination, that within weeks of closing down Air Jamaica, other airlines would put on flights to satisfy the demand for seats. And, even if there was a temporary shortage of airlift, this might not be a bad thing. Famous restaurants in the capital cities of the world maintain their frisson because even the wealthiest patrons must make reservations in advance. It could well be that with the closure of Air Jamaica, the supply of airline seats would soon match the demand for hotel rooms and this equilibrium would allow hoteliers to raise their rates and become more profitable.
On the other hand, trying to keep Air Jamaica flying presents some formidable challenges rising oil prices, new security and maintenance concerns, pressure from creditors, and last, but not least, trying to reorganise around some staff members who, if not sabotaging the effort, are hardly enthusiastic about it. At the end of the day, Air Jamaica's losses may be in the order of magnitude of the financial sector meltdown which brought FINSAC into existence. Or put another way, the Jamaican government now owns and is trying to operate two major transportation companies, the JUTC Corporate Area bus service and Air Jamaica, both racking up millions of dollars of losses every day. How long can we afford to keep this up?
The Government should state definitively what its plans are for the future of the airline and take the necessary, but hard, steps to clean up the mess that now prevails.
THE OPINIONS ON THIS PAGE, EXCEPT FOR THE ABOVE, DO NOT NECESSARILY REFLECT THE VIEWS OF THE GLEANER.
