Susan Smith, Staff Reporter
Air Jamaica will have to match the Spirit fares or its traffic will simply shift. - FILE
AIR JAMAICA is reviewing its ticket pricing to Fort Lauderdale following the announcement that Spirit Airlines is to offer cheaper flights to that destination.
Last week, Spirit Airlines announced new non-stop services between Fort Lauderdale and Montego Bay and Kingston, starting November 10, and December 15, respectively. The low cost carrier projected prices as low as US$99 each way net of tax.
The cost of a round-trip ticket between Kingston and Fort Lauderdale as at June 23 to June 30 via Air Jamaica is US$363, plus US$ 85 in taxes.
"Spirit has just started to file its fares. Our pricing and strategy people are constantly reviewing their pricing initiative and Air Jamaica will react in a timely and competitive manner,"' said Director of Communications for Air Jamaica, Sandrea Falconer in an interview with Wednesday Business.
Noting that Fort Lauderdale is a very important market that has been nurtured by the Air Jamaica, Miss Falconer said it is too early to tell whether the competitors will cause a significant falloff in the revenue for Air Jamaica. "We wouldn't know until Spirit starts up," she said.
But airline specialist, John Gilmore said the Jamaican market domestically and in South Florida can be expected to respond dramatically to the new pricing.
"This market has been paying the highest prices in the Caribbean on the South Florida route on a cents per mile basis for a very long time," said Mr. Gilmore. "Air Jamaica will have to match the Spirit fares or its traffic will simply shift to Spirit."
And if it does match the fares, he said, "The revenue consequences will be severe."
If Air Jamaica attempts to reduce its fare by 50 per cent to match those proposed by Spirit, it could see its revenue plummet by 37.5 per cent.
"I'd guess Air Jamaica would see a 25 per cent traffic increase at best at a 50 per cent reduction fares, a net revenue decline of 37.5 per cent and some incidental costs associated with carrying the additional traffic."
Spirit has lower operating costs than Air Jamaica and so can make a profit by selling tickets for less than the national carrier can afford.
Managing director for Total Travel Limited, Ann Marie Chin, said since Spirit Airline has not asked the local travel agencies to promote its service, the national carrier should still enjoy the patronage received from its regular customers.
"Unless the Spirit Airline allows the local travel agencies to sell its service, I don't think its price offers will affect the local carriers," said Miss Chin.
-Furthermore, she believes Jamaicans like to travel on their own carrier or bigger carriers. She said she does not see the reduced prices announced by Spirit threatening the outbound traffic from Jamaica.
