By Dennie Quill, ContributorTHE NEWS coming out of JetBlue's boardroom this week is sensational. While many airlines are buckling under the strain of unmanageable debt, this upstart is announcing fleet expansion of 100 new aircraft.
JetBlue began operations out of JFK airport, New York, three years ago. Last month they reported load factors in the mid-70s. High load factors mean money for airlines.
In a Reuters dispatch, JetBlue's CEO David Neeleman cited "many market opportunities," and said: "We can go into Canada if we want to, we can go to Mexico, we can go to the Caribbean."
The success and growth of no-frills airlines like JetBlue, SouthWest, MidWest, AirTran, Spirit and Frontier are worth examining and those at the helm of Air Jamaica should pay close attention.
The model used by these airlines includes a combination of strategies such as lower labour costs, fewer perks, common fleets, quicker turnarounds, low-cost alternate airports, fewer cabin crew and no assigned seats. In some cases, passengers who are simply interested in getting transportation pay a base cost, those who wish to have meals and checked luggage must pay more. Best of all, the fare is cheap.
Low-cost airlines have also secured savings by slashing commission to travel agencies, charging for heavy luggage and eliminated the printing of pocket flight schedules, etc.
Air Jamaica's Chairman, Gordon 'Butch' Stewart, has been making heavy weather about Air Jamaica's champagne flights and classy menus prepared by the world's "only flying chef." Bearing in mind that it is crunch time for the airline, this seemingly arrogant display of prosperity is typical of the Jamaican lifestyle. It's the same kind of philosophy that guides an unemployed man who walks around with three cellular phones attached to his Versace belt.
I had the great fortune of hitching a ride on the luxurious Concorde some years back. I cannot remember what was served. People in search of great food usually make reservations at fine restaurants. They rarely go looking for gourmet on an airline. The average passenger sees an airline as a commodity in the same way he may acquire a cell phone price is what matters.
I guarantee that if JetBlue decides to fly to Jamaica offering their usual cheap fares, scores of passengers will forego mackerel rundown and cassava if it means saving US$100. The data is overwhelming. Despite the slump in the industry the demand for bargain, travel remains strong. Low-cost carriers increased market share by 50 per cent last year. Consumers love them because they take them to their destination at a reasonable price.
At a recent press conference Mr. Stewart suggested that the cost of providing these exotic menus was the least of his problems. He countered that flying empty planes, that is, low load factor, was cause for concern.
Well, food has to be a problem because it requires more people to provide this service. They are paid salaries, benefits and handsome perks. And what happens to all that champagne when there are no takers? Imagine popping a cork on an Air Jamaica Express flight at 8 a.m. with mainly business executives heading for meetings? Ridiculous!
What is sad is that in the final analysis, it is the Jamaican taxpayer who has to prop up Air Jamaica via government loans and guarantees. And this money has to be provided every year as each disbursement appears to be spent on ongoing operations. Air Jamaica has been in the red for years.
Yes, I have heard it often enough: Air Jamaica is critical to the tourism industry. I also understand that this is the worst prolonged crisis ever experienced by the airline industry. I am also aware that hull and liability insurance is up. But I also know there is a difference between bailing out an industry during crisis times as against propping up an efficient operation. There are some questions on my mind: Is Air Jamaica spending as wisely as it should? Is Air Jamaica making sound decisions about its routes? Could Air Jamaica be more efficient?
The Bahamas are beating the pants off Jamaica as a tourism destination and many heading to that destination from America chose a budget airline owned by Freddy Laker. Remember him? Sir Freddie is the British millionaire who invented a "no-frills" airline service in 1966 and stabbed British Airways in the heart by chopping transatlantic fares by half. The airline collapsed in 1992 and the Thatcher government said it would not intervene with British banks to save Laker. Sir Freddie retired in the Bahamas.
Significantly, we are now celebrating 100 years of aviation history. We are told that the Wright brothers nearly went broke building the first airplane a century ago. At a conference of industry officials in the US last week, it was predicted that the airline industry will see profitability in 2005. Perhaps there is hope yet for Air Jamaica.
Dennie Quill is a veteran journalist.
