Keith Collister, Contributor
CONWAY - FILE
AIR JAMAICA president and chief executive officer Michael Conway says the airline has substantially improved its performance since its difficulties last year and further improvements are ahead.
The airline has a strong 'franchise value' that needs to be improved, Mr. Conway said in his first local public speaking engagement at PanCaribbean's review of the economy yesterday. The first element of this franchise value was Jamaica's ideal geographical and geopolitical position in the centre of the Caribbean, having friendly relations with its neighbours .
Just five months into his new job, he stated that Air Jamaica was now undergoing a major transition away from the previous period of rationalisation, and that substantial progress had been made in the basic areas critical to its franchise value, such as punctuality and flight cancellations, where he believed its operations were now "as good as anyone".
The airline enjoys a loyalty factor from its ethnic customer base, unlike any other in the industry. Moreover, the substantial capital investment flowing into Jamaica from Western Europe for new hotel properties suggests that the popularity of Jamaica as a destination resort will continue to grow. In particular, there is the opportunity represented by the Cricket World Cup, which it is believed will attract an estimated 800,000 spectators to the region in early 2007.
ROUTE EXPANSION
Mr. Conway believes that Air Jamaica's basic route network has been the same for decades in terms of the regions covered. Currently, Air Jamaica only used its fleet as an "origin and destination" hub flying to the U.S., London and the Caribbean. This meant that the planes only flew eight hours a day.
He used Jamaica's recent port expansion as an analogy for his plans. The expansion of the Port of Kingston was to enable it to receive supertankers to distribute cargo right through the region, taking advantage of Jamaica's location in the middle of everything. In his view, what works for sea-lanes, should work for airlines too.
Mr. Conway said South America offers a major opportunity for Air Jamaica, where it would become not just a destination, but also a 'port' through which passengers can transit. American Airlines was currently charging very high fares for passengers to transit through Miami to Latin America, which presents an opportunity for Air Jamaica.
Moreover, Air Jamaica could present a more effective way to travel to Central America, as regional connections are frequently very difficult.
Stating that one should never take one's "eye off the money", Mr. Conway argued that the expansion of the route network in Western Europe beyond London presented a real opportunity. As an example borrowed from the Minister of Tourism, Mr. Conway said the Spanish were coming back to Jamaica, and "this time they were bringing their own money."
The domestic market between the two major population centres of Kingston and MoBay also presented an opportunity, as currently domestic passengers on Air Jamaica must go through the same burdensome customs and immigration procedures as if they were travelling to Western Europe. The Airport Authority was now in the process of creating a separate area for domestic passengers to check in, which is really needed, not least for World Cup Cricket, as many of the games are in Kingston, while most of the rooms are in MoBay.
To be an effective country hub, Air Jamaica needs to move the average daily utilisation of its planes from eight hours a day to 12 hours a day, an increase of 50 per cent. Using Air Jamaica's fleet of sixteen planes as an example, Mr. Conway said increasing efficiency in this manner would be similar to adding eight more planes to Air Jamaica's existing fleet, with the effect of lowering average unit costs.
One advantage Air Jamaica has is its outstanding customer service reputation, with the 'on airplane' service as good as any other airline. However, he acknowledged that this needed to be supported by decent schedules, and on time performance for Air Jamaica to get its product up to the level that satisfies the needs of their customer base.
NEW COMPETITION
Mr. Conway did not appear worried about the new competitors, particularly the low cost carriers, coming into the market, stating that Air Jamaica's new fares would be as competitive as that of any low cost carrier. He took the opportunity however to ask for local business support for their soon to be introduced new marketing strategies.
Stating that Air Jamaica's financial numbers would be released within two weeks, presumably as part of the budget process, Mr. Conway described them as 'not pretty'. It is worth noting however, as pointed out by the chairman of PanCaribbean economic review, Donovan Perkins, that after Mr. Conway's presentation on Air Jamaica at the Bear Stearns conference in Miami, Air Jamaica's international bonds rallied for three days, suggesting that whatever he told international investors gave them some degree of confidence.
Although airlines everywhere have a very high profile, Air Jamaica's profile in the Jamaican media is exceptionally high, he said. He argued that any government anywhere with a tourism industry as important as Jamaica's is to the country would be remiss if it was not involved in the airline industry. This involvement takes many different forms in other countries, as besides direct Government ownership, government involvement in the airline industry included subsidies, paying for infrastructure, highly beneficial tax arrangements, and the protection of routes.
