The Government has raised the possibility of the merger of Airport Authority of Jamaica (AAJ) and Port Authority of Jamaica (PAJ), catching off guard at least one of the agency heads, who said the idea has never come up before in any internal policy discussions.

But Finance Minister Audley Shaw, the overseer of the Treasury in a country seeking ways to carve billions from the cost of running the Government, sees potential savings in collapsing the functions of the two port authorities into what would emerge as a super agency.

"That, to me, appears to be a natural fit," Shaw declared while addressing a public function in Kingston late October.

"We have the Port Authority of Jamaica, which deals with the (sea) ports, and the Airports Authority of Jamaica, which deals with the airports. In many modern cities, much larger than our country, they have one single ports authority," Shaw said in a speech at the Jamaica Employers' Federation's (JEF) launch of the 2009/10 salary and benefits survey last Friday.

His comments were made in the context of the Government's stated intention to cut the size of the public sector in the face of a cash crunch.

However, while Transport Minister Mike Henry and Port Authority boss, Noel Hylton, were not immediately available to comment on the matter, Earl Richards, head of the Airports Authority, said the idea is new to his agency but might have been raised elsewhere in the government.

"It is not something that has appeared before my board for discussion," said Richards.

"I am not aware of specific discussions or studies taking place at this time but that doesn't mean that they are not happening," he said.

Saj support

The Shipping Association of Jamaica (SAJ) is throwing its support behind the merger idea, even at this early stage.

"I think such a rationalisation would be good. The country would benefit," said Roger Hinds, SAJ president.

Hinds is aligned with Shaw's position that other jurisdictions have one authority which has oversight for both air and sea ports.

In the Caribbean region, St Kitts and the Nevis, though a smaller country and a twin-island state, has adopted such a model.

"I think it would be a good fit," said Hinds. "On paper it makes sense."

The Airports Authority, a $12-billion agency by assets, has jurisdiction over Jamaica's two international airports - one of which is under private-sector control under a 30-year concession agreement, as well as several aerodromes.

The agency has seen swings in profitability in the past few years, and is projected to have one of its worse periods in fiscal 2009/10 due to exchange-rate risk, projected to cost $940 million and lead to a net loss of $745 million.

$42-billion assets

Finance Minister Audley Shaw publicly raised the issue in late October

Port Authority, an even bigger enterprise with assets of an estimated $42 billion, runs a profitable operation and, as such, is more likely to absorb the AAJ. But a multi-phase expansion programme has substantially weakened the PAJ, leading to an estimated $6.8 billion foreign exchange conversion loss on loans that erased half of the company's book value, which fell from $12.7 billion to $6.4 billion last year.

The company also booked a $6.3-billion loss, compared to a $1 billion profit the previous year, according to preliminary finance ministry data, but is projecting a recovery to black - albeit only $18 million.

Hinds said he expected any merger attempt would be fraught with challenges such as issues related to the culture of existing operations.

Other industry sources, who declined to be named, were sceptical of what they say constitutes rhetoric from Government on the issue, and that the talk is not new.

dionne.rose@gleanerjm.com