American Airlines paid to stay

published: Thursday | September 4, 2008

Arthur Hall, Senior Staff Reporter

The Government could pay out as much as US$4.5 million (J$324 million) over the next 12 months to American Airlines to ensure that it does not cut flights to Jamaica.

Expensive jet fuel and a soft United States economy have caused American Airlines to announce cuts in daily flights out of its Caribbean hub in Puerto Rico, from 93 to 51 this month.

Already gone are flights to Antigua, St Maarten, Aruba, Santo Domingo and Samana in the Dominican Republic.

Willing to pay

But with a projected sharp increase in visitor arrivals, Jamaican authorities are trying to ensure that the airline continues its flights into the island and are willing to pay the airline to keep landing in Kingston and Montego Bay.

The cash guarantee is being financed by the Tourism Enhancement Fund and its chairman, Godfrey Dyer, is defending the deal, which was negotiated by Tourism Minister Edmund Bartlett.

"It is a very good investment. This is something that we support, and when it came before my board, we examined it and we believed it would be money well spent," Dyer said.

According to Dyer, a similar programme existed years ago, financed by Jamaica Vacations Limited, but it was discontinued because of a lack of funds.

He said the money would only be paid to the airline if it failed to get an established minimum number of passengers on its flights into the island.

Dyer did not state the minimum passenger level agreed on, arguing that this was sensitive information.

However, he told The Gleaner that American Airlines was selected because it had more capacity than any other airline coming into the island.

"A number of our Caribbean neighbours, which had flights coming in seven days a week, are now having flights one day a week, so Jamaica, today, is the only Caribbean island that has adequate seats coming into the island."

Dyer dismissed claims that the decision to offer American Airlines a guarantee would put Air Jamaica at a disadvantage.

"Air Jamaica is being subsidised by the Government anyhow, so this is no unfair advantage to American Airlines," Dyer added.

Price pinch

Regional tourism interests have repeatedly warned that the flow of visitors to the island could be slashed as airline ticket prices soar and flights are sharply reduced.

The flight rollbacks are coming despite increases in tourism last year to most of the islands, including double-digit growth in United States visitors to Antigua, St Lucia and Jamaica.

The Caribbean is not the only region being affected by flight cuts as, in May, American Airlines announced steep cuts in flights around the world.

The reduction, almost double what American forecast in April, resulted in the elimination of at least 300 flights a day from the 4,300 that it and its regional affiliates offered. It also led to the elimination of more than 6,000 jobs.

Efforts to get a comment from American Airlines yesterday were unsuccessful.

arthur.hall@gleanerjm.com

Fact about the TEF

The Tourism Enhancement Fund was established under the PNP administration in 2005 to provide a pool of dedicated funds for the express purpose of impro-ving the tourism product.

The broad areas of interest include resort development, product development and beautification.

Specific projects targeted for funding are required to satisfy such criteria as the capacity to be self-sustaining; boosting economic prosperity; increasing the competitiveness of the tourism product; promoting resort development; and, focusing on heritage and culture.