Jamaica braces for revenue guarantee to airlines
published:
Sunday | June 15, 2008
Janet Silvera, Senior Tourism Writer
Pennicook and Cummings
WESTERN BUREAU:
WITH AIRLINES REDUCING flights to the tourism-dependent Caribbean - due to high fuel prices - Jamaica and other countries in the region could be forced to offer revenue guarantees to scheduled airlines.
Revenue guarantees are usually given to charter flights, wherein the government of a country pledges a certain amount of money for the carrier to fly there. There is no payment in the first instance if the airline fills the seats. However, if the seats are not filled the country pays the shortfall in revenue.
A collective decision to provide scheduled airlines with revenue guarantees was taken at an emergency meeting in Antigua of ministers and commissioners responsible for tourism and aviation, as well as industry stakeholders, last week.
cooperation agreement
The participants also agreed to cooperate on the establishment of hubs, promotion of the region, and coordinating the establishment of more efficient intra-regional carriers, according to a statement from the Caribbean Tourism Organisation and the Caribbean Hotel Association last Friday.
Over the years, Jamaica has stayed away from guaranteeing revenue to scheduled carriers because of its strong position in having its own national airline - Air Jamaica.
However, The Sunday Gleaner understands that the 2,000 additional seats announced by Tourism Minister Edmund Bartlett last week at the Jamaica Hotel and Tourist Association (JHTA) annual general meeting are part of a revenue guarantee to a legacy carrier. The new flight should commence in November.
"We are 90 per cent confirmed with the deal, although we have not yet signed a contract with the carrier," Minister Bartlett told this newspaper, while not disclosing the name of the airline. He noted that with over 2,000 new rooms coming on stream in the coming winter tourist season, it was necessary to have the airline seats to complement the influx of tourists.
It is understood that Grenada has since put up a revenue guarantee to bring in a daily American Airlines service from Miami, commencing in November.
Recently, American Eagle suspended 60 per cent of its flights into its Puerto Rico hub, curtailing travel to Caribbean islands such as Antigua, St Lucia, Grenada, the United States Virgin Islands and the British Virgin Islands.
In response to the imminent reduction in available seats to the Caribbean and possibly Jamaica, the JHTA yesterday implored Air Jamaica to do its job to defend the country's economy at this time, and to "outfly this crisis".
ready to work with hotels
"We must right now have a strong showing in the face of adversity and provide hope to the nation that hotel bedrooms, both existing and those that are aggressively now being constructed, have a fair chance at occupancies to earn the foreign exchange which the country desperately needs," stated JHTA president, Wayne Cummings. "We need to see and feel its presence in marketing and advertising, and telling the world that Jamaica is open for business and Air Jamaica can take you there," he added.
In reacting to the call by the JHTA, senior vice-president of marketing and sales at Air Jamaica, Paul Pennicook, told The Sunday Gleaner that the national carrier stood ready to work with the hotel partners to fill any void that might be created from any reduction in air seats.
"Any guaranteeing or support that the hotel industry is prepared to give to get additional airline seats into the country, Air Jamaica is prepared to make the necessary adjustments to respond to the demand," said Pennicook.
