The Government might still have to pay out US$4.5 million (J$360 million) to American Airlines under a revenue guarantee deal, although a major aspect of the plan has been scrapped.

The Gleaner has confirmed that the plan for the airline to implement daily direct flights from Chicago, United States, starting January 31, has been shelved in what tourism officials claim is "a bid to protect Air Jamaica".

"Based on the concerns expressed by Air Jamaica, it was decided that American Airlines would fly directly from Chicago twice per week and withdraw from the route on April 7," Lionel Reid, executive director of Jamaica Vacations, told The Gleaner yesterday.

"This was to ensure that we did not hurt Air Jamaica and was renegotiated without any penalty for the Government," Reid said.

Change of plans

According to Reid, American has decided to use a larger plane on the two direct flights while increasing the size of the plane that will offer a connection through Miami on days when there is no direct flight.

"We are a little disappointed, but we have to accept that there will be some fallout in the industry (because of the economic crisis) and there should be enough seats to get visitors into the island," Reid added, even as he admitted that the number of passengers targeted to be carried by American might not materialise.

After news broke last September that the Government had signed a multimillion-revenue guarantee with American Airlines, officials of Air Jamaica questioned the wisdom of the accord, pointing to the competition it would face on the Chicago route with daily flights from American Airlines.

New service

At that time, Tourism Minister Edmond Bartlett defended the agreement claiming it would result in an increased number of flights to Jamaica.

"American will be making 19 new flights to Jamaica each week with the possibility that approximately 156,000 more visitors could make their way to the island over the 12 months," Bartlett told The Gleaner then.

Bartlett further claimed that effective November 2, 2008, American Airlines would have started daily service from Dallas, Fort Worth, to Montego Bay, while increasing the number of daily flights from Miami to Montego Bay.

He added that effective January 31, 2009, American Airlines would offer a new service five times a week from Chicago to Montego Bay.

While American has started the direct flights from Dallas, Forth Worth, the airline comes into the island only five days each week with no flights on Tuesdays and Wednesdays.

With the direct flights from Chicago cut, it is not clear how this will impact the cash that Jamaica could pay to the airline when the account is balanced in November.

Yesterday, efforts to contact Bartlett were unsuccessful, while officials in his ministry pointed to a media briefing which he has scheduled for tomorrow.

Bartlett came under fire last year when The Gleaner broke the story of the multimillion-dollar revenue guarantee paid for by the Tourism Enhancement Fund.

Beneficial

But he insisted that the deal was worth it amid a decision by American Airlines to cut flights out of the US, arguing that Jamaica had already started seeing benefits.

"As minister of tourism, it would have been irresponsible to do nothing about American Airlines' decision to downsize their service from our primary market," Bartlett said.

He added that despite putting up the US$4.5 million, the deal might not cost Jamaica "one cent", as it was based on the number of passengers that American would take to the island.

"No payment will be made to American until the end of the one-year period (November 30, 2009). This depends on the load factor and the money will remain in escrow earning interest," Bartlett said.

arthur.hall@gleanerjm.com

Terms of agreement

Under the deal, American Airlines will not fly its planes into Jamaica if less than 65 per cent of the seats are taken up.

If the aircraft is more than 65 per cent full, but less than 75 per cent, Jamaica will be required to pay the 10 per cent revenue that the airline would lose.