Air Jamaica's announcement that it is downsizing itself, including cutting its fleet by 40 per cent, should have surprised nobody.

The fact is that the company's losses - US$170 million last year and more than US$1.2 billion for the past dozen years - are unsustainable and no Jamaican administration has mustered the gumption to close the airline. Moreover, Minister Don Wehby's optimism notwithstanding, it is unlikely that the carrier can be divested by the close of the fiscal year at the end of March - or any time soon thereafter, if ever.

It is important, therefore, particularly in the current global economic crisis and the Jamaican government's own deteriorating fiscal position, that the administration eases demands on its already overstrained budget.

Air Jamaica's move will result in its reducing the number of its fleet from 15 to nine, the elimination of more than 200 flights per week, and the layoff, it is estimated, of about 600 employees. Unfortunately, however, Air Jamaica has neither published its business plan nor said precisely what impact these developments will have on its balance sheet, except to suggest that there will be savings.

Containing the losses

But there are those who question whether the measures can completely eliminate Air Jamaica's losses and suggest that the island's taxpayers will have to continue to subsidise the carrier, at least to the US$30 million annually to which the Government committed itself four years ago.

Yet, there is no certainty that Air Jamaica's losses can be contained to the presumed manageable level, which raises the question, short of pulling the plug on the airline, of what else is to be used as a tourniquet, if not an assurance of viability. Indeed, it is a question to be posed to many other firms, in the public and private sectors, in this period of global recession.

One suggestion is obvious for those firms whose pay scales parallel rates at the international level, and higher, as is the case with some categories of employees at Air Jamaica. The airline's pilots have, in the past, been specifically among this group.

Earlier this decade, well before the current crisis, when the international aviation industry found itself in trouble and many faced bankruptcy, it was common for employees and their unions to agree to salary give-backs to forestall collapse. To put in bluntly, workers accepted salary reductions or reduced health or pension benefits and perquisites, or a combination thereof.

Deleterious consequences

Air Jamaica, while it tinkered at the edges, was never able to engineer anything deep and sustained from its highest-paid category of workers. That is part of what the airline has reaped with its losses, which taxpayers continue to cover.

That matter of pay, of course, does not relate only to large corporate entities, but works its way right through the economy, with potential deleterious consequences for the maintenance of jobs.

For example, the labour ministry is currently in discussion with stakeholders on the adjustment of the minimum wage, which currently stands at $3,700 weekly. There is agitation for a substantial hike.

It makes good economic sense for the administration to be cautious lest small businesses and householders are priced out of the employment market, with a consequent loss of jobs. That would not be good.

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