Air Jamaica Expands Fleet, Adds Routes On Way To Making Profit by Heather Orletsky, Contributing Editor

World Airline News, June 11, 1999

One word has been conspicuously absent from the 30-year history of Air Jamaica - profitability. But that is set to change, claims the airline, as it reaches the second year of a three-year reorganization that is focused on making the company's first profit by 2001.

First quarter results appear to justify the claim. In the three months to March 31, the airline increased revenues, and earnings showed a 13 percent growth on last year.

"Clearly our plan is realistic and is working," says Allen Chastanet, Air Jamaica's vice president of sales and marketing. "We anticipate breaking even by the end of 2000." But that is not all for the airline. New fleet additions and expanded routes are soon to follow.

The airline was in the red when the Jamaican government sold its majority stake in 1995 to Jamaican businessman Gordon "Butch" Stewart, now Air Jamaica's chairman. But Stewart, well known for his leadership in growing his Sandals resort chain, has turned the company around, boosting not only revenues and earnings but market share. Since the acquisition Air Jamaica has increased dominance at home, jumping from a 30 percent share in 1995 to 52 percent last year, including 80 percent of the Jamaican leisure market.

Clever leadership by Stewart, and CEO of one-and-a-half years Christopher Zacca, is behind the airline's rise, Chastanet says. This includes heavy market expansion and a complete fleet replacement are leading their changes.

Air Jamaica is now flying among some 11 U.S. cities, 11 Caribbean cities, and London, and it continues to expand.

On June 1, the airline inaugurated a new Airbus A340 for its London route. More flights are being added in several U.S. cities, including New York, Atlanta, and Los Angeles. The airline also plans to launch service to Bonaire in late June and to Turks and Caicos in November.

Much of the expansion is due to the formation of the airline's hub in Montego Bay and its code-share arrangement with Delta Air Lines [DAL], which began last year. "We have non-stop flights from 11 U.S. gateways that connect into our hub. Next year we're looking to add two U.S. gateways. And all this starts becoming feasible because of the hub."

Along with expansion, Air Jamaica cites competitive flight schedules as attracting customers. "Our schedules are superior to American Airline's [AMR] for a lot of the destinations in the Caribbean," he says, citing that flights leave earlier from U.S. cities to allow travelers more time at their vacation destination. Travel agents are noticing this as well as non-stop service options and inflight amenities like movies on some flights, he says. The airline's advanced bookings through Atlanta this summer are already in the 80-percent capacity range.

"Atlanta has become our number one feeder market into the Eastern Caribbean. And right now, for us, Delta has been a great partner. It allows us to open up the (U.S.) Midwest and West Coast. We do have joint fares with other carriers, but clearly Atlanta has been a very good hub for us, and it's something that's also worked well for Delta."

Air Jamaica's new A340 will be joining a fleet of Airbus airplanes acquired all within the past four years to replace Boeing 727s. The aircraft include four A310s, four A320s, and two A321s. The airline also has two MD-83s, which it is looking to replace with two more A321s.

The fleet commonality has helped revenue, he says, by increasing aircraft utilization from an average of seven to 10. Another aid was the recent pilot strike at American Airlines - its chief Caribbean competitor - which enabled Air Jamaica to pick up extra business and prove reliability. "Clearly that helped us substantially: one with our credibility with the Caribbean governments; and two with consumers," says Chastanet.

But like any smaller fish in a big pond, Air Jamaica continues to seek measures to cut costs and improve revenues. Diversification efforts have helped. This has included the airline's wholesale travel service, Air Jamaica Vacations, which was revamped after the privatization. It will serve approximately 85,000 passengers this year. The airline also works with other Caribbean governments, including St. Lucia and Barbados, to create travel packages for those countries.

Air Jamaica is also looking to nurture its Air Jamaica Express operation, which flies four smaller craft for shorter, inter-island flights. There is also a cargo operation that has remained fairly stagnant, but the airline claims this has the potential to be more lucrative. And off-beat travel-planning opportunities abound, such as a recent in-board wedding co-sponsored with Brides magazine.

Although its code share agreement with Delta has helped, Air Jamaica does not appear keen to follow current fashion and join one of the larger alliances. "We've taken a very different approach," Chastanet says, "and we will continue to deal with all of the operators."