Bharath says CAL-AIR JAMAICA deal not in trouble; Jamaica upset over cut in routes

A number of issues, including load factors, have caused Caribbean Airlines to re-examine some of its policies including the frequency of flights to Jamaica.

Trinidad and Tobago's Trade Minister Vasant Bharath made that statement to the Caribbean Media Corporation (CMC) in response to reports that the government of Jamaica is considering removing the Air Jamaica brand from the regional airline.

Last week, CAL Communications Manager Clint Williams confirmed media reports that the airline would be cutting back on the number of flights to Jamaica, effective April 16.

That prompted an angry response from Jamaica’s Transport Minister Dr. Omar Davis who said such a move would contradict the agreement signed when CAL acquired Air Jamaica two years ago. He said the only tangible weapon that his government has relates to the use of the Air Jamaica brand.

Bharath told the CMC, "We believe the Air Jamaica brand has value that was the reason we went into the arrangement in the first instance."

He added, “There have been some teething problems with regards to the some of the routes and the fact that there is the possibility that Jamaicans did not fully embrace the Caribbean Airlines logo. But we are working with the people on the ground at Air Jamaica to try to see if we could have had some kind of dual branding and we are now looking at rationalising some of those routes.

“In fact I think later this week we will be pulling about 50 per cent of the routes we were travelling on the Jamaican run off the schedule because we have not been able to get the load factors that has been required to keep the airline flying”.

Bharath noted that the rationalisation of the routes is because of increased competition. “That has caused us to re-look at the number of routes we are flying but we have every intention of attempting to maintain the Air Jamaica brand together with the Caribbean Airlines logo,” he said.
In 2010, Port of Spain and Kingston agreed to a deal that allowed the Jamaica government to own 16 per cent of CAL as part of the conditions for CAL taking over the profitable routes of Air Jamaica.

The deal also allows for Trinidad and Tobago agreeing to a US$300 million transition plan for CAL to acquire and operate six Air Jamaica aircraft and eight of its routes.
Bharath does not believe the agreement is in jeopardy. "Legally I believe that the agreement that was struck in the early stages suggests that Caribbean Airlines must maintain a number of routes and I believe we are very close to that number now," the minister stated

“Trinidad and Tobago negotiated with the Jamaica government in good faith when we entered into that agreement with the intention of making that agreement work. 

"But of course as competition has gotten stiffer, the airline business has gotten more difficult, we have had to look at rationalising,” he said. CAL is seeking financing from banks in Trinidad and Tobago to deal with a US$234 million debt.

According to its financial statements for 2012, CAL’s losses moved from US$43.6 million in 2011 to US$83.7 last year.

Bharath said he is meeting with the board of Caribbean Airlines this week to get some further information on those figures and "what in fact we can do to get the airline up and running on a profitable footing."

(Edited CMC report)