Opposition Leader Bruce Golding’s resolution for a select committee of Parliament to examine Air Jamaica’s losses and operational state was last week raised in the House as one of several issues the Opposition wanted discussed before the end of the Parliamentary year next month.

Included on the list were two other motions tabled by Golding calling for an urgent review of the Corruption Prevention Act and the operations of the Corruption Prevention Commission, as well as a second reading of a Bill entitled ‘An Act to amend the Contractor-General Act’.

Golding raised the matter of the review of the Corruption Prevention Act, which was enacted in 2000, on the basis that an amendment to the Act in 2002 required a first revision of the law no later than three years after May 1, 2001.

He based his call for a review of Air Jamaica’s finances against the background of the airline continuing “to incur substantial losses which will ultimately have to be borne by the budget”.

Golding’s renewed call for the Air Jamaica examination was apparently informed by news filtering from within the national airline that it had racked up losses of US$136 million since the government resumed control of the carrier in December 2004.

Repeated attempts since last Friday to contact Air Jamaica chairman O K Melhado for comment were unsuccessful.

In December 2004, when the airline returned to government control, Dr Vin Lawrence, the then chairman, and Dr Omar Davies, the finance minister, had promised greater transparency and regular updates on the airline’s financial performance.

Last December, Melhado had speculated that the losses for 2005 would be similar to those in 2004 but gave no specific figures.

Air Jamaica lost US$99 million (J$6.25 billion) in 2004.

Melhado had attributed a big chunk of the losses in 2005 to the fact that half of the carrier’s then 20-plane fleet was grounded for maintenance by the Jamaica Civil Aviation Authority at the prodding of America’s Federal Aviation Administration.

Against the background of the losses and the need to strive for profitability, Melhado had told Independent Talk host Ronnie Thwaites of the airline’s review of its business strategies and its intent to unveil a revised business plan in the first quarter of 2006.

He said that despite Air Jamaica’s trans-Atlantic flights to the UK three days a week, the planes were in the sky an average of eight hours a day. “We need to fly the planes 12 hours a day. That’s our completely realistic objective,” said Melhado, who became the airline’s chairman in October 2005 after Lawrence stepped down as executive chairman.

“What it means is a lot of rethinking of our schedules – finding ways to add frequency of routes that we are on, and expanding. That requires proper research before you do these things.”

Melhado’s announced review came five months after the airline, in an effort to reduce the losses, cut its fleet from just over 20 to 15, as well as staff and routes.

Among the routes cut were Boston in the USA and the Caribbean destinations of Antigua and St Lucia.

Next week, the carrier will resume service to St Lucia, a move questioned by a former American Airlines executive who opted not to be named. “That move will only spell additional costs to the airline,” he said. “The questions to be asked are what is the point of discontinuing routes only to incur the cost of rebuilding them, and how will Air Jamaica achieve more flying time without re-establishing its hub? In fact, what model is Air Jamaica now employing?”

Air Jamaica’s losses for 2005 come against the background of an improving airline industry worldwide.

“Last year, traffic and revenues went up and the glut of seats has tapered off,” said Vaughn Cordie of AirlineForecasts at the weekend. “Airlines were mostly able to make fare hikes stick in 2005. The industry is on the cusp of a recovery in 2006 and it could turn into a major recovery if oil prices fall further than expected. Let us not forget that the airline industry lost US$20 billion over the last three years.”

AirlineForecasts is a Washington, D C-based firm that specialises in transportation research, forecasts and education.

Last week, one travel industry analyst said the national carrier’s losses suggest that “seat for seat flown, the airline lost twice the money AJAG lost in its worst year (2004). This diminishes the argument that the country cannot do without Air Jamaica because of the money it brings to the country”.

He also noted that the airline didn’t carry the associated costs that go with developing new routes.

AJAG was the entity formed by hotelier Gordon ‘Butch’ Stewart in 1994 to run Air Jamaica as a majority partner with the government.

During AJAG’s tenure, the carrier accumulated losses in the region of US$800 million. Stewart, who is also chairman of this newspaper, has blamed these on problems early on when the USA, dissatisfied with Jamaica’s ability to police its civil aviation, limited Air Jamaica’s ability to fly new planes or to open new routes in the USA, and the post-9/11 fall-out in the aviation industry that sent several major carriers into bankruptcy.

Stewart’s group had invested approximately US$30 million at the time of its acquisition of Air Jamaica, and as part of its exit agreement pumped US$20 million for working capital into the airline.

Since the takeover, government has committed an annual US$30 million to the airline to keep it flying, until it begins earning enough revenues to be self-sufficient.