The Civil Aviation Authority (CAA) has instructed national carrier Caribbean Airlines (CAL) to drop its Air Jamaica (AJ) brand from its aircraft.
The Sunday Express understands that use of the AJ brand does not comply with CAL’s airline operator certificate.
Despite the acquisition of AJ routes, CAL is not licensed to operate two brands but has been doing so for over a year.
For CAL to use the AJ brand, it will have to register a new airline in the name of Air Jamaica.
CAL, the Sunday Express understands, was alerted about this disparity by CAA a few months ago as it sought to improve its systems ahead of a planned audit by the international Federal Aviation Authority (FAA).
CAA is being audited by the FAA.
In the short term, the onus is on CAL to repaint AJ’s six planes at a cost of US$60,000 an aircraft.
CAL’s head, Corporate Communications Clint Williams confirmed that CAL had received recommendations from CAA which had been passed to its new line minister, Vasant Bharath.
Minister of Trade, Industry and Development, Bharath, as Minister in the Ministry of Finance, is in charge of all State enterprises. Williams said yesterday that Bharath is expected to meet with his counterpart in Jamaica to discuss the matter.
Former transport minister Devant Maharaj, under whose purview both CAL and CAA had fallen, will also be part of the discussions.
Asked whether CAL was already repainting its aircraft, Williams said it will be part of the discussions between the ministers. He admitted that one aircraft, which was already undergoing scheduled maintenance, was already re-touched with CAL’s logo.
CAL’s investment in AJ has already been costly.
Apart from an initial US$50 million for acquisition of routes, former finance minister Winston Dookeran had disclosed to Parliament that Air Jamaica recorded an unaudited loss of US$38.1 million ($245.2 million) for 2011.
CAL’s investments (US$149 million), the Sunday Express had reported, have had to be liquidated to address the costly operations of Air Jamaica.
The business plan for the Air Jamaica operations for the months of May to December 2010 forecast a profit of US$4.6 million and $16 million for 2011.
However, data obtained show the actual performance for the Air Jamaica operation from May to December 2010 was a loss of US$21 million “for various reasons” and US$38 million for 2011. The 2011 figure has to be contextualised given there was an adjusted fuel subsidy from US$1.50 to US$2.34 a gallon.
The government of Air Jamaica owns 16 per cent of CAL, following the consummation of a shareholders agreement which was signed on May 26, 2011.
Meanwhile, CAL has put four of its nine ATR aircraft it ordered up for sale.
CAL has only collected two of the aircraft it had ordered from the France’s Aviones de Transport Regional (ATR) .
When the proposal to acquire the ATR was made on September 9, 2010 from a note submitted by then line minister, Works and Transport Minister Jack Warner for CAL to enter into a purchase agreement with ATR for nine aircraft, no funding requirements were identified.
CAL paid the US$1.8 million commitment fee-—calculated to a $200,000 deposit on each aircraft—out of pocket on September 13.
By January 2011, CAL management had approached the Ministry of Finance for money for the ATR purchase but was told that no funding had been requested on the Cabinet note, and CAL was forced to utilise its own internal funding to pay fully for the first two aircraft.
The Sunday Express learned CAL is hoping to acquire three more of the aircraft to complete its propeller fleet.
As such, it intends to mortgage the first two ATRs and use those funds to finance the acquisition of the other three. Williams confirmed the four ATRs were up for sale as there were “changes in CAL’s business model moving forward”.
The four aircraft for sale remain at the manufacturer’s plant in France.