I found the article in The Sunday Gleaner of October 11, 'Should Air Jamaica be sold, if so, to whom?' by Delroy Warmington interesting and for the sole purpose of elucidation, thought it would be helpful for me to comment on two of the matters raised by him.
First, Mr Warmington states that "The most compelling solution is the public option. Sell Air Jamaica to the public. It could be modelled after the successful privatisation of Kenyan Airways. This is the envy of airline privatisation. It is now a most efficient and profitable airline".
The facts are that over the period 1992-1995, Kenyan Airways was close to liquidation when the Kenyan government announced its intention to privatise the airline. It eventually appointed a new management team and selected the International Finance Corporation (IFC) - the private sector arm of the World Bank - to conduct its privatisation.
The selection process launched by the Kenyan government ultimately resulted in the choice of KLM (the national airline of the Netherlands) as the strategic partner. An important factor in the choice was the record of KLM as a pioneer in the development of airline alliances. It was also important to note that KLM had been flying to Kenya since 1969. The transaction opened the possibility for Kenyan Airways to be part of KLM and its partners' global network.
Airline privatisation
Under KLM's leadership the company developed further and was ready for its first initial public offering (IPO) in 1996. So Mr Warmington is correct as Kenyan Airways is a model for airline privatisation and that is the model that the IFC, and the privatisation team are seeking to replicate at Air Jamaica, as follows:
1. Stage 1: The Preparation Phase, where the concentration is on laying the groundwork which will allow a strategic partner to capitalise/restructure the national airline, so that Stage 2 can become a possibility.
2. Stage 2: With growth and the development of a sustainable business, such a national airline could reach a position where an IPO - which involves the public, is possible.
It should be noted that one critical reason why any strategic partner would be interested in Air Jamaica is that Jamaica provides growth opportunities, thereby making the possibility of an IPO more realistic. Equally critical, however, must be the recognition that the ability to complete Stage 2 in a timely manner depends significantly on the prevailing economic climate. The current climate for reaching Stage 2 is much worse when viewed against 1996 when Kenyan Airways was able to issue its first IPO.
According to Mr Warmington, "The Government has demonstrated a neurotic obsession with consul-tants. No one is saying that any of these consultants is an ingenue to privatisation, but they should only be used to validate assumption".
With the greatest respect, consultants who are worth the title must function in far more than a 'validating' manner. They provide expert advice within their field (s) of choice, inclusive of evaluating and clarifying the particular situation of problem with which they are presented, with the intention being to produce focused advice on possible options.
Best-fit recommendation
The end result is usually the offer of best-fit recommendation for action. As mentioned above, the Government of Jamaica is advised by the very consultant which led "the successful privatisation of Kenyan Airways" which Mr Warmington lauded as "the envy of airline privatisation" - one which "is now a most efficient and profitable airline".
Surely that same organisation can be given an unbiased opportunity, working in tandem with the Air Jamaica Privatisation Team, to lead the carving out of a deal for Air Jamaica that will redound to the good of the airline and those who support it.
I am, etc.,
DENNIS LALOR
Chairman
Air Jamaica Privatisation Committee