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| Dennis Morrison |
Surviving in the travel industry
Dennis Morrison, Contributor
The deepening financial problems, as reflected in record losses
by many of the world's major airlines, are posing a serious threat
to the growth of the tourism and travel industry.
Not only are the airlines being pushed to raise fares, but they
have had to cut seat capacity in order to contain costs as they
struggle to reduce losses. This is a reversal of the trend over
the last 20 years when cheaper airfares and expansion of airlines
fuelled rapid growth in world tourism.
exploded oil prices
As oil prices have exploded to unprecedented levels and intensified
the financial crisis in the airline industry, even the giant carriers
have been forced to create alliances or undertake mergers to counteract
the financial woes.
Delta Airlines and Northwest, both of which operate scheduled flights
to Montego Bay, are the latest United States (US) carriers which
have embarked on the course of integration. With regulatory approval
already received from European authorities and US regulators predisposed
to consolidation, this combination seems set to emerge as the world's
largest carrier in terms of traffic.
expanding Ja's air access
A few days ago, the pilot groups gave the go-ahead to the deal
and, hence, it is very likely that the merged entity will be in
operation by year end. It is also important to note that Delta and
Northwest have already secured US antitrust approval to operate
an alliance with Air France-KLM. Together, these airlines have 25
per cent of the seats between Europe and the USA.
This alliance, therefore, represents a critical potential vehicle
for expanding Jamaica's air access to the European travel market,
apart from the existing airlift that Delta and Northwest provide
to the USA.
The local tourist industry will need to pay close attention to
this merger in the coming weeks. Indeed, a proactive stance is essential
if we are to ward off possible rationalisation of routes serving
the island's markets in the USA or grasp opportunities for increasing
traffic. Over the last five years, US carriers have tended to operate
surplus air seats to Jamaica. In the new situation, the industry
will have to do a more effective job of marketing in the areas served
by these airlines, while positioning itself to use the platform
to Europe.
The other major alliance being formed involves American Airlines,
British Airways and Iberia, which cover 18 per cent of the air traffic
between Europe and the USA. This alliance will also allow for better
connections and improved flight schedules which could make for more
convenient travel from Europe to Jamaica. But the industry players
will have to move strategically and with timeliness to explore the
possibilities.
The seat capacity taken off the London route by Air Jamaica may
be partly replaced through this alliance or that being formed by
Delta and others using the American or Delta connections out of
the USA. Further, Air France-KLM, Iberia and British Airways could
provide the feed to continental Europe which is vital, especially
for upscale travellers.
stopover visitors
On another note, it has been reported that Jamaica received one
million stop-over visitors in the first six months of the year.
This report does not correspond with the official data from the
Jamaica Tourist Board which show that the figure was just under
940,000 and hence a correction should be made right away.
Dennis Morrison is an economist and a former chairman of the Jamaica
Tourist Board.
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