Spirit Airlines reportedly buys Air Jamaica

Some interesting rumors are circulating around the tropics - acccording to the Jamaica Gleaner, US ultra-low-cost-carrier and Ryanair-wannabe Spirit Airlines will purchase perennially unprofitable state-owned flag carrier Air Jamaica, which could be renamed "Spirit of Jamaica." The news comes only days after Radio Jamaica reported that the Jamaican government's Privitisation Committee, set up to find the best buyer for the airline, recommended that either Trinidad-based Caribbean Airlines or British charter airline Thomas Cook should be the one to make the purchase. Spirit Airlines spokesperson Misty Pinson refused to confirm or deny the story, only saying to The Airline Blog, "We don't comment on market rumors."

In preparation for the sale, the government installed Bruce Nobles, the same person who oversaw restructuring at Hawaiian Airlines, as president and CEO. Nobles realized, pretty quickly, that Air Jamaica's fleet utilization was poor and vowed "to fly the airplanes as much as you can to generate revenue." He also dropped routes to Atlanta and Miami, and instead used the aircraft on routes where they made money. Nobles also noted that one of Air Jamaica's main problems was that it lacked capital; "Air Jamaica spends too much money because it does not have any," he said, and has since secured more cash for the carrier.

Evidently, he's done a pretty good job of fixing up the airline; those who thought that there would be a mid-summer snowstorm in Montego Bay before a profitable Air Jamaica might be surprised. Nobles says that the airline, which has never made a profit, could break even as soon as December and may actually become profitable in 2010. Especially given the current economic environment, that's quite an accomplishment. The fact that Spirit's owners, Indigo Partners and Oaktree Capital, are interested in buying Air Jamaica has to be a testimonial to the airline's improved financial condition.

Of course, if the sale turns out to be true, it does raise a few unanswered questions. Would Air Jamaica turn into an ultra-low-cost-carrier, along the lines of Spirit? Many in Jamaica would probably cringe at the thought of their national airline becoming another Spirit, which is known for its Ryanair-like disregard for passenger service (according to the Department of Transportation, Spirit had the most complaints in 2008, with 14.3 per 100,000 passengers; US Airways, with 2.0, came in second). Perhaps Spirit might run the carrier separately, keeping its existing (and newly-profitable) business philosophy and using it to feed Caribbean traffic into Spirit's US operations (and vice versa). But here, the 'feed' strategy might not be successful - for a start, the two airlines serve different airports in New York (Air Jamaica at JFK, Spirit at LaGuardia). And the discrepancy in the current levels of service offered by the airlines might be off-putting to some travelers, too.

photo by Matt Coleman - BNA-Photo on Flickr

After Skybus, there's JetAmerica

photo courtesy JetAmerica

No, this isn't the original JetAmerica Airlines, which operated a bunch of MD-80s out of Long Beach in the 1980s until it was bought by Alaska Airlines. This is a brand-new start up public charter carrier flying one wet-leased Boeing 737-800 from Miami Air International between cities like Lansing, Michigan and South Bend, Indiana from its base in Toledo, Ohio.

Sound familiar? Well, Toledo is just halfway across the state from Columbus, the home of the infamous Skybus, which went bust less than a year after it started flying. And Skybus' famous limited $10 fares are awfully similar to JetAmerica's $9 fares, although only a certain number of seats (9 to 19) on a flight will be at that price.

So, will JetAmerica (sometimes spelled Jet America) survive? The concept of the ultra-low-fare carrier (where pretty much everything carries its own fee) hasn't really taken off in the US. Sure, carriers like Spirit and Allegiant have managed to make the model work, but these airlines fly mostly vacation travelers to and from Florida and Las Vegas. JetAmerica might suffer because Toledo certainly doesn't have a lot of originating and departing traffic - something that helped contribute to Skybus' demise.

Yet JetAmerica is also being heavily subsidized by some of the airports that it flies to; Melbourne, Florida, Toledo, Lansing and South Bend airports are all giving JetAmerica $1.4 million in grants for a year, not to mention $1.1 million in marketing help and $867,000 in waived fees. These subsidies can help the airline weather any spikes in oil prices, but at the moment, oil prices are relatively low (sky-high oil prices helped to take down Skybus). And CEO John Weikle claims that JetAmerica's goal is to make money along the same lines as Allegiant, by "stay[ing] away from the competition."