Air Jamaica has been bleeding the country dry for many years. We have seen several “business plans” to rescue the organization. For the very first time however, there appears to be a transformational business plan as the organization has decided to cut several routes, including the once untouchable Miami route, reduce the number of planes from 15 to 9; and drastically cut staff at all levels. Why has it taken so long for Air Jamaica to take this decision? Why after years and years of losing money is the declining economic environment being used to justify the decision?
I believe the focus of Air Jamaica has changed, and the new business plan reflects the change in focus. For many years we were led to believe that Air Jamaica was absolutely necessary to the survival of the tourism industry and therefore business plans were developed to support the tourism industry. Now that Air Jamaica is about to be divested, the focus has shifted from the survival of the tourism industry to the survival of Air Jamaica as an entity in and of itself, hence the seriousness of the new business plan.
This provides a lesson as we look at the business and operational plans around our public sector. In the private sector, the Vision and focus are on wealth creation and shareholder value, hence business plans are quite clear and by extension most employees are clear on what needs to be done. Most persons in public sector organizations, as stated by the Prime Minister himself at last year’s Productivity Conference, are not clear on the Vision, purpose and focus of the respective organization. The result is that business plans have no clear context and organizational shortfalls result.
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For too long the planners at AIR JAMAICA seem to have ignored a most basic and fundamental principle or axiom of economics, that marginal cost cannot be greater than marginal revenue. Apparently,they have now come to the realization that some form of cost rationalization and effectiveness in terms of downsizing staff and the elimination of certain routes are a must, with regard to radically transforming the business for its very survival, if this --survival--is even possible at this late stage in the game.It is a pity that it took them so long to come to this realization, after losing hundreds of millions of dollars over the years.Interestingly,if it were not for the global financial meltdown, the policy of rationalizing cost would not have been implemented.SMALL IS INDEED BEAUTIFUL!!
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