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ALTA Reaches Out to Petrojam Regarding Jamaica Jet Fuel Price Increases

Direct News Source

Mar-2018 ALTA reached out to Petrojam to express the industry's concern related to constant jet fuel price increases in Jamaica over recent years, particularly the last increase which became effective in January. The constant price increases over recent years have had a negative impact on the airline industry's competitiveness in Jamaica due to the relative importance of jet fuel as an airline's cost. Jet fuel, an airline's biggest cost, represents approximately 25 percent of an airline's operating cost. Therefore, every cent of fuel cost results in a huge impact to an airline's financial results. In the Jamaican market, the estimation is that every cent generates an extra cost of USD $700,000 a year. Therefore, fair and competitive conditions with distributors would be an incentive for airlines to continue growing and expanding their operations.

ALTA emphasized that maintaining competitive jet fuel prices would provide a number of benefits to the country, improving Jamaica's competitiveness as a tourist and business destination in both world and regional scenarios. A competitive price promotes an increase in passenger traffic, an increase in frequencies, and even the arrival of new carriers, as well as all of the indirect benefits to a country's economy development.

The high price increase and the high impact this price has for airlines results in substantial risk for Jamaica's sustainable economic development, as well as the permanence of a carrier that does not have suitable competitive conditions for market development. This is reflected in the lower growth rate of frequencies over the last three years in comparison with prior periods.

ALTA expressed the association's readiness for open dialogue with Petrojam and their eagerness to share the industry's views and best practices with Petrojam and relevant stakeholders.

This press release was sourced from ALTA on 18-Mar-2018.