By Vernon Khelawan Thursday, July 26 2012

NOTWITSTANDING the fact that a high level delegation of government officials, led by Trade, Industry and Invesement Minister Vasant Bharath flew to Kingston last week to discuss the latest travails of Caribbean Airlines Limited, (CAL) as it relates to the Jamaica operations, the issue of “one airline; two brands” remains technically unresolved.

Two weeks ago the issue reared its head when it was reported that CAL should not be using the Air Jamaica trademarks on its airplanes, since Air Jamaica’s AOC cancelled itself out when the merger was completed in May last year and CAL’s Trinidad AOC cannot be used for a Jamaican airline. To put it in a nutshell, the United States Department of Transportation (DOT) on February 10, 2011 granted permission to CAL “to conduct the operations to and from the United States that were being conducted by Air Jamaica Limited.” Now its counterpart agency the Federal Aviation Administration (FAA) is saying this could only be done if there is a codeshare agreement between both carriers.

The Bharath team included CAL Chairman Rabindra Moonan and acting Chief Executive Robert Corbie as well as Ramesh Lutchmedial, director general of the Trinidad and Tobago Civil Aviation Authority. Speaking to Business Day earlier this week, Minister Bharath, now the line minister of CAL, said he considered the discussions “fruitful” and added, “I think there is some significant value in the two brands”.

Coming out of the meeting Bharath said, was the decision to set up a working committee “to explore both brands as well as the viability of the existing Air Jamaica routes.” He added that there was no decision on the size, but he expected it to comprise four or five people from each country, including civil aviation and legal representatives as well as airline officials. No time frame was given for the activation of the committee. On February 10, 2011 the DOT granted CAL an exemption to permit the airline to conduct the operations to and from the US that were being conducted by Air Jamaica Ltd.

The DOT document states, “We found that this authority was warranted because, as noted in the record, Air Jamaica intended to cease services and the government of Jamaica had, under a Transitional Services Agreement , transferred Air Jamaica’s routes to CAL in order to facilitate a smooth transition of air services from Air Jamaica to CAL. We also found that CAL’s proposal to serve the United States from Jamaica and from New York to Grenada (currently operated by Air Jamaica) would facilitate a seamless transition from Air Jamaica to CAL, of the former carrier’s services and would minimise disruption to the travel plans of passengers and shippers.”

An authoritative source told Business Day, “That decision registered the Air Jamaica name to CAL (whose name CAL was already ‘registered’) for use with the qualifier “operated by Caribbean Airlines” to minimise confusion since the one airline, CAL, was being authorised to operate under two names: CAL for its own operations and Air Jamaica “operated by Caribbean Airlines” for the former Air Jamaica operations (routes) it had acquired under the DOT exemption authority under USC 40109.”

On the other hand, the FAA has taken the position that “CAL needs to own or have a code share deal with an entity with an AOC called Air Jamaica, which seems inconsistent with the DOT decision, which specifically registered the Air Jamaica name to CAL for its use specifically for the former Air Jamaica operations it had acquired as CAL, while continuing to use its own name (CAL) for the balance of its operations.”

The DOT document from Paul Gretch, director of International Aviation states, “Under the circumstances, we find that the public interest requires that CAL give consumers notice that Air Jamaica- branded services conducted after the Air Jamaica-CAL changeover, are in fact being operated by CAL of Trinidad and Tobago and not by the old Air Jamaica.

“To that end we hereby amend the exemption authority we granted on September 14, 2010 …to require that CAL continue its current practice (that it uses in the operations it now performs for Air Jamaica by wet lease) of identifying flights offered through its website(s) and in global distribution systems as ‘Air Jamaica/operated by Caribbean Airlines’,” added the document.

It can be seen therefore that this decision was made specifically to allow Caribbean Airlines to use both names, since both have been registered by the DOT for CAL’s use by decisions made within its jurisdiction on CAL’s application – CAL for CAL’s use in its own (TT) operations and Air Jamaica (as qualified) for its use in CAL’s operation of the former Air Jamaica operations under its own (CAL’s) authority.

Meanwhile Jamaica’s Minister of Finance and Public Service Audley Shaw answering a call from the Jamaica Gleaner for clarification on the use of Air Jamaica’s trademarks by Caribbean Airlines, said, “The essential provisions of that agreement are that Caribbean Airlines has the right to use – for an initial 12-month period those trademarks which are listed in an attachment to the agreement.

“At the end of the initial 12-month period, the right to continue using them is automatically renewed every year at a royalty amount of (US)$5 per year. It is important to not however, that the trade marks which Caribbean Airlines may use are restricted to those listed in the licence agreement. Although those which Caribbean Airlines may access do comprise the main Air Jamaica trademarks, not all are included. For example, Air Jamaica’s Seventh Heaven trade mark is not part of the agreement,” added Minister Shaw.

He said that while the licence gave CAL exclusive right to use the trademarks as stipulated, “Nonetheless, the government of Jamaica, as the licensor, retains the right to continue using the name in any of the ways in which it was being used prior to May 01, 2010 and, subject to Caribbean Airlines’ agreement, may also use the name in any other way which does not compete with the activities of the licensee (CAL).”

Minister Shaw, quoting from the agreement said, “The agreement can be terminated if Caribbean Airlines does not use the trademarks for six months.” He then listed five other conditions under which CAL’s right to use the Air Jamaica trademarks can be terminated -:

• Caribbean Airlines becomes bankrupt;

• The airline assigns or attempts to assign the rights to some other entity;

• The government of Trinidad and Tobago fails toown at least 50.1 percent of Caribbean Airlines;

• Caribbean Airlines fails to continue to run the Jamaica operations to the minimum service level outlined in the Shareholder Agreement; and

• Caribbean Airlines breaches any of the covenants and fails to correct the breach within 30 days.

“Importantly too,” added Shaw, “the trademarks can only be used in connection with the airline’s Jamaica operations relating to routes and frequency, fleet and crew, although Caribbean Airlines may make such changes or variations to the routes and frequency and/or to the fleet and crew stipulations as the airline believes are appropriate in order to achieve maximum profitability and the ultimate success of the Jamaican operations.”

The work of the committee, as revealed by Minister Bharath, would therefore have to deal with these matters in some way.