Poverty, Debt, and the Structural Limits on Jamaican Development

While Norman Manley rosily envisioned independence in 1962 as a turning of the “wheel of history,” the colony’s official head of state, the governor of Jamaica, appointed by London’s Parliament, offered a more somber assessment. In a confidential memo from 1961, Sir Kenneth Blackburne, a career diplomat who was fated to be the last Englishman to serve as Jamaica’s governor, pointed to intractable problems that would plague Jamaica well beyond independence. The report cheered Jamaica’s significant economic growth in the 1950s—GDP grew from just over UK£70 million in 1950 to more than £210 million in 1959—but it also warned that the “considerable prosperity [of] the middle and upper sections of the population,” had “not yet, as had been hoped, penetrated to the vast mass of under-privileged people.” What Blackburne labeled as “slums” in and around Kingston now held 25 percent of the population, whose living conditions were “at an abominably low level… . The slum dwellers cannot but contrast their conditions with those enjoyed by the more fortunate people who … are able to enjoy new houses, motor cars, and all the delights of a civilized life.”⁹ This stark divide led Blackburne to dismiss Manley’s optimism. Instead, he foresaw independence as politically and socially divisive:

For the past twenty years … nearly the whole population … has been united in its aim to secure its own independent status in the world. That aim has virtually been secured; and it is no longer possible to rally popular opinion in the struggle for the abolition of colonialism like a country which has fought a war and has been united in order to win. Jamaica is now in the “post war period” without a clarion call which will make all work for the good of their country.¹⁰

Despite British complicity in creating this situation, Blackburne saw little prospect that London would help rectify these inequalities. He hoped that “some help may be obtainable from the Colonial Development Corporation,” which was a government institution designed to finance investments in soon-to-be-independent colonies. The CDC might finance “slum clearance,” he noted, but he added that “the total amount likely to be obtainable in this way will be insignificant in comparison with the needs of the next few years.” Instead, he suggested that poverty abatement be off-loaded onto the United States, though that nation’s investments were more self-servingly political than altruistically focused on economic development. As such, Blackburne advocated a Cold War–inflected approach to the Americans: “The main source of capital would seem to be the United States, whose Government is rightly concerned with the dangers of the spread of communism in the Caribbean and Latin America.” If poverty abatement programs could be packaged as reducing the threat of communism, the Americans might finance them. Even so, this largesse would not come as grants, but rather as low-interest loans. Blackburne thereby foresaw that Jamaica’s most pressing social and economic need, combating poverty, would require borrowing, with debt then becoming another hindrance to the new nation’s economic development that would create problems well beyond independence.¹¹

This context of intractable poverty and growing debt needs to be remembered when thinking about the resources devoted to Jamaica’s aviation sector. When Norman Manley and his government were elected in 1955 with the greatest powers of self-rule ever granted under the British, aviation became a key investment stream to stimulate growth. Yet, the financial demands to prepare the airports alone for the Jet Age, much less to start an airline, were daunting. Before 1945, the only serviceable airports were reserved for British and American military use, with no civil aviation runways or terminals that could have handled jets. Soon after the war, the main military airfields in Kingston and Montego Bay were converted to civilian use, and loans were secured for runway extensions at Kingston, though even these updates were inadequate for the coming Jet Age. Thus, from Manley’s election through independence in 1962, even more funds were allocated to make both airports jet-ready—runways, terminals, and safety equipment were overhauled. Overall, UK£6 million was spent on these airports between 1945 and 1962, mainly paid for with loans backed by the Kingston government, not London.¹²

Despite this debt and the controversial prioritization of aviation infrastructure over poverty-related needs, these investments did encourage substantial growth via tourism. Larger airports meant larger planes and more visitors, leading to a dramatic evolution in Jamaican tourism. This process began in the late 1940s with the arrival of modest numbers of wealthy Tories fleeing mainland United Kingdom’s high postwar taxes, as well as Hollywood and Broadway celebrities looking to spend their winters in remote but opulent luxury. These tourists either reached Jamaica by ship, or they worked their way to New York or Miami and then took Pan Am or BOAC flights to Jamaica on propeller planes that carried around forty passengers each.

By 1962, however, the island’s jet-ready airports enabled tourism to transform into a mass-marketed product focused on luring North America’s middle- and working-classes. These less elite but far more numerous patrons began their vacations on passenger jets carrying a hundred or more travelers and sunned themselves at increasingly large, though still modestly sized resorts, which peaked at around one hundred beds per property. What Jamaican tourism lost in exclusivity was more than justified by the massive increases in foreign exchange and job opportunities. Indeed, when Norman Manley’s minister of trade and industry, Willis Isaacs, presided over ceremonies to welcome Pan Am’s first jet service into Kingston in 1962, he boasted that tourism had already doubled since the government was elected in 1955. He also predicted that tourist numbers would soon double again, which they did by 1970.¹³

Pleased with this tourism growth and a similar postwar boom in the bauxite industry, G. Arthur Brown exuded cautious optimism regarding the economy as it stood at independence. “These developments,” he reported, “transformed the economy from a one-crop banana economy pre-1940, to one which … rested on four legs: agriculture, industry, bauxite, and tourism.” Brown was closely involved with these diversification efforts through his work as director of the Central Planning Unit and chair of the ad hoc aviation committee. In fact, the latter committee’s decision to establish Air Jamaica was designed to deepen this newfound economic diversity.¹⁴

In tandem with Jamaica’s aviation investments came equally generous spending on hotel development. One of the first laws passed under the colony’s first home-rule agreement in 1944 was the Hotel Aid Law subsidizing new hotel construction. When investors, whether foreign or domestic, built new hotels, they gained tax relief (no income taxes on five of the first eight years of operation), exemption from import duties (for supplies imported for construction needs), and relief from the colony’s rules against repatriating hard currency earnings. These subsidies helped increase hotel inventory, most pronouncedly around the North Coast’s hub of Montego Bay, which was quickly blossoming into a tourist mecca.

By 1956, the Hotel Aid Law had succeeded in increasing Montego Bay’s inventory to 1187 beds, with 2809 on the entire island. Even larger hotel projects were in the works, including a proposed three-hundred-room hotel near the Montego Bay Airport that would be built by the Pan Am–owned Intercontinental Hotels Corporation. Unforeseen circumstances would delay this project’s completion until 1971. Yet, it was first planned in 1949, thanks to the incentives of the Hotel Aid Law.¹⁵ By the 1960s Pan Am had been joined by BOAC in financing a hotel of its own in Kingston. These projects were subsidized by Jamaican taxpayers, even as they became a second revenue stream for the West’s legacy airlines.

Air Jamaica was born into this complex mélange of optimism and pessimism that accompanied Jamaica’s independence. As Norman Manley saw it, the “wheel of history” was turning in the right direction, and even the more studied observations from G. Arthur Brown could celebrate the end of Jamaica’s colonial-era “one-crop banana economy.” The simultaneous pessimism was best epitomized by Governor Blackburne’s report, which expressed alarm that Jamaica’s poverty was worsening, even as its prosperity grew for the middle-class and elites. The “slums” that he saw growing in West Kingston were not even a mile from Kingston Harbor, where Pan Am, between 1930 and the onset of World War II, had landed its sea planes and walked passengers to the smart Myrtle Bank Hotel for a pampered overnight stay. Even Kingston’s new jet-ready Palisadoes Airport (later renamed to honor Norman Manley) could be spied from Trenchtown, Tivoli Gardens, Rema, and other shantytowns in West Kingston, even though it was located on a peninsula a few miles across the harbor.

Blackburne’s pessimism also contained a financial component that counterbalanced Brown’s optimism: debt. Not only did he foresee debt as the main mechanism at Jamaica’s disposal to address its social problems, but he also correctly pointed to the Americans as the likeliest source of such loans. Here, too, though, Blackburne envisioned limits on American largesse, except when a fight against communism was involved. Otherwise, the American and British interests that ran Jamaica’s colonial-era “banana economy” were poised at independence to wean Jamaica off state aid, promoting instead development via foreign direct investment from corporations. In this model, American and British companies, including Pan Am and BOAC, could be lured by tax subsidies. While this model would foster employment and economic growth, it did not address Jamaica’s postcolonial desires for sovereignty. It would not rectify foreign control of most revenue-making enterprises, as found in Jamaica’s colonial era, nor would it challenge the cartography of colonialism from the prewar aviation sector. Indeed, at the dawn of independence, Pan Am and BOAC still enjoyed a near-monopoly on air routes to Jamaica, even as ticket sales to the island had been booming for nearly two decades.

The Headwinds of American Neo-imperialism

In 1961, Jamaicans surprised American and British observers—and their premier, Norman Manley—by voting to leave the West Indies Federation. According to British plans drafted soon after World War II, it was the federation, not Jamaica itself, that was to gain independence. Thus, through the 1950s, as self-rule increased in each of the individual colonies of the British-held West Indies, federal institutions were being built, including a parliament building and executive offices at the newly designated federal capital of Port of Spain in Trinidad. Manley pleaded with voters to recognize Jamaica’s limitations as too small for independence on its own. Yet, its population of over 1.6 million was far and away the largest of any British colony in the region, its location was geographically isolated compared to the others, and its economy—though it lacked the oil reserves of Trinidad—was larger than its peers and growing robustly. Thus, voters opted for a go-it-alone independence plan, following the entreaties of Manley’s rival Alexander Bustamante. Manley stayed in power long enough to lead the independence negotiations in London in January 1962, the event that opens this chapter. However, when he lost the next election in April, he went into opposition and gave way to his cousin, Bustamante, who became the country’s first prime minister in the independence era.

G. Arthur Brown’s work on founding Air Jamaica had already begun in 1961, at the same time as the referendum. As expected, the committee debated a variety of issues: Would the increased economic development that an airline might bring justify the risks of taking on more government debt to start it? Would the global aviation system, so favorable to the West’s legacy airlines, really offer Air Jamaica the freedom to price seats, open new routes, and expand seat inventory? Could an unproven start-up improve on the service customers received from Pan Am and BOAC? Development, debt, sovereignty, foreign control—these variables were foremost considerations as Brown and the committee finally decided in 1963 to create an Air Jamaica that was quite unique, possessing an as-yet-untried ownership model and operating structure.

Proponents existed for all of the most viable options to provide more air service from Jamaica to North America and Europe: to bolster the Pan Am-BOAC duopoly but cajole them into continued expansion, to form an independent airline, or to co-own an airline that would serve Jamaica and its recently spurned partners from the West Indies Federation. The last of these options was unpopular among the officials on the committee. British officials had founded an airline in 1949 to serve all of the British West Indies, when BOAC created BWIA (British West Indies Airways), which they continued to own through 1961. Even though BWIA benefited Jamaicans in important ways, especially offering a handful careers as pilots, customer-service personnel, flight attendants, and technicians, the airline served as a cautionary tale for Brown and his team. As they knew, BWIA’s efforts to link far-flung colonies in the Caribbean and then feed traffic onward to Miami and New York was far from profitable. In fact, overall BOAC lost UK£3.2 million on BWIA before selling it to Trinidad’s government. They also expressed concerns that BWIA had become a “make work” enterprise with bloated payrolls. Thus, BWIA was the type of unprofitable, overly politicized carrier that Brown wanted to avoid.¹⁶

Many large hoteliers preferred to double down on the Pan Am-BOAC duopoly. These businesses already worked well with both airlines, creating mutually beneficial pipelines from airports to resorts and back. Thus, when Brown’s committee ultimately voted to start a Jamaican airline, it had to appease the tourism elites’ desire for continued service from these foreign carriers. By including Abe Issa as an Air Jamaica board member—among other resorts, Issa owned the Myrtle Bank Hotel in Kingston where Pan Am’s prewar passengers had overnighted—Brown signaled that the new airline would respect these desires.

Overall, Brown’s plans for the new Air Jamaica involved much pragmatic balancing. Expanding national sovereignty would happen, but state investments in the new airline would be both modest and prudently spent. Sovereignty was mainly boosted via the Chicago conference’s reliance on bilateral negotiations. Once Jamaica had its own airline, it could finally exercise this leverage against the Americans and British to negotiate both new routes and more landings and takeoffs on exiting routes. After all, the system’s primary principle was reciprocity; the starting point in negotiations was that each country’s airline would fly an equal number of rotations on each route. If Air Jamaica matched Pan Am’s and BOAC’s capacities, it would immediately double available seats. And it could push for opening new routes by promising the same reciprocity. As a ministry paper from 1965 explained: “In the absence of Jamaica’s own national carrier … traffic between Jamaica and any overseas country would be virtually limited to the carrier of that country only, thus resulting in Jamaica having international services with negligible, if any, effective competition… . Fares, schedules, frequencies, etc., would therefore rest almost solely on the decision of one airline owned in an overseas country and the Government would have little say in these matters.”¹⁷

Brown’s innovative plan for Air Jamaica, finalized in 1963, was a joint venture owned 51 percent by the government, 33 percent by BOAC, and 16 percent by BWIA, a formula that reduced the government’s outlays by almost half. In fact, the partner airlines further agreed to cap the government’s share of potential losses at UK£20,000 annually. This commitment made BWIA’s large deficits, which committee members were loath to duplicate, a non-issue.¹⁸ Finally, Air Jamaica also opted to wet lease BOAC and BWIA planes, meaning these airlines provided their jets fully staffed and ready to fly. This solution saved Air Jamaica money by eliminating exorbitant start-up expenses, including aircraft purchases, hiring and training of flight crews, and fleet maintenance. As a government minister noted: “The cost of a modern commercial jet aircraft is a considerable one and the annual turnover runs into millions of pounds. Jamaica has very little experience in this field, and it is clearly advantageous for the Government to ensure that, in the establishment of an airline, the experience and know-how of a large organization should be secured.”¹⁹ Thus, the agreement rightsized Jamaica’s commitment to the new airline: it got the increased capacity it most wanted without massive financial investments. The new Air Jamaica would not be on par with Pan Am or BOAC, as it would not even have its own planes or in-flight personnel. However, it would serve the island’s growing tourist-oriented economy well.

Air Jamaica was ready to fly in August 1963, but it lacked approval from the Civil Aeronautics Board to operate in the United States. This is where Brown’s work nearly unraveled. Pan Am filed a letter of objection, which CAB officials supported, claiming that Air Jamaica was not actually an independent airline. Citing the airline’s ownership structure and proposed wet lease operations, Pan Am argued that Air Jamaica was nothing more than a “paper airline.” It posited that BOAC, with its 33 percent ownership stake, was the actual force behind the airline and was using Air Jamaica to get more flights for itself (albeit under Air Jamaica’s name) on lucrative routes between New York and Jamaica. The CAB demanded a thorough review of Air Jamaica’s ownership and wet leases, which in turn led to a protracted diplomatic fight between Jamaican officials and the CAB, with the White House and State Department ultimately intervening. This conflict delayed Air Jamaica’s launch by nearly three years, until 1966.²⁰

British diplomats lamented the fact that Air Jamaica had become a pawn in a larger squabble between America’s and Britain’s aviation giants. They surmised that Pan Am was really mobilizing against BOAC: “It is … clearer than ever that Pan American are determined to use these negotiations to further their object of driving BOAC out of the Caribbean.” If BOAC were stripped of its ownership stake in Air Jamaica, it would fly only its long-haul routes between London and the Caribbean, since the wave of independence across the West Indies meant that BOAC was no longer a designated national carrier in the region.²¹ Pan Am instead wanted BOAC replaced with national airlines like Trinidad-owned BWIA. These carriers, with small domestic markets, would predictably strain under high operating costs and ultimately become unreliable enterprises, offering service far inferior to Pan Am’s. Britain’s diplomats thereby concluded that Pan Am’s “wish [is] to get BOAC out of the enterprise, so that no strength is left able to support Air Jamaica against the powerful blows that Pan American could rain on it.”²²

Pan Am aspired to tear Air Jamaica away from BOAC, even if it jeopardized larger American commitments to support Jamaican sovereignty and development. The CAB, after all, was forcing the Jamaican government into costly and risky commitments. The CAB finally insisted in 1966 that the Jamaican government increase its ownership in and operational responsibility for Air Jamaica, with a firm commitment that BOAC and BWIA divest. These demands would diminish Air Jamaica’s competitiveness in relation to American carriers, while also pushing the Jamaican government into deeper dependence on American financiers for loans to cover the airline’s inevitable debt from purchasing planes and hiring hundreds of employees.

Ever a staunch ally of the United States and eager to cast his nation as a counterbalance to Castro’s Cuba, Jamaica’s new prime minister, Alexander Bustamante, was initially caught off guard by the CAB’s delay. British diplomats counseled their Jamaican counterparts to threaten the Americans: “In the case of Jamaica, their remedy is simple; to say to the US, ‘Unless you recognize our airline, we shall not allow your aircraft to land in Jamaica.’” At the same time, they admitted this tactic’s dangers: “But the Jamaicans are, one assumes, scared to do this, first because of their generally weak attitude towards the US, and secondly because they are unwilling to risk the loss of American tourists.”²³ Jamaica’s ambassador to Washington, Neville Ashenheim, waited until late 1964 before shaming the CAB for its neo-imperialist ways: “We allow your airlines to operate in Jamaica. We expect you to allow our airline to operate into the United States. We cannot accept a position that because you are an old and wealthy country with established airlines of its own you have the right to strangle our infant airline effort at birth.”²⁴

As Ashenheim’s memo circulated more widely, the White House took notice and pressured the CAB to break the impasse. Ultimately, in early 1966, the CAB finally granted Air Jamaica its needed permission with its ownership and lease arrangements intact. However, it imposed a three-year time limit for BOAC and BWIA to divest. This decision finally allowed Air Jamaica to take flight, though with its days already numbered. By 1969, it would either have to fold, merge with BWIA, or rely on further diplomatic finagling to extend its lifeline.

Jamaican officials overlooked this pending turbulence when the first Air Jamaica flight took off on May 1, 1966. Acting Prime Minister Donald Sangster, who replaced Bustamante after a debilitating stroke, enthusiastically recalled that “for many years a national airline for Jamaica was a dream.”²⁵ Yet, amid the celebration for Jamaica’s taking “its place among the airline-operating nations of the world,” Minister Cleve Lewis acknowledged the “very often hard bargaining” Jamaica’s ambassador faced when “the representative of a small newly-independent country [was] doing business with the most air-minded country in the world.”²⁶ G. Arthur Brown, in turn, expressed both satisfaction and caution, especially regarding the airline’s future. “The introduction of service by Air Jamaica is a dream come true,” he noted before adding: “What we have today … must only be regarded as the beginning. We have a long way to go before we have fully established ourselves but, in typical Jamaican fashion, we are proceeding with caution.”²⁷ With renewed vigor, Brown turned immediately to Air Jamaica’s future after the CAB’s 1969 expiration date, exploring new options to keep the airline afloat.

Air Jamaica’s Higher-Risk Second Incarnation

Air Jamaica’s joint venture with BOAC and BWIA did indeed expire in 1969. Yet, Brown succeeded a year earlier in establishing a new legal entity called “Air Jamaica (1968) Limited,” which would seamlessly replace it. This too was a joint venture, this time a sixty-forty split between the government and Air Canada that would last for ten years—an expiration date again mandated by the CAB. Unlike the first Air Jamaica, this new venture had more features to assure the CAB that it was not a “paper airline.” Indeed, Brown formed it knowing full well that “the United States Government … will not compromise the financial viability of the airline”—that Air Jamaica had to own for itself the elements needed for its operation.²⁸

Therefore, the airline acquired its own planes, two brand-new DC-9 jets with a capacity of around one hundred passengers each, purchased directly from the US manufacturer. While a larger DC-8 was also leased from Air Canada, it came with the stipulation that “the Board [of Air Jamaica] will have to take immediately firm decisions regarding the … acceptance of an option on a mini jumbo aircraft in replacement of the DC 8 in 1972,” again because of the CAB.²⁹ Moreover, Air Jamaica’s flights would boast its own flight attendants, gate agents, and baggage handlers, all of them recruited through the home office in Kingston. At the beginning pilots would be Canadians, but only until enough Jamaicans graduated from training programs.³⁰ Thus, with its own Jamaican employees, its own airplanes, and its own marketing plan, the new airline more credibly assured the CAB of its self-sufficiency, despite leaning on expertise and funding from Air Canada. The number of new expenses did, however, mean that this second incarnation of Air Jamaica placed greater financial burdens and risks on the Jamaican government.

The amount Air Jamaica borrowed was quite high. Another Canadian enterprise, the Bank of Nova Scotia, opened a line of credit of US$18.5 million over ten years, some of which would be drawn immediately to cover start-up expenses and planned short-term losses. Air Canada then made available an additional US$7.4 million through Air Jamaica’s issue of “redeemable preference shares” of stock. While the company’s so-called “ordinary shares” were held 60 percent by the government of Jamaica and 40 percent by Air Canada (with a total capitalized value of only US$800,000), a “redeemable preference share” would be given to Air Canada for every additional dollar that it invested. These shares were essentially another line of credit that could be drawn on, and, in fact, US$6.1 million was used in 1969 to pay for the DC-9s. Over time, the government bought back these “redeemable preference shares” at a premium: the base price, plus 7 percent interest, compounded semiannually. Thus, before its first flight, the new Air Jamaica had credit lines of US$25.9 million. Plus, it was already foreseen that “a further loan of U.S.$10 million will be required in 1974 but no arrangements have been concluded to obtain this loan.”³¹

Because the CAB required the Jamaican government to buy out Air Canada over ten years, there were added yearly burdens in addition to debt servicing. The costs due just to Air Canada were considerable. In total, “over the ten years the outflows from the Budget could be of the order of £5,003,288 [roughly US$10 million at the prevailing exchange rate of two dollars per Jamaican pound].”³² This amount, coupled with Air Jamaica’s US$18.5 million bank loan, was disquieting to a variety of participants, including, somewhat ironically, American officials. Diplomats at the embassy in Kingston cautioned that “the prime difficulty from this Government’s point of view will be … Jamaica[’s] repurchase [of] the preferred shares at the rate of $1.1 million annually… . The repurchase might well constitute a politically imprudent annual charge for [the] Government to bear.”³³ Totally omitted in this report was the United States’ culpability in forcing this scenario on the Jamaican government. These additional risks—and debt—were dictated by the CAB.

While these were risky times for the new Air Jamaica, they were also, in retrospect, the airline’s heyday, when there seemed a viable way to end Jamaica’s subordination under the cartography of colonialism. Progress along these lines started with the choice of Air Canada over other viable partners from America and Britain. Several American airlines submitted joint venture proposals, and Brown’s team identified TWA as the most likely of these. Diplomats in Kingston even surmised that Jamaica’s new prime minister, Hugh Shearer, a member of Bustamante’s political party, might press for this arrangement “in the belief that [Air Jamaica’s] dealings with the CAB would thereby be smoothed.” Yet, they also rightly saw a countervailing sentiment: resentment at American machinations against Air Jamaica. These diplomats were therefore not surprised by the ultimate choice: “We also know … that this Jamaican Cabinet, more nationalistic than its predecessors, will be attracted by the Air Canada offer, in [that] Jamaicans will own more of Air Jamaica … [and] Air Canada will permit a good deal of Jamaican management of the airline, whereas TWA would do virtually all the managing.”³⁴ Thus, even in these assessments, the Air Canada partnership offered greater potential for Jamaican autonomy.

Equally vital to this era of new opportunity were the terms negotiated with the United States in a ten-year bilateral agreement governing air routes. These negotiations, completed in 1969, rendered a very favorable outcome for the Jamaicans, especially because Air Jamaica was given routes beyond New York and Miami. Chicago, Detroit, and Philadelphia were opened, and the United States also permitted extensions beyond these new cities to third-country destinations in Canada (Toronto and Montreal), Nassau in the Bahamas, and the far-off metropole of London. With this agreement, G. Arthur Brown found hope that the airline’s new jets—and new debt—could pay off. As he saw it, these additional gateways would make Air Jamaica a viable long-term airline. Indeed, in forging a cartography of postcolonialism for the nation, routes that did more than replicate Pan Am’s and BOAC’s colonial-era trunk lines to Miami and New York were essential.

Ambassador Ashenheim’s assessment was also glowing: Air Jamaica would now serve “four of the five largest cities in the U.S.,” including “Philadelphia and Detroit … to the exclusion of U.S. airlines.” He gleefully added, “if we can get the British rights [to Nassau and London], [this] could by itself turn Air Jamaica into one of the important and financially strong airlines of the world.” While overstated on the latter point, Ashenheim’s optimism was shared widely: “Our tourist authorities appear delighted, Air Jamaica seems to be wagging its tail in anticipation of becoming an important airline, and … whilst we have given the U.S. considerable freedom [flying its own desired routes into Jamaica], we have extracted a fair price for this.”³⁵ Certainly, major risks loomed when the new Air Jamaica launched on April 1, 1969. This was the first flight in the airline’s history with its own jets, decorated its own tangerine and yellow colors, with a cadre of Jamaican women serving as stewardesses, and with Jamaican pilots soon to be licensed for flying. Thus, although there were risks, as Ashenheim saw it, the potential rewards were far greater.³⁶

Oil Shock and the Popping of Jamaica’s Tourist Bubble

The new Air Jamaica’s launch was so successful that a cover story in the trade journal Air Transport World feted G. Arthur Brown for his work: “The exact formula probably would be impossible to repeat. In a way, that’s too bad! Because the way the Jamaican government has managed to ease into the business of running a successful flag airline has got to be one of the best yet devised.” The article added that the airline in 1971, just its second year in operation, posted a profit of almost US$200,000, while its load factor (the percent of available seats sold) rose to a healthy 76 percent on the New York–Kingston route. Furthermore, the new routes initiated since 1970 (Chicago, Toronto, Philadelphia) all grew, with further expansion in the offing: “Next will come Detroit via Nassau… . In 1974, the sights shift across the Atlantic to a one or two flight per week service to London.” The airline was on pace to carry 310,000 passengers in 1972, and there was a seeming promise of more success in the coming years.³⁷

The fuller maturation of Jamaica’s aviation sector invited, in turn, new commitments to larger hotels. The Hotel Aid Law of 1944 continued to help expand inventory from 2,809 beds in 1956 to 9,616 by 1969. However, almost all this growth took place at small-scale hotels. As of 1969 there were only eight properties with more than one hundred rooms and none with two hundred rooms. Air Jamaica’s ambitious 1969 relaunch and its route expansion plans motivated government officials to contemplate a new phase of hotel development: building large-scale conference hotels for up to five hundred guests. To this end, Prime Minister Shearer’s government passed the Hotel (Incentives) Act in 1968, which enhanced the 1944 subsidies: hotels with at least 350 beds and convention facilities now qualified for a fifteen-year tax holiday, rather than the original seven.³⁸

This law finally drew in major international hotel developers, including both Pan Am’s and BOAC’s hotel divisions, who teamed up with local developers and broke ground on massive projects. BOAC’s Pegasus Hotel in Kingston was expected to cost over US$7 million, while Pan Am’s Intercontinental Hotels committed to manage (though not own) the long-planned US$17.7 million resort property near Montego Bay’s airport. When it was asked to further mitigate the risks of both these projects beyond the 1968 subsidies, the Shearer government also guaranteed some of the construction loans. An even bolder commitment to hotel development came in the 1968 decision to found the Urban Development Corporation (UDC), which was owned entirely by the government and charged with increasing tourism in areas designated as high priority, including downtown Kingston, the new north shore town of Ocho Rios, and the remote Seven-Mile Beach at Negril. The UDC then laid out funding to construct convention hotels in each area, two of which—Ocho Rios and Kingston—chose Pan Am’s Intercontinental Hotels to lease and manage the properties. The government was now investing tens of millions of dollars into convention hotel construction and taking on ownership of various hotels as well.³⁹

Note the opening dates for these projects and their proximity to the worldwide oil crisis: BOAC’s Pegasus opened in 1973, Pan Am’s Montego Bay Intercontinental in 1974, its sister property in Ocho Rios in 1975, and its other sister property in downtown Kingston in 1976. Thus, this burgeoning bubble of hotel development was ready to pop right when OPEC drastically cut its deliveries of oil to the Western world in 1973 and 1974. As a country with no oil reserves, Jamaica was poorly positioned to weather the quadrupling of fuel costs. During the crisis, each of the “four legs” of Jamaica’s postindependence economy shrank.

Heavy energy users like the bauxite industry were hit with drastic increases in production costs. Yet, even more detrimental was what G. Arthur Brown saw happening in industrialized countries: “The rich countries decided to cut back on economic growth and set up a deflationary policy to reduce consumption… . The deflationary policy had a serious adverse effect on demand for developing countries’ products and thus began the long slide in commodity prices which in turn reduced the incomes from developing countries’ exports.” For Jamaica, the consequences were calamitous and multifaceted. As Brown noted, “Jamaica obviously was caught up in this vicious cycle: borrowing heavily to maintain imports, being hit by declining commodity prices, particularly bauxite and sugar and, as we got into the 1980s, being further hit by high real interest rates. This means that from reduced export earnings we had to pay for high-priced energy and the servicing of an escalating debt.”⁴⁰

The government’s bold investments in convention hotels since the late 1960s now looked foolhardy. While tourist arrivals continued to increase from 1966 through 1974, “the results of this favorable trend were however nullified by a substantially faster building of new hotels and resulted in a steady decrease in year-round island-wide room occupancy, reaching an alarming low of 40% for 1974,” noted a consultant for Air Jamaica. The oil shock precipitated a reckoning in the tourism sector far beyond Air Jamaica. The convention hotels, originally privately held companies, were sold to the UDC, which was now stuck paying their debts and covering their losses.⁴¹ Faced with seeing them either closed or operating but government-owned, the Michael Manley government reluctantly opted for the latter. It was a last-ditch effort to salvage the thousands of hotel-based jobs that Jamaicans relied on.

In 1976, the minister of tourism in Manley’s government, the future prime minister P. J. Patterson, announced that the UDC’s most recent acquisitions of convention hotels around the island, “will place approximately 3,300 rooms under the control of Government.” He added that the debt burden for these properties was especially high, since “all [of UDC’s] secondary development projects,” including the hotel projects it owned, “have been financed by loans with no cash equity input from Government.” Also concerning was the growing difficulty finding lenders: whereas loans used to be available from banks, “now, however, long-term commercial bank financing is extremely difficult to find and medium-term funds are also scarce.”⁴² Patterson’s address took place as Michael Manley’s government, facing a broader lending crisis, contemplated bailout negotiations with the IMF. Meanwhile, labor unrest fed violence on the streets, increased crime in middle-class areas, and added to the lawlessness in West Kingston’s shantytowns. States of emergency, including deployment of the Jamaica Defense Force on city streets, were commonplace in the mid- to late 1970s.

Air Jamaica’s financial prospects took a similar nosedive with the oil shock. Its dependence on tourists for 80 percent of its business was unfortunate, as tourism is especially vulnerable to recessions. With more Americans forgoing vacations, Air Jamaica struggled to maintain its revenue, while also decreasing capacity and laying off workers. The company posted a profit in 1973 of JA$1.38 million and even was able to maintain financial discipline in 1974 by posting a more modest profit of JA$546,000. However, the 1974 annual report warned of losses in the following year, due to “increasing costs, low yielding fares, and the work stoppage at the start of the year.” It added that for every dollar earned, an unsustainable twenty-three cents were now going to fuel costs.⁴³ In 1975, Air Jamaica lost a staggering JA$2.54 million and management reported even more ominous prospects for 1976: “If the world economy continues to recover without any major dislocation in commodity prices, and if crime and violence here in Jamaica abates and our industrial problems are quickly resolved, we could see the beginning of a slow recovery. If these conditions are absent, the year could prove disastrous.”⁴⁴

Unfortunately, 1976 was, in fact, a disastrous year, with economic frustrations spurring protests and numerous strikes. An exceptionally contentious and violent election campaign that year further exacerbated social tensions. Michael Manley was first elected in 1972 with an economic program summed up by his political slogan (borrowed from a popular reggae song) “Better Mus’ Come.” He vowed to continue his political rivals’ earlier Keynesian commitments to stimulate development through state debt and state ownership of enterprises, though now coupled with more ambitious spending to combat poverty.⁴⁵ During Manley’s reelection campaign, partisan tensions were far more intense, as was Manley’s antagonism toward the IMF, the American government, and American companies operating bauxite mines in Jamaica. When the IMF pushed the government to accept severe austerity measures in exchange for emergency loans, Manley shared his response at a massive election rally: “The Jamaican government will not accept anybody, anywhere in the world telling us what to do in our own country.” He reached his crescendo with the remark, “Above all, we’re not for sale.”⁴⁶

Manley’s message reverberated with voters, who delivered a decisive victory in December 1976. However, faced with no alternatives to overcome ballooning state debts and the declining prospects of finding lenders, he agreed to return a negotiating team to the IMF in 1977, headed by G. Arthur Brown. Meeting failure in the initial round, a team was reassembled in 1978, this time without Brown, and succeeded in finalizing an agreement that provided US$240 million in loans, in exchange for a 30 percent devaluation in the Jamaican dollar and further austerity measures, import controls, and tax increases.

Overall, IMF officials anticipated that the 1978 agreement would precipitate a dramatic 25 percent drop in ordinary Jamaicans’ living standards, which further exacerbated the cycle of protests, strikes, violence, and states of emergency. By 1979, faced with ever-growing opposition to both the IMF and to Manley’s leadership, the Jamaican government abandoned the protocols, with Manley calling them “a disastrous program” that was imposed on Jamaica “as retaliatory punishment that this impertinent little country had dared to question their wisdom.” By the end of Manley’s term in 1980, there was no working relationship between Jamaica and the IMF, and the country was still burdened with debt, by then totaling over US$1.3 billion.⁴⁷

Whatever culpability lies with the Manley government’s commitment to democratic socialism for the growing nationalizations and debt, it was the more conservative government of Hugh Shearer, elected in 1968, that wrote and passed the legislation that ultimately exposed the government to these risks, at least in the hotel and aviation spheres. It was also complete coincidence that the popping of the tourism bubble—as well as the simultaneous popping of the bauxite bubble—took place after Manley’s 1972 election, due to the unforeseen oil crisis. While Manley’s government was accused of recklessly nationalizing companies, it gained ownership of the new mega-hotels only reluctantly. The government’s role as payer of last resort, thanks to corporate subsidy programs from 1968, now made it the owner of resort after resort.

These difficulties also occurred right when the government was required to buy out more of Air Canada’s ownership stake in Air Jamaica. This time at the behest of the United States’ CAB—an irony that deserves more attention from those studying the Manley years—the government increased its ownership in another flagging Jamaican company. In 1974 it purchased an additional 6 percent of “regular shares” from Air Canada, and in the following year—as Air Jamaica posted its sobering JA$2.54 million loss—it raised its ownership share to 74 percent. Each year, the government also repaid Air Canada over US$1 million from its 1969 line of credit. The company’s debt-to-equity ratio now reached a perilous 84:16 split, deviating substantially from the 60:40 norm that was considered healthy for airlines.⁴⁸

It is telling to compare Air Jamaica’s struggles with Pan Am at this moment of crisis. Even this most storied global airline was unmoored by the 1973–74 oil crisis, a situation made worse by its purchase of a large fleet of gas-guzzling Boeing 747 jumbo jets. For the first time ever, Pan Am had to dramatically reduce its route network. After allowing its Intercontinental Hotels in Jamaica to fall into government hands, Pan Am managers in March 1976 suspended all flights to Jamaica. The airline stayed out of Jamaica for seven years, until 1983, before ultimately going out of business altogether in 1991.

Ironically, the airline that meddled to expel BOAC from the Caribbean and keep Air Jamaica a weak, indebted competitor now unilaterally ceded its market share as conditions in Jamaica worsened. After Pan Am’s withdrawal, Air Jamaica carried 75 percent of air traffic to the island, making the moribund tourism industry even more dependent on the beleaguered airline.⁴⁹ Even if the government had wanted to divest from Air Jamaica at this stage, the airline’s disappearance would have been more calamitous than at any time before.

The two decades of aviation growth around Jamaican independence saw both bold successes in combating the cartography of colonialism and, unfortunately, bold failures. Massive airport expansions to make both Montego Bay and Kingston jet-ready by the country’s declaration of independence on August 6, 1962, allowed the new nation to ascend into the Jet Age—albeit while still captive to Pan Am and BOAC, who brought the lion’s share of the ever-growing numbers of tourists to the island. G. Arthur Brown then succeeded in crafting an artful attack on this cartography of colonialism: he created a joint venture with Britain’s BOAC and Trinidad’s BWIA that would allow Air Jamaica to become the new country’s national airline on the cheap. The first iteration of Air Jamaica had no jet costs to assume, no in-flight employees to pay, and a guarantee that government debts would not exceed UK£20,000 in a year.

At this point, however, the Americans struck back against the Chicago aviation system’s normal rules of engagement. Pan Am, eager to maintain its dominance after decolonization, attacked Air Jamaica as a “paper airline” undeserving of access to American markets, and the United States government agency in charge of issuing such licenses, the Civil Aeronautics Board, concurred. The ensuing stalemate delayed Air Jamaica’s launch from 1963 to 1966, with the Americans still getting the last word. By 1969, Air Jamaica was compelled to shed its previous partners, assume more financial risk, and fly its own planes with its own crews. Even when G. Arthur Brown reincorporated the airline as a joint venture with Air Canada, the CAB here too forced Air Canada to fully divest by 1979.

Even so, for a few brief years, G. Arthur Brown’s Air Jamaica (both iterations of it) seized market share on routes between New York and Jamaica. Then, as a consequence of bilateral negotiations in 1969 and thereafter, Air Jamaica was able to expand its footprint to several more gateways in the United States, as well as open up flights into Canada, the Bahamas, and even Britain. By 1973, Air Jamaica had built out the contours of what a cartography of postcolonialism looks like: Jamaica was now a hub, with Air Jamaica flights linking it directly to a dozen cities in the North Atlantic region. Despite carrying a heavy debt burden from the start-up period of the Air Canada joint venture, prospects were decent that Air Jamaica could continue to grow, and continue to earn a profit, as Jamaica’s tourism industry upsized. This was now an era of mass tourism, replete with jet planes and three-hundred-bed convention-sized resort hotels.

Then came the oil crisis of 1973–74, followed by decisions by the West’s central bankers to combat inflation by raising interest rates and grinding economic growth to a halt. The resulting recession was calamitous for Jamaica, as it raised energy and import costs while lowering global prices for its bauxite, sugar, and bananas. Crucially for Air Jamaica, the tourist trade, already showing signs of weakness before 1974, contracted precipitously thereafter, as consumers in the North Atlantic region cut back on vacationing. Air Jamaica never recovered from a confluence of crises: the OPEC oil shock; the costly CAB-mandated extraction from its partnership with Air Canada; and the labor unrest and politically motivated violence that was exacerbated by the country’s debt and ensuing conflicts with the IMF.

All these developments are far from the turning of the “wheel of history” that Premier Norman Manley rosily proclaimed for Jamaica from a jetliner in 1962, or what G. Arthur Brown hoped for with Air Jamaica’s seemingly successful takeoffs in 1966 and, again, in 1969. In the end, the challenges of developing a cartography of postcolonialism were too numerous, just as the independence-era economic challenges for this comparatively impoverished and small state were too great to overcome. Chroniclers of Air Jamaica’s history may be tempted—as with the few historians who have examined aviation in the Cold War Global South—to attribute these failures to Jamaicans themselves: to the hubris of seeking national prestige through an airline, to mismanagement of a highly technical and complex enterprise, to miscalculations in developing tourist assets too quickly.⁵⁰

Yet, Air Jamaica’s failure can be traced to actions by its colonial overlords in London and its neo-imperial overlords in the United States—especially the latter. As part of a larger strategy to maintain predominance in the Caribbean, aviation officials at Pan Am and the Civil Aeronautics Board placed excessive financial burdens on Air Jamaica. Similarly, Jamaica’s legacy under colonial rule, including under American economic hegemony since the early twentieth century, placed excessive burdens on the newly independent country. Incurring debt was the only way forward prescribed by the governor of Jamaica at the dawn of independence, a condition that Jamaica’s local elected officials accepted as inevitable. Debt was how Jamaica was to address its stunning poverty. Debt was also how Jamaica was to develop its infant industries like tourism, including its hotels, airports, and airlines.

By the close of the 1970s, Air Jamaica had become exactly what British diplomats in 1964 surmised was the CAB’s ultimate intent: an indebted airline, 100 percent owned by a Jamaican government that had “no strength … left [to be] able to support Air Jamaica against the powerful blows that Pan American could rain on it.”⁵¹ Unexpectedly, however, Pan Am itself was no longer around to seize on Air Jamaica’s weaknesses. Instead, the tumult of the mid-1970s temporarily left the weak Air Jamaica with even less competition from US carriers—and with more obligations to supply tourists to increasingly cash-starved, government-owned resorts. In the end, nobody won from American protectionism, especially not Jamaica’s taxpayers, tourism investors, nor its workers eager for jobs in aviation and tourism.