The Tribune

• Urges that local carriers’ US access be ‘curtailed’

• Dispute over Bahamas overflight fees intensifies

• Dutch national flag carrier also voices objections

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A second aviation industry group yesterday backed calls for sanctions to be imposed on Bahamian airlines flying to the US unless this nation reforms its allegedly “unjust” overflight fees.

The National Air Carrier Association (NACA), which represents low-cost airlines servicing this nation such as Frontier Airlines and Spirit Airlines, gave its support and approval to Airlines for America’s demand that the US Department of Transportation impose restrictions on the ability of Bahamasair, Western Air and others to service US destinations unless The Bahamas backs down.

George Novak, NACA’s president and chief executive, in a January 10, 2023, letter to US Department of Transportation officials blasted what he described as “excessive overflight fees” being levied on its members and other US airlines by the Bahamas Air Navigation Services Authority (BANSA).

“NACA agrees that the charges for air navigation services currently being levied by The Bahamas significantly exceed the cots to The Bahamas of providing those services,” Mr Novak wrote, “due in large part to the fact that the Federal Aviation Administration (FAA) has historically provided approximately 75 percent of air traffic services for Bahamian air space.

“These charges are clearly inconsistent with The Bahamas’ obligations under Article 10 of the US-Bahamas Air Transport Agreement to ensure the fundamental fairness of the user charges imposed on carriers. NACA agrees that US carriers are discriminated against via-a-vis other system users because US carriers pay into the FAA’s Airport and Airway Trust Fund to support air traffic control and related facilities, and then are charged by The Bahamas for the provision of the same and related facilities already provided by the FAA.”

Reiterating the Airlines for America complaint that Bahamian-owned airlines and other US carriers “do not have these duplicative payments levied against them when they operate through The Bahamas’ air space”, Mr Novak and NACA demanded that sanctions be imposed on the ability of local carriers to access the US unless this nation “immediately” cease collecting the current fees as structured.

Echoing its fellow industry group in branding The Bahamas’ fees structure as “unjust, discriminatory, anti-competitive and unreasonable”, NACA called for the ability of local airlines to provide services in the US to be “curtailed or suspended”, or face “other countervailing measures” deemed fit by the US Department of Transportation.

The Bahamas now has two powerful US aviation lobby groups ranged against it. Airlines for America includes key carriers such as American Airlines, Jet Blue and Delta, all of which service The Bahamas’ market, as do Frontier and Spirit. NACA also represents the likes of Air Transport International, Atlas Air, AmeriJet, Breeze Airways, Miami Air International, Omni Air International and World Atlantic Airlines.

The Government has pledged to fight their complaint, which yesterday also received backing from KLM Airlines, the Netherlands’ national flag carrier. “We find it hard to accept how the process is currently set up at [in] The Bahamas,” said Johan Zandastra, KLM’s procurement officer for navigation charges.

Tribune Business also understands that the International Air Transport Association (IATA), the lobby group for the global airline industry, has been vehemently opposed to The Bahamas’ overflight fee structure since it was unveiled in March and April 2021. The airline industry’s complaint, as led by the US carriers, is premised on three key issues.

First, given that the FAA still provides air navigation services above 6,000 feet in some 75 percent of Bahamian air space under a ten-year management agreement, the US airlines are alleging they are - in effect - being double taxed as they already pay the FAA to provide this. They are also alleging they are paying The Bahamas for services it is presently not providing, and are subject to fees not levied on domestic carriers, hence the “discrimination” charge.

Finally, the Airlines for America group, now backed by NACA, is also alleging that the present overflight fee structure breaches Article 10 in the Bahamas-US Air Transport Agreement, which calls for such levies to be “just, reasonable, not unjustly discriminatory, and equitably apportioned among categories of users”. The overflight fees are paid in return for the right to use or fly through Bahamian air space.

However, those involved with the development and roll-out of The Bahamas overflight fees say the US airlines are seeking to effectively re-litigate an issue that was already settled more than a year ago. Suggesting that these carriers have become accustomed to paying nothing for transiting Bahamian air space, they accused the US airlines of seeking to bully this nation, and queried: “Does our air space have no value?”

One well-placed source, speaking on condition of anonymity, compared the situation with the US airlines to that encountered with the cruise lines when The Bahamas raised per passenger fees from less than $1. All complained bitterly about it, but eventually feel into line, and they added: “They [the US carriers] think they can simply stop paying. You can’t fly through a nation’s air space and not expect to pay for that. There are costs associated with providing safety and oversight.”

The Government hired consultants ALG, which undertook a six-month consultation process with the aviation industry and other stakeholders to determine the overflight fees that The Bahamas would charge and what was reasonable. It was decided that The Bahamas has “a fairly complex air space”, resulting in different fees for carriers transiting this nation, those taking off and landing, and planes flying between different Bahamian islands.

Bahamian air space was also managed by three different countries - the US, Cuba and Bahamas. It is understood that the then-Minnis administration took the view that it was a single air space that could not be segmented, but the US airlines want only to pay for the portion that affects them and the services they use, dealing only with the FAA and “having no regard for The Bahamas” and its costs.

The Civil Aviation Authority Bahamas (CAAB), in notifying the aviation industry of the proposed fees in an August 31, 2020, paper, said they were competitive when benchmarked against the Caribbean region average using the distance of 223 nautical miles, which was described as the “average overflight” distance through Bahamian air space. The Bahamas was pegged at $136, some $10 below the region’s $146 average.

“The chart shows that the proposed charging scheme is aligned with regional benchmarks, and therefore sets competitive fees for the airspace users,” the Bahamian aviation regulator said. “Landing fees have been calculated based on equality among airspace users, establishing the same cost per nautical mile for the average domestic and international flight - note that the international landing fee covers both the arrival and departure flights.

“When accounting for both the passenger levies and ANS (air navigation services) charges, the average charge per aircraft seat equates to less than $1.60 for domestic and international landings, as well as for overflight operations. Therefore, the proposed charging scheme has a minimum impact on the passenger ticket price and on the aircraft operators’ competitiveness.”

Explaining the rationale for introducing the overflight fee structure, the CAAB added: “The Bahamas is recognised as one of a few nations that do not charge ANS charges. Hence, new revenue streams for the provision of air navigation services and regulatory oversight have been explored to promote the safety, security, economic viability and reliability of the aviation sector in The Bahamas.

“The new revenue streams will permit the CAAB to reduce the burden on fiscal resources currently funding these activities; [and] finance critical upgrades and modernise the air space structure and communication, navigation and surveillance (CNS) infrastructure.”

Other priorities included the financing of “strategic investments in the regulatory oversight activities of the aviation sector, thereby enhancing the compliance with the International Civil Aviation Organisation’s (ICAO) standards and recommended practices, and The Bahamas’ safety audit outcomes”, and improving “the ANS capabilities and manpower capacity in the country”.