The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas has no hope of reversing the 22 per cent decline in post-recession private aviation visitors when its policies keep increasing the sector’s tax burden, a leading private aviation guide said yesterday.

Jim Parker, president of Caribbean Flying Adventures.com, a top pilot’s guide for planes flying in the Caribbean, told Tribune Business that Value-Added Tax (VAT) had almost “doubled” the fuel taxes paid by private planes refuelling in the Bahamas.

Combined with the $50 ‘each way’ arrival and departure taxes, and the $29 per passenger tax, Mr Parker said VAT’s imposition had merely added to a massively increased private aviation tax burden.

The latter tax, he added, was a further disincentive for private pilots and their planes to bring persons to the Bahamas, something that was already costing this nation “significant tourism dollars”.

Mr Parker said all this meant there was likely little chance for the Bahamas to reverse the decline in private aviation numbers it has experienced since 2007, when the financial crisis and economic recession hit.

Official arrivals data he has obtained from the Ministry of Tourism, and shared with Tribune Business, shows that private aviation visitor arrivals to the Bahamas have fallen from a 106,499 peak in 2007 to 83,237 in 2013 - a drop of 22 per cent, or more than 23,000.

While the latter is not especially significant in the context of the Bahamas’ total five million-plus annual tourism arrivals, the reality is that private aviation visitors are among this nation’s biggest, and highest-yielding, stopover spenders.

This translates into a market that the Bahamas should be desperate to grow, not retard - yet Mr Parker says its taxation policies, with VAT the latest example, are doing exactly that.

“There’s a 22 per cent decline in private aviation numbers,” Mr Parker told Tribune Business. “They’re [the pilots] totally fed up with these increases.

“After five years of steady decline [in private aviation arrivals], how are you going to come up with increases in the face of increased taxes? The increases over the last three to four years, they don’t stop.”

The data obtained by Mr Parker shows that, while private aviation visitors to the Bahamas stabilised in the low 80,000s range annually in the four years to 2013, they are not growing - and are nowhere near pre-recession levels.

This newspaper revealed last week the confusion among fixed base operators (FBOs) in the Family Islands over whether 7.5 per cent VAT should be levied on fuel sales to private planes. Commercial airlines have escaped this levy, but private planes have not been so lucky.

With aviation gas costing around $7 per gallon, Mr Parker said VAT had added another 52-53 cents to the Government’s tax take. With existing per gallon taxes at around 57 cents, VAT had “essentially doubled the fuel taxes” to around $1.10 per gallon for private planes.

Mr Parker said VAT had merely compounded the negative impact from government tax policies that took a turn for the worse with the 2013-2014 Budget (at least as far as private aviation is concerned).

He added: “Anyone with connections to the private aviation fleet in the US knows that private pilots are avoiding the Bahamas in droves because of the fourth successive passenger tax increase (from $15 to $20 to $25 to $29), and the 2013 introduction of a $50 ‘processing’ fee just to show up.

“Thousands of pilots who used to fly to the Bahamas for day trips with four people in the aircraft now face $166 in airport fees plus an additional 7.5 per cent in fuel taxes (where fuel was already taxed $0.57 a gallon versus $0.19 in the US).

“The 7.5 per cent increase on fuel doubles the fuel tax to over a $1 a gallon. This revenue stream – the Fly to the Bahamas for Lunch – has virtually disappeared. It completely kills the day business, the day flights to the Bahamas.”

Mr Parker said that, combined with the $50 processing fee, VAT’s introduction meant it now cost private planes more than $100 just to stop in the Bahamas to refuel.

Suggesting that many would now bypass the Bahamas as a refuelling stop, Mr Parker contrasted this nation’s approach with Belize, which had separate policies for domestic and international aviation that favoured the latter.

He added that the Bahamas, unlike all other destinations, was also applying the $29 per passenger tax to crew - a further disincentive to private aviation.

“It’s a shame,” Mr Parker told Tribune Business. “When you add up the declining arrivals numbers, the Bahamas is losing significant tourism dollars. It’s totally offsetting any increase in those tax revenues.

“It’s very unfortunate. They’re costing the Bahamas money. They’re not putting more tax dollars into the Government’s coffers. They’re taking thousands of dollars out of the pockets of hotels and restaurants. People are going elsewhere.”

Mr Parker said there had been no decline in the number of US-based private pilots who were flying, adding that he had seen no drop in participation on the trips he organised to places such as Guatemala, the Dominican Republic and Puerto Rico - all places where fees and taxes were competitive.

He added that the fall in private aviation arrivals was “enormously hurtful to all the Bahamian businesses” that served the market, and should be “a grave concern” to the Government.

“In the meanwhile, competing destinations for private pilots like the Dominican Republic, Puerto Rico, the Caymans and even Mexico are either maintaining low fees, lowering fees or offering reasonable fuel prices,” Mr Parker told Tribune Business.

“ The hand writing is on the wall in bold letters. The Bahamas needs to wake up and recognise the importance of private aviation tourism. It needs to reverse the harmful tax and fee increases of the past five years or continue to loss more millions in tourism revenues and tax collections.”