The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Sky Bahamas yesterday said it is slashing the frequency of US flights by two-thirds this month, in a bid to assess the financial and other impacts from aviation security upgrades.

Randy Butler, the Bahamian airline's president and chief executive, said the US Department of Homeland Security's demands would inevitably increase costs for local carriers and airports.

"We go into the US from Abaco and Bimini, and to be honest with you we're pulling those flights off this week," he told Tribune Business. "We'll start going again, but for this month we'll be pulling them off to assess all the changes and the costs.

Mr Butler explained that the frequency of Sky Bahamas' US-bound flights from Bimini and Abaco will be cut from three per week to one per week, as it works through the new requirements from the US Department of Homeland Security.

Tribune Business reported yesterday that, according to the New York Times, foreign airlines flying into the US - such as Sky Bahamas and Bahamasair - have just months to show they are carrying out enhanced security protocols, including the interviewing of passengers, and bring their security standards into line with those of US airlines. Otherwise heavy fines will result.

Mr Butler said Bahamian airports and airlines will have to hire more staff to meet US regulatory demands, which in turn will raise travel costs via increased airline ticket prices and airport user fees.

Acknowledging the need for safety and security, he added: "I think you're going to see more fees come. The Airport Authority is responsible for security, and they will have no other option but to hire more people and pass that security fee on to the passengers.

"The airlines will have to hire more people, and pass that fee on to people. Flying to the Family Islands is already cost prohibitive. They'll definitely have to separate the Family Islands from others."

Mr Butler expressed concern that the increased cost, time and inconvenience will reduce demand for air travel - especially among tourists and leisure travellers. He warned that this could also boost the "informal economy", especially the so-called 'hackers'.

"We have an informal economy, which is the hackers, going out of these private airports," he told Tribune Business. "You're going to see more people using them, hackers, as it's going to be cheaper. It means the informal economy will grow. It's already a large one, and it will grow.

"The informal economy is going to impact the formal economy. We are going to have less flights per day. Flights are done on economies of scale, and how many passengers you are likely to have."

The Sky Bahamas chief said reduced flight frequencies were also a distinct possibility as a result of the enhanced US security demands, as airlines could not afford to sit on the runway waiting for passengers to clear security.

The Bahamas, a tourist-dependent nation with around 80 per cent of visitors coming from the US, is always disproportionately affected by new aviation regulations coming out of Washington D. C., as these impact the ease and cost of access to this country.

The new Minnis administration has already shown it is worried about 'access' and aviation-related costs for visitors to the Bahamas, fearing increases here will further undermine the Bahamas' price competitiveness.

It has demonstrated this over the Nassau Airport Development Company's (NAD) proposed increase to Lynden Pindling International Airport (LPIA) user fees - a response to its debt downgrade.

Mr Butler added: "I can tell you that the Bahamian airlines and carriers are very challenged, and they are primarily challenged because of the backdoor taxes the Government have put on the people through NAD, which is ultimately owned by the Government.

"Now, when you have these requirements coming in, it's going to cost more and we will have to get more people to do it [passenger screening and processing] faster. The goal is to get to the destination on time. We've got to move on it, and still complete the check-in and do it on time."

Mr Butler said air travel was meant to be fast, and the new aviation security measures - which may be necessary - went against this industry rationale.