By NEIL HARTNELL
Tribune Business Editor
The US is interested in sealing an “open skies” agreement with The Bahamas as many of the conditions for such a deal are already in place, a cabinet minister has revealed.
Dionisio D’Aguilar, minister of tourism and aviation, told Tribune Business that US officials pushed the issue when they met with the Bahamian delegation he led at a recent global conference held in Kenya.
A so-called “open skies” agreement is a bilateral deal that liberalises commercial aviation services between two countries, allowing their respective airlines to fly to the other unmolested by any regulatory restrictions, bureaucracy or trade barriers.
Mr D’Aguilar, emphasising that an “open skies” deal would not permit “cabotage”, which would give US-owned airlines the right to operate domestic flights, said that while he was not opposed to such an agreement in principle it needed to be given more thought by the Minnis administration.
Revealing more details on his discussions at the ICAN 2018 summit, organised by the International Civil Organisation Aviation (ICAO), the Minister added that The Bahamas’ drive to finally charge aircraft for flying over this nation’s air space was also raised by the US.
Most of The Bahamas’ air space is currently managed by the US Federal Aviation Administration (FAA), with this nation currently receiving no overflight fees – a situation successive administrations have been working to remedy.
Mr D’Aguilar said the FAA is currently working out the fee it plans to charge The Bahamas for continuing to manage the air space together with how it will share the revenues from these fees with this nation.
He added that bids from companies seeking to manage/administer the overflight fees regime on The Bahamas’ behalf were expected next month, and estimated that it could generate between $40-$50m in extra annual revenues for the country.
“They did bring it [the overflight fees] up,” Mr D’Aguilar said of his Kenya meeting. “The US was focused more on entering into an agreement with us that is commonly referred to as an Open Skies agreement.
“While we don’t presently have such an agreement, we’re operating as if we did. Many of the conditions necessary for an ‘Open Skies’ agreement are happening now between our countries.
“Their position was that if 10 points are required for an Open Skies agreement, seven to eight of them, are happening anyway. Their position was that it’s so close to happening,” the Minister continued.
“We told them we need to maintain discussions with them, and go back and look at it. From a cursory initial glance, the Open Skies agreement looks doable, but we want time to mull it over some more before we make a decision.”
Mr D’Aguilar, meanwhile, said The Bahamas had made “excellent progress” in negotiations with the FAA over the overflight fees when the two sides met in October before ICAN 2018.
“I think the Americans have gone back to finalise the agreement they’d like to have with us and work out a fee they want to charge us for managing the air space,” he told Tribune Business.
“It’s not to earn money; it’s a cost recovery. We’ll charge flights through our air space and pay them a management fee for managing it. We’re trying to keep the fee as low as possible.”
Mr D’Aguilar said the US manages 75 percent of The Bahamas’ sovereign air space, known as a Flight Information Region (FIR), with Cuba overseeing the balance.
While the ICAO, which oversees the network of FIRs globally, is “not minded to change that arrangement” – given that it would involve a “long and arduous process” – Mr D’Aguilar said The Bahamas would at least gain access to a long-neglected and forgotten revenue source that could finance regulation of its commercial aviation sector.
He revealed that 90 percent of the flights that currently pass through Bahamian air space are charged no fee because they either take-off or terminate in the US – a situation that will now change.
“We have put out a Request for Proposal (RFP) for a company to help us, for lack of a better word, monetise our air space – what to bill, how to bill, how to set it up, the methodology used to bill, and how to track it and collect it,” Mr D’Aguilar said.
“We don’t have the expertise in-country. Hopefully, these proposals will come in probably by the end of January.”
Asked how much revenue The Bahamas potentially stands to earn from levying overflight fees, Mr D’Aguilar said much depended on the calculation method used.
While the US determines its fees by the distance aircraft travel through its air space, other countries base it on the size and weight of the respective plane.
Still, he added: “If I have to make an educated guess, it’s probably in the $40-$50m range.”
The Christie administration took the first steps towards The Bahamas gaining a new revenue source through its January 2017 agreement with the FAA to exempt Bahamian aircraft operators from the payment of overflight fees for domestic flights in their own airspace.
At the time, then-Prime Minister Perry Christie said the deal, which was seen as a possible first step in the Bahamas regaining control of its own air space above 6,000 feet, would save the national flag carrier, Bahamasair, around $1m over a three-year period.
Under international laws, countries require airlines and other aircraft to pay a fee for the right to fly over their airspace. The administration of those rights in The Bahamas has been performed by the FAA since 1952, meaning Bahamasair and other Bahamian-owned carriers have had to pay the US for the privilege of flying over their own country.
Former minister of transport, Glenys Hanna Martin, previously said talks on the matter stretched back to 2006 during the first Christie administration, when negotiations initiated by that government had “progressed as far as a request from the Bahamian government for the US government to submit a proposal for the payment to the Government of the Bahamas of overflight fees”.