By NEIL HARTNELL
Tribune Business Editor
The government has allocated just one percent of the $200m needed to upgrade 28 Family Island airports in this year’s budget, a Cabinet minister revealed yesterday.
Dionisio D’Aguilar, minister of tourism and aviation, told Tribune Business that the $2m provided for the 2019-2020 fiscal year highlighted why The Bahamas must urgently “fix the model” for airport maintenance as the already-strained Public Treasury “is unable to carry the load”.
He voiced optimism that a passenger user facility charge will be introduced “in the near term” at Marsh Harbour’s Leonard Thompson International Airport to provide a funding mechanism for its upkeep, amid complaints from the Abaco Chamber of Commerce and others that visitors are being given a terrible first and last impression of The Bahamas due to its deterioration.
Mr D’Aguilar said such a move was part of wider plans to potentially roll-out the so-called “NAD model” to major Family Island airports, given that all are suffering from a lack of operational and capital improvement funding.
This structure, which involves a private sector entity taking over an airport’s management and financing, has already been adopted at the Lynden Pindling International Airport (LPIA) with the Nassau Airport Development Company, and the minister said the Government’s financial constraints give it no alternative but to look at similar public-private partnerships throughout the nation.
While aviation consultants, Stantec, estimated in 2013 that a $180m total investment was required to bring all Family Island airports up to international standard, Mr D’Aguilar said these costs had likely escalated to “very much north of $200m”.
The Minnis administration itself is not well-placed to do much about it, the minister admitted, as the Government has “allocated $2m for it this year”. All 28 airports remain under the control and management of the state-owned Airport Authority, with travelling passengers contributing nothing towards maintaining infrastructure vital to the tourism industry and inter-island commerce.
“The issue at many of our Family Island airports is a lack of funding for operations and capital improvements,” Mr D’Aguilar told Tribune Business. “So the Government is considering the implementation at some of the key Family Island airports of a business model similar to the one we have at LPIA, where we have an entity that manages that specific airport and raises funds through the implementation of a passenger facility charge.
“None of our Family Island airports charge a passenger facility charge. I don’t know of any international airport that does not charge a passenger facility charge. The business model at airports recognises the users of the airport pay for its use, but we don’t deploy that at Family Island airports, so they don’t have sufficient funding in place to fund operations and provide the necessary upkeep when needed.”
Acknowledging that this had resulted in The Bahamas possessing some of the cheapest airports in the Caribbean to fly into, Mr D’Aguilar said this had created an imbalance that needed to be addressed if this nation is to bring its aviation ports of entry up to world-class standards.
Using the Miami to Nassau route as an example, he revealed that airline ticket prices typically contained around $154 in total fees. While around $60 was incurred on the US side, the remainder on this end was made up of NAD’s charges ($48); Bahamian departure taxes ($29); and a $7 security fee with the remainder being Value-Added Tax (VAT).
While similar fees and charges may not be imposed at the same level in the Family Islands, Mr D’Aguilar said additional income streams were essential to address the Airport Authority’s “very limited funding for capital improvements and equipment upgrades” and “keep it on the cutting edge”.
“The process has begun for us to turn our airports into self-sustaining businesses,” he told Tribune Business. “Once we’ve done North Eleuthera and Exuma, we will bring attention to those airports receiving serious traffic and set up a business model that allows for sufficient revenue to upgrade and maintain them. We need to put that structure in place.
“I feel that we’re leaving money on the table that could be used to maintain them. We need to fix the business model. The public purse is not going to be able to carry the full load. The travelling public can expect, in the near term, to commence paying a passenger facility charge. I’m hoping that at Marsh Harbour we can achieve that in the near term.
“We’ve got to review how we roll that out, but Family Island airports are the cheapest in the Caribbean to visit. Yet it’s leaving no funds for us to keep them in an acceptable state. It’s not only foreign visitors bringing that to our attention but local residents. They want something a lot better and I can understand that.”
Mr D’Aguilar said Marsh Harbour was a prime example of the flawed airport operating model employed in The Bahamas. “The Government spent $30m on it, and we need to put in place a funding mechanism and business model that provide for the regular upkeep of the second busiest airport in the country,” he added.
“We need to step in and ensure there is no deterioration to the physical plant, and provide the necessary maintenance and up keep of the facility. There is no doubt we’ve been having some challenges at Marsh Harbour airport in terms of runway lighting, in terms of issues at the terminal that have been brought to our attention by the Chamber of Commerce and local community.
“We’ve obviously responded to those issues. There was a problem with the runway lighting that we’ve corrected, and I’ve been advised we’ve taken remediation steps to correct the other issues, but that will not solve the problem long-term.”
Mr D’Aguilar said “the biggest impediment” to transforming many Family Island airports is that they lack legally-defined boundaries, having simply “evolved” over the decades. This has forced the Government to hire surveyors via the Surveyor General’s Office to properly determine the limits for these assets.