By NEIL HARTNELL
Tribune Business Editor
A Cabinet minister has admitted that the Nassau Flight Service (NFS) privatisation timetable is “aggressive”, but argued that “there’s nothing wrong with that” ahead of today’s bid deadline.
Dionisio D’Aguilar, minister of tourism and aviation, told Tribune Business he was “not going to discourage” a schedule that aims to place the airport ground handling services provider in private sector hands by October 2 this year.
He revealed that there had been “a lot of interest” shown by Bahamian investors and groups in Nassau Flight Services, but cautioned that “we won’t know until the fat lady sings” how many of these will translate into actual bids.
Mr D’Aguilar hinted, though, that the under-five months timeline for privatising Nassau Flight Services was unlikely to be met due to the need for any sale to obtain Cabinet approval - a stage that he conceded is often impossible to predict in terms of how long it will take.
Responding to suggestions that the privatisation schedule is unrealistic, he told Tribune Business: “Probably, but there’s nothing wrong with that. We have to set ourselves some aggressive deadlines to move this process along.
“When we initially set the deadlines, those are standard norms. One step you cannot speed up is the Cabinet approval. That part of it is really unknown. However, you have to say something and that’s what we proposed.
“Cabinet is not to be rushed in its deliberations, and will want to evaluate all options. Those driving the RFP (Request for Proposal) on behalf of the Government set themselves a fairly aggressive schedule and I’m not going to discourage that.”
The Government’s involvement in any commercial deal tends to slow the process down, based on its track record. The Nassau Flight Services (NFS) prospectus, a copy of which has been seen by Tribune Business, reveals the Minnis administration is targeting a tight two-month window in which to choose a winning purchaser/franchise operator.
All bids are due to be submitted by today, June 28. Interviews with the best offers will be held “if necessary” on July 12, with the preferred bidder selected one week later and the “purchase/franchise agreement” awarded by July 26, 2019.
Setting out a breathless pace, the Nassau Flight Services RFP allows only one week between the award and contract execution on August 2, 2019. A 30-day transition to the new owner/franchise operator will then begin on September 2, 2019, with the takeover closing on October 2, 2019, in a process lasting less than five months.
“There’s been a lot of questions, interest and information provided by the Department of Aviation,” Mr D’Aguilar told Tribune Business of potential bidders’ response to the privatisation process.
“I’m encouraged by the level of interest. I’m interested to see how bids come in, and the extent of them. It’s very exciting and we’ll see how it pans out when the bids are revealed and evaluated. Obviously a recommendation will be made to the Cabinet if there is one to make.
“A lot of people have expressed interest, but whether they put in a bid remains to be seen. We’ve been been informed there’s a lot of interest being registered but we won’t know until the fat lady sings who responds.”
The Minnis administration views Nassau Flight Services as “low hanging fruit” when it comes to privatisation, outsourcing and getting the Government “out of business”. Mr D’Aguilar identified the ground handler, which provides services at Lynden Pindling International Airport (LPIA), Exuma and San Salvador, as such a target in its 2017-2018 Budget address.
The Government also sees the privatisation as part of its drive to create more Bahamian entrepreneurs, diversify the economy and spread the wealth, hence its insistence that foreign bidders need not apply given that Nassau Flight Services’ size makes it a prime candidate to remain in local hands.
Nassau Flight Services is projected to enjoy somewhat modest growth in its main business line, ground handling, over the next decade to 2028. Top-line revenue from this source is forecast to rise by 21.9 percent over this period, or 2 percent per annum, increasing from an actual $6.251m in 2018 to $7.62m in 2028 - a relatively modest pace of growth that, in total, is less than $1.5m.
“NFS has managed an average of 6,600 flights during the period 2015-2018, and is projecting a two percent annual growth over the next ten years,” the bid documents confirm. “NFS has managed an average of 6,600 flights during the period 2015-2018.”
The number of flights handled by Nassau Flight Services is also forecast to increase from the 6,850 handled in 2018 to 8,350 by 2028 - an increase of 1,500 annually, or 21.9 percent, that matches the level of revenue growth.
The ground handler currently has 244 total employees split between 166 full-time workers and 78 temporary staff, who provide services at Lynden Pindling International Airport (LPIA), Exuma and San Salvador airports.
The fate of the staff, and the industrial deal with the Airport, Airline and Allied Workers Union (AAAWU) that any buyer will inherit, are likely to be key subjects in negotiations between the Government and preferred bidder.
The union deal is valid until February 2020, and the Government’s RFP says it will accept either an acquisition of “minimum 10-year franchise agreement” from the winning bidder.
Nassau Flight Services’ client base comprises British Airways, Air Canada, West Jet, Sunwing Airlines, InterCaribbean Airlines, Caribbean Airlines, COPA Airlines and Cubana Airlines at LPIA’s international terminal, and Jet Blue, Southwest Airlines, United Airlines and Silver Airlines at the US terminal.
It also serves a host of charter and other operators, including Air France and Condor, while in Exuma it serves Air Canada and takes care of American Airlines and Air Cariabes in San Salvador.