By YOURI KEMP
Tribune Business Reporter
A Cabinet minister yesterday said Bahamasair is examining how to combine flights and slash schedules to contain losses that will inevitably “go up” amid the coronavirus pandemic.
Dionisio D’Aguilar, minister of tourism and aviation, told Tribune Business: “Bahamasair obviously will be reviewing its operations to do what economically makes sense.
“I have spoken to the chairman [Tommy Turnquest], and have spoken to the managing director [Tracy Cooper], and they are looking at combining flights and reducing schedules to embrace the new economic realities. It doesn’t make sense to fly empty planes if there is no demand, so they are reducing their schedule to accommodate the new realities that not very many people are travelling.”
Mr D’Aguilar said he did not know what Bahamsair’s monthly cash “burn rate” is, only “what the subvention is and what’s being budgeted in this current fiscal period”. He added: “Bahamasair probably costs the Treasury about $1m a month in subventions, or thereabouts. Most of it is to pay their $120m loan that they incurred when they bought the five new planes.
Adding that he expects Bahamasair’s subsidy, pegged at $22.393m for the 2019-2020 fiscal year, to “probably” be increased, Mr D’Aguilar added: “I am sure the losses the will obviously go up. The airline has a very high fixed-cost business model, so you need [passenger] loads to make it work.
“So when your loads go down, you are incurring all of the lease payments, all of the crew and all of the fixed costs that can only be covered when you have passengers, so you naturally expect losses to go up.”
Bahamasair is far from the only airline in this predicament, as Mr D’Aguilar told Parliament yesterday: “The international Air Transport Association estimates that airlines have already lost $113bn as a result of COVID-19. This number does not even take into account the recent travel restrictions imposed by the US and Canada on European travel, suggesting that losses will rise to unfathomable figures.
“On March 15, American Airlines announced it will continue its short-haul flights to the Caribbean, but in responses to decreased demand and the US government’s COVID-19 travel restrictions, the airline will undergo a phased suspension of long-haul flights with a 75 percent capacity decrease from March 16 through May 6.
“Domestic capacity will reduce by 20 percent in April, and 30 percent in May. On Tuesday, March 10, Delta declared it would reduce its international capacity by 25 percent, eliminating travel on some 40 percent of its routes.”
Mr D’Aguilar continued: “Most US-based carriers have announced that they will continue with essential travel only, but have suspended fees for flight changes and cancellations in order to facilitate future travel once this crisis is behind us.
“As the prime minister has highlighted, some 82 percent of stopover visitors hail from a country which is slowly closing itself off to the world, while 75 percent of our foreign visitor arrivals depend on a cruise industry which has entirely ceased operations.”
Mr D’Aguilar said news from The Bahamas’ second largest visitor market, Canada, was “equally disheartening”, and added: “The Canadian government proclaimed on Friday, March 13, that Canadians should avoid all non-essential travel outside of Canada. Only a few of its airports are open to receive international flights.”
“Each of the three major airlines, Air Canada, Sunwing and WestJet, have suspended or greatly reduced flights to the Caribbean.”