The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamasair has increased ticket prices on all domestic and international routes with effect from early April after its fuel costs soared by an “extra $100,000 per week”, its managing director revealed yesterday.

Tracy Cooper told Tribune Business that the state-owned national flag carrier had no choice but to pass some of increase on to passengers as it was impossible to “absorb all of that” within its existing expense structure.

Disclosing that ticket prices have risen by around $3 on domestic routes, and $10 for all international flights, he added that aviation fuel prices had risen by $1.50 per gallon over the past six to seven weeks after Russia’s invasion of Ukraine sparked sudden volatility in global oil prices.

The increased fuel burden comes as Bahamasair struggles to return to pre-pandemic passenger load factors, with Mr Cooper confirming that the airline and its rivals are “not there yet”. COVID’s Omicron variant was a further setback for the industry in January and February, but he said customer volumes had started to come back in March and voiced optimism that the elimination of testing for inter-island travel would provide a timely boost for Easter.

Forecasting that Bahamasair was unlikely to recover fully from the pandemic until the rest of the economy does likewise, which is estimated to be some time in late 2023, Mr Cooper said of current aviation industry conditions: “What we have is the fact that the fuel prices have gone up significantly. We’re up $1.50 or so more on a gallon of aviation fuel. It’s over $4.12 a gallon of aviation fuel.

“This has obviously been the impact of the Russian invasion. Unfortunately, Bahamasair is using 90,000 to 95,00 gallons of fuel a week, so it’s a significant impact. It’s easily costing the airline an additional $100,000 a week in fuel costs. We don’t have any choice but to pass some of that on to the consumer because we cannot absorb all of that.”

Based on the $1.50 per gallon increase figure supplied by Mr Cooper, and the 90,000-95,000 gallons consumed by Bahamasair per week, this newspaper’s calculations show that the airline’s fuel costs have risen by between $135,000 and $142,500 per week. Based on a four-week month, that means monthly costs have jumped by between $540,000 and $570,000. Over a year, that translates into between a $7.02m and $7.41m expense hike.

Asked how this will impact Bahamasair’s ticket prices, Mr Cooper replied: “We’ve already adjusted. It took effect a few days ago. I believe that around the beginning of April it came into effect. We are looking at, I think, it’s another $3 domestically and $10 or so internationally on a ticket. With the volatility in fuel prices, sometimes it goes up, and sometimes it comes down. We have to get the average and just stick with that for a while.

“We don’t make changes [to ticket prices] on a daily basis. We make adjustments, and then watch it for a while, and if we have to make changes up and down we do that. We cannot make changes every day. The consumer needs to have some degree of predictability as well. Hopefully the fuel prices stabilise and come down, but we just don’t know. It’s really what the market dictates.

“Obviously it has a negative impact, but if we pass some of the increase through it does not have as much adverse effect. The consumer picks up some of it, and we try and do the best we can until it levels back out.”

Bahamasair is still struggling to recover from COVID-19’s devastating financial impact, with lockdowns, border closures and reduced travel slashing its revenues by 84 percent year-over-year for the ten months to end-April 2021. This forced Bahamian taxpayers to underwrite a $60m-plus subsidy to keep the airline operating.

“Obviously we still have not caught up to pre-pandemic levels,” Mr Cooper said yesterday. “For January 2022, air arrivals to The Bahamas were around 55 percent of 2019 levels, so it’s running in the right direction but we’re not there yet.

“Again, for January and February, we had the Omicron variant that was playing a bit of havoc. We’ve seen a bit more of an increase for March. We’re hoping that going into April, especially for the Easter break and with regatta festivals back in place, we’ll see a better return.”

Asked about the potential domestic tourism/travel boost from the end to inter-island COVID testing, Mr Cooper added: “I think it’ll play itself out to be significant. We’re even more hopeful now that the US CDC has taken us down to Level 2, so a combination of those factors should cause for travel to be easier in and around, and to, The Bahamas.”

Asked how Bahamasair’s current financial performance compares against the losses the airline suffered during COVID, he said the amount of ‘red ink’ had been cut by between tree to four-fold. Mr Cooper said: “Where we’re at, in comparison to the latter part of 2020 and early part of 2021, I can easily say we’re 200 percent, 300 percent better, but that’s not a difficult thing to compute. We were dead in the water at those times.

“Everyone can remember that 2019 was a banner year for The Bahamas. It’s probably going to be a little difficult for a while to get back to that, with 7.2m visitors in 2019. It was an extraordinary year, including Dorian. The projection for the full recovery is somewhere in 2023, that’s what the market is talking about. I don’t anticipate we’ll get back before that time with the progress being made.”