The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Harbour Island realtor has blamed “crazy” air fares that have more than doubled compared to pre-COVID for a 20 percent slowdown in high-end villa rentals during the 2023 peak winter season.

James Malcolm, of the Bahamas Property Group, told Tribune Business that while some clients were prepared to pay up to $20,000-$30,000 per week to rent prime properties they are very “sensitive” to costs they deem unreasonable and are reluctant to “over pay for air fares”.

Noting that round-trip air fares into Eleuthera from the US have more than doubled since the pandemic, rising from around $750-$800 to at least $1,800 via a 125 percent increase, he added: “It was slower this year than in previous years for high-end rentals and that reflects the higher air fares. Even though people pay top dollar to rent out these units, they are still sensitive to air fares.

“Pre-COVID, to get here on Delta or American Airlines was probably $800 per round trip, and this season it’s around $2,000 per person give or take. The folks that travel to Harbour Island to have the wherewithal, and find it really convenient to get to Eleuthera directly rather than fly to Nassau and connect on Pineapple Air like they used to. They’ll pay for that to fly here on a jet.

“But even though they are well-heeled travellers to Harbour Island, and they’re willing to pay $20,000 a week for villas, on the air fare they’re not going to pay. We were probably down 20 percent for villa rentals this year compared to last year. I don’t know where they went but they didn’t come here,” Mr Malcolm continued.

“The air fares make it uneconomic. There’s more value in villas on the beach than there is for air fare. People will forego renting those villas because of the air fare. It’s cost prohibitive. We saw a 20 percent slowdown in rental activity at the higher end. That was affected by air fares and inflation. The two go hand-in-hand, but primarily air fares.

“I flew from Harbour Island to Des Moines, Iowa, a few weeks ago and paid $2,100 for a round trip. There’s some craziness in airline pricing and it doesn’t help us.” Mr Malcolm voiced his concerns after a senior tourism official last week said The Bahamas has failed to convert its US proximity into affordability with airline ticket taxes now exceeding the actual cost of a flight.

Kerry Fountain, the Bahamas Out Island Promotion Board’s executive director, questioned “what’s on the drawing board” to reduce the high access/airlift costs into this nation as he revealed that ticket taxes for his recent flight to Nassau from Fort Lauderdale were 13.4 percent higher than the actual ticket cost.

Taxes worth a combined $163.35 accounted for 53 percent of the total ticket price, and Mr Fountain told the Eleuthera Business Outlook conference: “I need to address this. I’ve heard it mentioned again yesterday on a sales call by some of the hotel partners, and that is the cost of getting to this island of Eleuthera. Some are paying $1,200 or whatever it is.

“The other day I was flying from Fort Lauderdale to Nassau. My ticket cost $144, but the taxes were $163.35. That’s more than the cost of the ticket. We always talk about, when we are writing a business plan for The Bahamas, about our proximity but what we have failed to do is translate or convert that proximity into affordability....

“The point of the matter is that because of the high cost of getting here the number one market for The Bahamas is Florida; Miami and Fort Lauderdale. You could jump on a Carnival cruise from Miami, Fort Lauderdale for $400. That’s almost equal to the cost of an airline ticket. Florida is our home court. We’ve given up that advantage. What are we doing? What is on the drawing board to reduce the high cost of ticket taxes to The Bahamas.”

However, Benjamin Simmons, proprietor of The Other Side and Ocean View properties on Harbour Island and Eleuthera, told Tribune Business that he had received no complaints from guests about the cost of airline tickets into the destination. “The main complaint is the inconsistencies with some flights getting here and delays,” he said.

“I think the destination is one of the most elastic when it comes to pricing. I haven’t noticed any sensitivity to pricing. The biggest complaint is that flights are delayed and people have missed their connections or they have left their luggage behind.”

However, Mr Simmons said there will be “a breaking point” if air fares continue to increase to a point where it is cheaper and easier for visitors to reach rival destinations. And he agreed that current prices may make the destination unaffordable for some members of groups such as weddings.

Carlton Russell, the former senior Atlantis executive who is now The Cove’s managing director, told last week’s Eleuthera Business Outlook that it was “very short-sighted” for The Bahamas to be at the mercy of high ticket taxes that raise costs to access the destination and potentially price some visitors out of the market.

“Sixty percent of that airline ticket is taxes,” he said. “What would be the outcome if we reduced that tax by 50 percent? What would that do for our destination?” Contrasting the impact from one dollar spent by a visitor to that taken in taxes, Mr Russell said: “The dollar that comes in circulates 11 times’ in the community before it goes back out.

“So does it make sense to get that dollar in taxes at the front end, which is one dollar, or that same dollar after it has circulated through the community 11 times? We need to look at tourism in a different state” of mind.

Dr Kenneth Romer, the Ministry of Tourism, Investments and Aviation’s deputy director-general, and acting director of aviation, told a panel discussion at the same conference that officials are “constantly advocating” for commercial airlines to reduce ticket prices and travel costs to The Bahamas.

However, he also pointed out that ticket prices are set by market forces of supply and demand, and The Bahamas remains a high-end destination that wealthy travellers are prepared to pay a premium to visit. “Airlines are businesses, and businesses are always driven by profit. Businesses are driven by demand,” Dr Romer replied.

“The Bahamas is, first of all, an expensive destination. You cannot compare The Bahamas to Mexico and others. Those persons who come to The Bahamas generally have the means to pay for the tickets. Airlines view us as a high-end, luxury destination.

“We are constantly advocating for our airlines to reduce the cost of travel. You’re going to have a certain amount of seats that are going to be affordable, but the majority of our seats are going to attract higher rates because we are almost a luxury, high-end destination. Whether or not you buy a ticket somebody’s going to buy it because demand exists for the destination. They’re going to drive demand to drive their profits.”