The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Government Wednesday warned the US airline industry that it will “not bully The Bahamas into surrendering its sovereignty” over assertions that this nation’s air navigation fees are excessive and unjust.

The Davis administration, firing back at the sector’s latest salvo in filings with the US Department of Transportation, argued that the carriers were making “last grasp” allegations and changing the basis of their claim because they cannot show that The Bahamas’ charges are discriminatory against them under American law.

It asserted that Airlines4America, whose members include the likes of American Airlines and Jet Blue, had been unable to identify any instance where US carriers paid higher fees than competitors for the same service because no such discrepancies existed. Carriers taking off and landing in The Bahamas pay the same air navigation fees, the Government added, while those transiting Bahamian air space did likewise via a separate charging schedule.

The Davis administration also accused the airlines of hunting for a non-existent contract breach that does not fall under the US law their initial claim was based on, the US International Air Transport Fair Competitive Practices Act 1974, and called on the US Transportation Department not to allow the industry to “run roughshod” over The Bahamas’ Air Transport Agreement with Washington, D.C.

“The members showed that they want the Department to engage in an amorphous hunt for a contract breach that has nothing to do with the Act. This last grasp requires The Bahamas to submit this reply to address the new and errant points the members have raised,” the Government said of the US airline industry.

It accused the sector of “all but abandoning their attempt to claim discrimination” against The Bahamas, with the airlines now arguing that the complaint should remain before the US Transportation Department on the basis that this nation’s air navigation fees are “unreasonable”.

“That attempt does clarify that the members are groping for a way to convert a contract claim into a claim under the Act. That attempt must fail else the Department will find itself expanding its jurisdiction to resolve all contract disputes under the Act without there being discrimination,” the Government’s filing argued.

“The next flaw in the members’ argument is their invitation to label The Bahamas’ actions under the Air Transport Agreement and Air Navigation Services Agreement [with the US government] as discrimination while tacitly admitting that all air carriers pay identical rates for receiving the same services.

“The members point to the fact that The Bahamas would collect less from air carriers who land and take off in The Bahamas than what it collects for [transit] fees. Even in that argument, the members cannot identify any air carrier paying different rates for receiving the same service. But the members also ignore that [transit] charges are $0.0043 per nautical mile and ton versus the charges for air carries that land and take off are $0.0099 per nautical mile and ton,” it added.

“All air carriers taking off and landing in The Bahamas pay the identical rate, and all air carriers flying over The Bahamas pay the identical rate. The Members’ argument is therefore wrong; all air carriers pay the identical rate for the identical services. There is no discrimination between the charges for flying over The Bahamas and the charges for landing or taking off from The Bahamas.....

“There is no way to construe the members’ argument other than recasting their discrimination claim as a plea for help to bully The Bahamas into surrendering its sovereignty by acquiescing to jurisdiction for claims the members have made under the contracts.”

With fees levied on aircraft transiting Bahamian air space some 2.3 times’ lower than those for counterparts that land and take-off, the Government added: “The members also raise the Aviation Trust Fund but offer no facts to show that there is discrimination based on the members paying into the fund. The arguments presented by the members amount to using the Act to bully The Bahamas into surrendering its sovereignty.

“The Department should not encourage the members to run rough shod over the Act or Air Transport Agreement. The failure to allege a discrimination claim is fatal to the complaint... The Act is not for the members to beat up The Bahamas for a perceived unfairness – they must show discrimination.”

The dispute has potentially serious ramifications given that the US Department of Transportation, if it finds in the US airlines’ favour, could go to the extent of totally barring Bahamian airlines such as Bahamasair and Western Air from flying to the US or reducing such access. However, it is likely there is too much at stake for all parties to go to such extreme sanctions.

The Bahamas, in 2021, signed a 10-year deal that outsourced management of 75 percent of its air space above 6,000 feet to the FAA, with the US agency agreeing to waive the air navigation fees it previously levied for using this country’s air space.

The Bahamas subsequently imposed its own air navigation services charges in a bid to generate revenue sufficient to fund the development of civil aviation safety and oversight in The Bahamas, and associated regulatory functions. This will thus eliminate the need for Bahamian taxpayers to fund this, saving the Public Treasury millions of dollars per annum at a time when it is coming under increasing fiscal stress.

However, arguing that these fees should only cover the cost of providing the service, the US airlines are alleging there is no justification for “the tens of millions of dollars” that The Bahamas is collecting given that it is just paying, at most, $80,000-$100,000 to the FAA. They claim this “runs afoul” of global best practice and agreements, plus the US International Air Transport Fair Competitive Practices Act 1974.

The Bahamas has established a sliding scale for its air navigation services fees that ranges from $8.50 to $51.60 per 100 nautical miles based on the aircraft’s weight. Several observers have privately suggested to Tribune Business that the US airlines are seeking to bully The Bahamas by placing no value on the worth of this country’s sovereign air space.

They believe the sector is longing for a return to the days when The Bahamas earned not a single cent in revenue from the aviation industry’s use of its air space, which sits on key Atlantic and other routes between Europe and the western hemisphere and North and South America. The FAA used to waive air navigation services fees for planes that took off and/or landed in the US after passing through Bahamian air space, thus giving them free use of this country.

The Government, in its answer to the US airlines’ complaint, asserted that The Bahamas’ air navigation services regime was compliant with the Chicago Convention - the agreement that established the main principles of global air transport - as well as International Civil Aviation Organisation (ICAO) guidelines.