By YOURI KEMP
Tribune Business Reporter
The introduction of passenger user fees to finance Family Island airport redevelopment will cause travellers to “kick back” and initially soften travel demand, Bahamian aviation operators forecast yesterday.
Anthony Hamilton, Southern Air’s director of administration, and president of the Bahamas Association of Air Transport Operators, told Tribune Business that while the initial reaction was likely to be negative passengers will eventually “eat it”.
Tribune Business revealed yesterday how Bahamian and international travellers will ultimately have to pay user fees of up to $43 per person to finance the collective $263m redevelopment of the 14 Family Island airports put out to bid on Wednesday.
The project information memorandum (PIM), released to interested private sector bidders, reveals that “recommendations” have already been made to levy passenger facility fees that will increase through a series of phased-in rises over a four-year period to pay for upcoming infrastructure upgrades at the major airports.
Mr Hamilton said a “combination of things” will occur when the user fees are first introduced, with Nassau Airport Development Company (NAD) likely to increase those for Lynden Pindling International Airport as a result. “This fee situation is becoming a challenge,” Mr Hamilton said. “Inter-island travel will begin to dry up because we’re going to have to pass the costs on.
“So this will be a progressive advancement of the fees? I need to acquaint myself with some of the things that were projected with them coming on stream with the airports. But we have a challenge in maintaining all of the airports that we have up to international standard because they are an excessive burden on the public purse, and so this is an effort to try to address that with the public participating.”
Mr Hamilton said the Bahamian aviation industry needs to “come together” on these issues, citing a missed opportunity to do so during the COVID-19 pandemic over the health travel visa fees as operators had to ensure those additional costs were covered in their ticket prices. “These little costs, they add up particularly for the Family Island folks who have to come back and forth doing their business. This is obviously going to be a pinch,” he added of the planned fees.
“I think initially people are going to kick back, but because they need to travel and for the convenience, a lot of folks will end up eating it because what other choice do you have?”
Ned Mulford, owner of Cat Island’s Pigeon Cay Club, said the impact depends on “how much the increase is”. He added: “If it goes from $12 to $25, and $15 to $43, that may be too much of an increase. That’s going to be a lot of money. It has to be in the millions.”
“Most consumers won’t notice, but I don’t think they should increase the fees by more than double. I don’t know why they keep it lower for domestic, but to make a near-triple increase for international sounds like too much.” He added that people will still come regardless of the new fees, which he described as “hefty”.
The Family Island airport bid documents said: “A passenger facility fee of $15 for departing international passengers, and $12 for departing domestic passengers, [will] be increased annually until 2025, ending at an amount of $43 for departing international passengers and $25 for departing domestic passengers.” Given that the initial airport user fees were due to be implemented in 2022, this schedule will likely be delayed by a year.
Besides repaying private investors for financing the Family Island airport upgrades, the passenger facility fees will also help to cover their operational and ongoing maintenance costs. The fees for Bahamian/resident travellers will thus double over the four-year period, increasing from $12 to $25, while near tripling for international travellers as these rise from $15 to $43 per trip.
The bid documents revealed that the increase will apply only to those airports defined as ‘Tier one’ and ‘Tier two’ in the tender process. These are Exuma International Airport; Marsh Harbour; North Eleuthera; Rock Sound; Governor’s Harbour; Long Island International Airport San Salvador International Airport; and Cat Island’s New Bight International Airport.
“The Government plans to restructure passengers’ fees to ensure the financial viability of the airports’ development,” the bid documents confirmed. “The Airport Authority is subsidised significantly by the Government of The Bahamas whereby most of the subsidy is used to pay people-related costs with a minimum left to invest into the infrastructural upgrades/maintenance of Family Island airports.
“The Airport Authority derives revenue from airport parking fees; aircraft tie down; official sunset fees; midnight fees; and fuel royalty fees. These airport-related fees were not changed since the 1980s. In addition to the mentioned revenue structure, the Airport Authority does not charge passenger facility fees (with the exception of Grand Bahama) despite the legislative framework that allows such charges.”
Thus Family Island residents could be in for something of a culture shock, with airline ticket prices and the cost of travel increasing to reflect the new fees that will finance a return on investment for the private sector groups bidding to take over redevelopment, operation and management of these airports.
Other Family Island airports not included in the top two “tiers” will initially impose a passenger facility fee of $7 for departing international passengers and $5 for departing domestic passengers “to be increased annually until 2025, ending at an amount of $15 for departing international passengers and $12 for departing domestic passengers”.
The bid documents added that passenger security fees at all airports, including LPIA, will be levied at between $7 to $10 for departing domestic passengers and from $9 to $12 for departing international passengers. “Revisions to the schedule of other airport fees and charges to be implemented on a date to be determined,” bidders were informed.