The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

TOURISM officials yesterday conceded it was “critical” that Freeport’s airport fuel and handling costs, which are 126 per cent higher than Caribbean rivals, are reduced within the next “three to six months” to sustain the sector’s growth and make it truly competitive.

David Johnson, the Ministry of Tourism’s director-general, who spoke with Tribune Business while at the 16th Grand Bahama Business Outlook, said he had met with executives of Hutchison Whampoa, the airport’s operator, to outline those concerns.

“We are are joining our partners, Hutchison, in tackling the fuel issue, as Hutchinson owns the airport and also operates the facility for obtaining fuel,” Mr Johnson said.

“There is also a concern with handling costs other than fuel, and how we can become more competitive. We will examine why our costs are as they are, and see what the opportunities might be to achieve some economies to make us more competitive.”

Mr Johnson added: “One of the advantages is that consumption levels going forward should be much higher, and fuel costs are driven by volume.

“We hope that the guaranteed increased demand brought about by Sunwing flying, and the contracted jet flying by Bahamasair to US cities, the combined effect of that would mean a 300 per cent increase or more in the amount of fuel being consumed at the airport which, if we managed properly, I believe we could achieve fuel cost reductions.

“Likewise, if we reach those volumes and passengers travelling, the cost to handle each passenger should also be reduced. These are the things we are discussing, to see how with increased volume we can reduce unit costs to make the airport costs and, by extension, the destination cost more competitive.”

Mr Johnson reiterated: “It’s critical for us that we achieve these economies within the next three to six months, otherwise we would be operating with a premium on costs, and that makes it difficult to sustain the growth in tourism we’re trying to achieve.”

Tourism Minister Obie Wilchcombe, who highlighted the issue during his address at the Business Outlook, told Tribune Business: “The problem is we are 126 per cent higher than anyone in the Caribbean for turnaround and then fuel costs at the airport; that’s just too high.

“We have generated some dialogue, which I feel is going to be progressive. I feel very good about it and they [Hutchison] understand what we’re trying to do. We won’t be able to compete with the other Caribbean countries if we can’t find a way to reduce the cost.”