The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Major airlines allege they are paying “more than five times” what it costs The Bahamas to provide air navigation services to them amid demands that sanctions be imposed on local carriers flying to the US.

The Airlines for America consortium, which includes key carriers such as American Airlines, Jet Blue and Delta, is claiming its members are paying more than $11m per year in overflight fees to The Bahamas even though the services this nation provides cost a fraction of this sum.

While their challenge to The Bahamas’ fledgling 18-month overflight regime was disclosed over the Christmas holidays, no details of the US aviation industry’s complaint - including their demand that Bahamian-owned commercial airlines be either totally barred or severely restricted from flying to the US unless the matter is resolved to their satisfaction - have been disclosed until now.

Should the Biden administration’s Department of Transportation bow to the US airlines’ demands, carriers such as Bahamasair and Western Air could suffer a major loss of income and passengers, while the key transportation artery for this nation’s lucrative stopover visitor market would also be somewhat choked.

The Airlines for America complaint is urging the US transport regulator to issue an order “that, unless the Government of the Bahamas immediately ends the collection of its unjust, discriminatory, anti-competitive and unreasonable user charges, that the authority held by the air carriers of The Bahamas to provide international air transportation to the US will be curtailed or suspended, or be subject to other countervailing measures”.

The Government has pledged to fight the complaint, which is premised on three key issues. First, given that the US Federal Aviation Administration (FAA) still provides air navigation services above 6,000 feet in some 75 percent of Bahamian air space under a ten-year management agreement, the US airlines are alleging they are - in effect - being double taxed as they already pay the FAA to provide this.

They are also alleging they are paying The Bahamas for services it is presently not providing, and are subject to fees not levied on domestic carriers, hence the “discrimination” charge. Finally, the Airlines for America group is also alleging that the present overflight fee structure breaches Article 10 in the Bahamas-US Air Transport Agreement, which calls for such levies to be “just, reasonable, not unjustly discriminatory, and equitably apportioned among categories of users”.

“With minimal exceptions, the members do not presently receive any further services from BANSA (Bahamas Air Navigation Services Authority) besides those air traffic services provided by FAA and the administration of those services and charges to the members,” the Airlines for America consortium alleged.

“Therefore, beyond the fees paid to the FAA under the ANSA (Air Navigation Services Agreement) and any potential administrative costs to implement the ANSA and levy charges to pay the FAA, we are not aware of any further material costs for Bahamas’ air navigation services.....

“A consequence of the ANSA and the way that The Bahamas levies charges is that US carriers departing/arriving are discriminated against vis-à-vis other system users. Specifically, members that pay into the FAA’s Airport & Airway Trust Fund pay to support air traffic control and related facilities, and then are charged by The Bahamas for the provision of the same service and related facilities, all of which are provided by the FAA,” they continued.

“Bahamian air carriers and other non-Us carriers do not have these duplicative payments levied against them when they operate through The Bahamas’ airspace after a US departure or before a US landing.” Airlines for America alleged that its members have to pay $51.60 per nautical mile when flying through Bahamian air space, and $61 per flight when landing or taking off in The Bahamas.

“Since the establishment of the Bahamas charges, our members alone have paid over $20m to The Bahamas. Accordingly, we estimate that the total charges levied against all air carriers in a year exceeds $11m,” the consortium claimed.

“When compared to a very generous and conservative $2m estimate of the annual total costs of air navigation services to members by The Bahamas (including the fees paid to the FAA, administration of the ANSA and costs to levy charges against air carriers), the actual charges levied against the members are likely five times in excess of the costs to the Bahamas.”

Asserting that these fees violate the Bahamas-US air transport agreement, the Airlines for America group, which also includes Southwest Airlines, United Airlines, FedEx and United Parcel Service, alleged they are paying far more than the $80,000 fee earned by the FAA for managing this country’s air space.

“First, and without question, the Bahamas charges far exceed the actual costs of providing air navigation services by multiples of hundreds are not just or reasonable,” Airlines for America alleged. “The annual charges levied against the members alone are more than 100 times greater than the FAA’s annual fee to The Bahamas for its services and, being generous to the Bahamas in their administration of the ANSA and fee collection, significant multiples higher than the actual costs to The Bahamas for all the services provided to the members.

“Second, and also without question, the Bahamas charges exceed the full cost to The Bahamas of providing its air navigation services. Its air navigation services to members are very limited to the FAA fees, administration of the ANSA, and administration of levying charges against air carriers.

“There are no known additional services that would significantly raise the costs for The Bahamas for providing services to the members. Also, given the huge excess, we respectfully submit that such excess is not a reasonable return on assets after depreciation as envisioned by the US-Bahamas ATA, especially because The Bahamas admittedly has minimal assets for its air navigation services.”