The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian-owned airlines have been hit with demands for up to $1m-plus in retroactive fees that have caused some to question if they “can survive” in an increasingly hostile environment.

Sherrexcia ‘Rexy’ Rolle, Western Air’s president, chief executive and general counsel, in a written response to Tribune Business inquiries confirmed that the airline last Thursday received an invoice from the Bahamas Air Navigation Services Authority (BANSA) mandating that it pay an extra “$1.3m-plus” for the three-year period between May 2021 to end-July 2024.

Revealing that this represented a 118 percent increase, or more than doubling, of the $1.1m already paid by Western Air to BANSA during that same timeframe, she said: “Yes, we have received what appears to be a retroactive invoice from BANSA. It should be noted [that] Western Air has consistently paid every invoice issued by BANSA in full since the inception of its billing.

“Western Air has paid over $1.1m in fees to BANSA. In fact, BANSA’s own records indicate that we have actually paid more than we were invoiced. However, on March 6, 2025, we received an invoice from BANSA for $2.4m-plus covering the period from May 2021 to July 2024 - charges that have never previously been billed or communicated to us.”

Paul Aranha, founder of Trans-Island Airways, told this newspaper his company also received a BANSA invoice on the same day as Western Air demanding that it pay a total retroactive sum almost triple what the Authority has to-date billed it for the May 2021-July 2024 period.

Disclosing what Tribune Business calculated was a 198.5 percent, or six-figure, increase, he said he has already engaged attorneys to “handle” the matter while warning that - if BANSA does not alter its stance or back down - Trans-Island Airways will likely leave The Bahamas and relocate to another jurisdiction.

Asked what will happen if the situation remains unchanged, Mr Aranha replied: “I don’t think we will continue operating. We will look elsewhere for our aviation involvement. We’ll take our very capable Bahamian team with us wherever we go. This is not an environment we can realistically continue to exist under.

“We’ve already referred it to the lawyers. As far as I’m concerned they’ll be handling the rest of this. Negotiations are typically fruitless with people when you have this great of a divide. I’m skipping the negotiating part and referring it to the lawyers. When there’s something so obviously wrong there’s an obligation to take a stance on it.”

Both Ms Rolle and Mr Aranha challenged how BANSA can now retroactively impose massive fee hikes on flights it has already provided services to and which occurred as far back as almost four years ago. And they argued that it is an impossibility for their carriers to now go back and demand that passengers on those flights pay more to cover higher fees that did not exist back then.

The fees at the heart of this latest aviation drama are those levied under the fledgling air navigation services regime overseen by BANSA. These fees are split into two types - origin/destination charges, which are levied on planes that take-off and land in The Bahamas, and then overflight fees. The latter are levies paid almost entirely by international carriers that fly through Bahamian air space without stopping in this nation.

BANSA is restructuring its air navigation services fee regime in a way that shifts the financial burden of these fees on to take-off/landing fees, and away from overflight fees. Tribune Business previously revealed how these changes will potentially impose six-fold and greater fee increases over the next four fiscal years through 2028-2029 on carriers that are Bahamian-owned or service this nation.

However, what was not known at that time was the extent to which BANSA planned to impose this new structure - together with the associated fee rebalancing and hikes - retroactively for the period between May 2021 and July 2024. That only emerged with the arrival of last Thursday’s billings, which followed a consultation meeting with aviation industry stakeholders on the reforms on Wednesday, March 5.

To the surprise and shock of many who attended, the meeting was not chaired by a Cabinet minister or senior Department of Aviation official but, instead, Jerome Fitzgerald, the Prime Minister’s senior policy advisor. Also present was Lenn King, BANSA’s director, who did not reply to a Tribune Business e-mail seeking comment, and the Government’s Spanish consultants, ALG Group.

BANSA’s February 2025 consultation paper on the air navigation services fee proposals, using heavily-guarded and technical language, did give a hint of what was coming. It referred to the over and under-recovery of fees during the May 2021-July 2024 period, and said these would be adjusted for “the difference between the actual costs for the provision of services as allocated to overflights and origin/destination respectively”.

And, with fee income set to be reallocated according the cost incurred in providing these two separate services, the BANSA paper said airline operators and carriers would either receive a “credit” if they had paid more than their fair share or a “debit” demanding they pay extra to cover their under-billing. Those carriers receiving a “credit” would have this applied against their fees moving forward.

With the burden being re-directed towards take-off and landing fees, their retroactive imposition will largely fall on Bahamian-owned carriers and others that service this nation. Mr Aranha, in particular, argued that this makes no sense given that a potentially crippling burden is being placed on carriers that represent “the lifeblood of the economic engine of this country” by bringing in The Bahamas’ stopover visitors.

And, given that the overflight fees component is being substantially reduced in the air navigation services regime restructuring, those carriers likely to be the recipients of The Bahamas’ “credits” are the US and foreign-owned commercial passenger and cargo traffic that flies over this nation without stopping here. In effect, the restructuring represents a wealth transfer from Bahamian to US and foreign-owned airlines.

Ms Rolle, in her reply to Tribune Business, warned that the inevitable impact of BANSA’s unexpected retroactive fee increase will be higher ticket prices and air travel costs for both Bahamians and international travellers to pay for it. Besides impacting access to the destination, she said the sudden billing lacked “due process” and gave little opportunity for Western Air to challenge or query the fees.

And she also voiced concern over anti-competitive and “unfair trade practices”, as the fee exemption granted to “state-owned aircraft” in BANSA’s 2024 ‘Notice of Intent’ appears to pave the way for these charges not to apply to Western Air’s major rival, state-owned Bahamasair.

“What makes this particularly concerning is that it appears this invoice is based on BANSA’s new charging scheme, which was only announced in April 2024 and was set to take effect in July 2024,” Ms Rolle wrote.

“BANSA was still in consultations and discussions with Bahamian and foreign carriers about this charging scheme well into 2024, so we are unclear how these new charges would be enforceable from 2021, when they were unknown and not final. Especially when BANSA invoices were being issued and paid by Western Air for years without these new charges ever being included.

“Essentially, we are being retroactively charged under a fee structure that did not exist at the time these flights occurred, making this an arbitrary and unprecedented financial burden. The airline would not have had the ability to consider this new charging scheme into its operational costs prior to July 2024.”

Setting out Western Air’s concerns, Ms Rolle cited the “lack of prior notice and due process” from BANSA. She added that every invoice sent by the Authority to Western Air during the period May 2021-July 2024 showed no outstanding monies were owed because all were paid on time.

“Suddenly applying new fees to past flights disadvantages carriers, given inadequate and untimely notice of the specific charges,” she added. “Unexpected, retroactive fees increase operational costs, which inevitably affects ticket pricing and the cost of travel for passengers. Airlines already face significant rising operational costs and passengers face significant fees, and such unpredictable charges only worsen this.

“BANSA’s 2024 Notice of Intent exempts ‘state-owned aircraft’. It is unclear if this exempts our friends at Bahamasair, which is a government-owned airline. But if it does, it raises serious questions about unfair competitive practices if only private airlines are being forced to bear these high navigational costs a government-owned airline, which receives a subsidy, is exempt from.

“This places us on a more uneven market field if only Western Air and other private carriers are expected to absorb these new costs. We have not received an itemised bill or any invoices relating to these alleged charges,” Ms Rolle continued.

“If the intent is to retroactively bill us from 2021 with new charges, this fails to give us an opportunity to verify, reconcile or correct any billing queries within a reasonable time. Again, all invoices issued, Western Air pays. No previous invoices were issued reflecting anything owed.”

Summing up Western Air’s position, Ms Rolle said: “Western Air has formally requested clarification from BANSA on this retroactive billing and a full breakdown/ itemised bill of the charges. We remain hopeful for a resolution that ensures fairness, transparency and proper industry regulation.”

Mr Aranha, meanwhile, told Tribune Business: “It’s laughable that we received a near three-fold increase in retroactive billings for air space services that have already been paid and, in most cases, paid for. We don’t have the option to go back to our customers and say: ‘We’re really sorry. The Government of The Bahamas has changed how they bill for air navigation services fees. Please pay more for your flight’.

“It’s not a realistic option to go back to our passengers and say: ‘Hey, unfortunately the flight you took in 2021, four years later the Government of The Bahamas has decided to change the fees and increased the bill for services already provided and paid for, so you have to pay more’. We’d be laughed out of the room.”

Questioning what else the Government, or its agencies, may decided to retroactively bill for and hike the fees, Mr Aranha said no industry or “right-thinking person” could support such an approach. “I don’t know why BANSA and its consultants have decided an industry operating on very slim margins can take a surprise hit retroactively for air space fees,” he added.

“Going forward, while it will impact the demand for air space going into The Bahamas, you can at least budget for these fees... But you cannot go retroactively and say it’s not good enough and come up with this suddenly. If they want to subsidise foreign operators that overfly The Bahamas and give them a credit, that’s fine. But they should not think they can fix this problem by shifting it on to local operators.

“Second, as a country dependent on tourism, and an archipelago so dependent on air transportation, you’d expect to see incentives for people to fly - not a never-ending stream of increasing costs. Air transportation incentives are important to the ongoing support of the Family Islands, ongoing support of the tourism industry, and is the lifeblood of the economic engine of this country,” Mr Aranha said.

“These fees are consistently wrecking the machine. We need to be able to incentivise people to add and operate more airlines. It’s a highly-regulated environment where you have an ever-increasing cost and burden of regulation. There’s got to be a point at where we say this is an industry that’s important to us: We need to support and encourage it. And it’s got to be more than a Junkanoo rush-out.

“It has got to be a cost structure that makes it attractive. Every single day the scheduled airlines have the pleasure of competing against their tax dollars because Bahamasair is subsidised to the tune of $20m-$30m annually from the public purse,” he added.

“But we do have the intention of paying all of our bills at the original rate we were made aware of versus this new retroactive billing. That’s a very important point for me. We’re not trying to skirt our financial obligations.”

The Bahamian aviation industry has faced a barrage of multiple new and increased fees in the years following Hurricane Dorian and COVID-19.

Besides the up to three-fold and six-fold increases in Customs ‘inbound’ and ‘outbound’ fees unveiled in last May’s Budget, the sector has also faced the imposition of airport infrastructure improvement fees at Lynden Pindling International Airport (LPIA) and jumps in landing and other fees. Further fee increases, along the lines of those implemented in Bimini, are almost certain to follow to pay for upgraded Family Island airports.

Tribune Business previously reported aviation industry sources as asserting that the jump in BANSA’s origin/destination charges, and simultaneous reduction in overflight fee rates, appeared designed to appease the US government and foreign airlines.

The US Department of Transportation previously voiced “serious concerns” about the level of the fees and whether they are excessive when compared to the actual expenses The Bahamas incurs for providing air navigation services.

And it also challenged whether the level of charges is compliant with the Air Transport Agreement treaty agreed between The Bahamas and US, sparking discussions at the diplomatic level between the two countries over revising the BANSA fee structure. However, Article 28 of the Chicago Convention in International Civil Aviation does appear to give sovereign states such as The Bahamas the right to set their air space fees.

The US Department of Transportation’s concerns over whether The Bahamas’ fees are excessive likely stem from the fact that this nation, in 2021, agreed a 10-year deal where the US Federal Aviation Administration (FAA) continue managing Bahamian air space above 6,000 feet. The FAA also agreed to waive the cost of air navigation services it was providing and accept a mere $80,000 fee per annum.

As a result, both the US government and members of the Airlines4America consortium - the likes of American Airlines, Jet Blue, FedEx, Delta, Southwest Airlines, United Airlines, and the United Parcel Service - are arguing that The Bahamas was offering very little in services for the money it is taking in.

Asserting that the fees should only cover the cost of providing the service, they allege here was 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 - sum equivalent to 1 percent of the charges. They claim this “runs afoul” of global best practice and agreements, plus the US International Air Transport Fair Competitive Practices Act 1974.

The commercial passenger and cargo airlines, especially, have been using regulatory challenges and other aggressive lobbying/pressure tactics to force The Bahamas to back down. And it is they who stand to benefit most from the proposed cut in the rates for transiting Bahamian air space as they constantly have flights moving between the North and South America continents.

The Bahamas, though, will argue that it needs the air navigation services revenue to build the human, financial and physical resources necessary to eventually take over management of its entire air space from the FAA. And the monies raised are also designed to ensure its civil aviation regulatory regime - Civil Aviation, BANSA etc - no longer has to be financed and subsidised by Bahamian taxpayers via the Budget.

Civil Aviation, for example, is due to receive an $8m subsidy during the current 2024-2025 financial year.