The Tribune

By NEIL HARTNELL Tribune Business Editor BAHAMASAIR has reduced staff levels through "natural attrition" by more than 12 per cent over the past five years, Tribune Business was told yesterday, while improving its on-time performance by more than 10 percentage points over the same period. Henry Woods, the national flag carrier's managing director, while describing its improved operational performance as "very positive" over the past five years, said the savings from its many cost initiatives were continually offset by factors "beyond our control". Bahamasair has been one of the principal government-owned entities bleeding the Public Treasury and Bahamian taxpayer over the decades, requiring regular $20 million-plus subsidies, and Mr Woods told Tribune Business the airline frequently found itself in a "catch 22 position" - successfully saving costs in certain areas, but seeing expenses soar in others. Noting that oil prices were up roughly 31 per cent year-over-year, Mr Woods said: "I was looking at the TV, and it's at $105 per barrel now. A year ago this time I was so happy it was slightly below $80 per barrel. "It is a concern. Our fuel bill fluctuates, and our fuel bill right now is number two, next to labour, in terms of expenses. We're really in a catch-22 position. We make strides in the area of cost savings, but expenses continue to rise - fuel goes up, the cost of aircraft spares increases annually, airport and passenger charges increase year-to-year. "We take many cost savings initiatives, but at the same time other expenses continue to increase. We have taken several very positive steps, but you save a dollar here, spend a dollar more there, because of the rapid increase in expenses." Pointing out that the Nassau Airport Development Company's (NAD) decision to raise fees on carriers using the Lynden Pindling International Airport (LPIA) was not an isolated move, Mr Woods added: "It's all over - at every station. That's what we are faced with; increasing costs Every time we cut costs, they increase in areas beyond our control." One area where Bahamasair has been successful in reducing costs is staff size. Rather than going the redundancy route, as many Bahamian companies have elected to do, the national flag carrier has employed 'natural attrition', not replacing staff who leave unless it needs to fill essential positions. Describing the 12.2 per cent reduction, Mr Woods told Tribune Business: "It came down from 709 in 2007 to 623 purely through natural attrition. We're more efficient with less." While cost containment had proven difficult for Bahamasair, Mr Woods said the national flag carrier had enjoyed more success in its operations, improving a number of key metrics. "Operationally, I'm very, very encouraged," he added. "I'm very happy with the operations. Over the past four-five years we've improved our on-time performance and passenger complaints have reduced significantly." Asked where Bahamasair's on-time performance now stood, Mr Woods told Tribune Business: "We are around the high 60s, low 70s [percentages]. It used to be in the 50s and so on. "It fluctuates seasonally. As the high season comes on, we have heavy pay loads of baggage to deal with. But the operation has been greatly improved." As for Bahamasair taking over Vision Airlines' service to Grand Bahama from five US cities, Mr Woods said the fine details were still being worked out, indicating that the Ministry of Tourism may have spoken out earlier than the national flag carrier wanted. "It's still in the very early stages," the Bahamasair chief added. "I think that in another 30 days it will be worked out. They're working daily on it." Explaining the plan last week, David Johnson, director-general at the Ministry of Tourism, said: "They [Bahamasair] now have the route authority to fly Baltimore, Raleigh, Louisville, Richmond, in addition to Fort Lauderdale to Grand Bahama. Vision Air is offering an ACMI or wet lease arrangement, while Bahamasair takes on the distribution, selling and the customer service as they gear up to, in fact, fly the flights with their own aircraft in short order." Vision Airlines began flights to Grand Bahama last November 11, providing direct non-stop service from the same five US cities. Its competitive low fares were expected to bring an additional 100,000 seats annually to Grand Bahama in its first phase of operations. Mr Johnson had previously told Tribune Business that Vision Airlines had not been performing up to expectations. He said the airline's service to Grand Bahama was operating at about 30 per cent load factors - far below the 65 per cent expectation. He added of the new plans: "The cost structure alone offers the customers much lower costs. Baltimore to Grand Bahama today requires you to fly about 15 hours round trip, and the airfare will be no less than $650. "On these flights it will take you two hours and twenty minutes, and the airfare is less than $300 round trip. We are cutting airfare back more than 50 per cent, and reducing travel time by more than 75 per cent. It will be a full scheduled service within two-and-a-half weeks where anybody can book. "This service will represent about 100,000 seats to Grand Bahama, which is a base of almost 35 per cent more seats than currently exists to Grand Bahama year around. We intend to build on that. Bahamasair is facilitating this and enthusiastically so."