The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian airline chief has warned the Government its new aviation taxes are “closing the door” to Family Island economic development, with the sector now watching “with bated breath” to see if it reverses course.

Captain Randy Butler, Sky Bahamas’ president and chief executive, told Tribune Business that tourism and the Family Islands’ “lifeblood” was being impacted by a variety of new and increased fees - many Customs-related - that were introduced in the 2013-2014 Budget.

Emphasising that all serious Bahamian-owned and international commercial carriers wanted “to pay their own way”, Captain Butler added his voice to those criticising the Government’s lack of consultation with the aviation industry on the tax increases.

And he questioned whether the Budget subsidy increases to Bahamasair, and resorts such as the Grand Lucayan and Sandals Emerald Bay, were in part designed to compensate them for the increased aviation taxes.

“This is a black eye for tourism, aviation and the Bahamas again,” Captain Butler told Tribune Business of the new aviation fees/taxes. “We’re doing this willy-nilly.

“Again, this is something the Government did not consult the industry on. They didn’t take a look at it on the whole and look at what the implications are.”

The Sky Bahamas chief said no consultations had taken place with the airlines, both individually or collectively, or with industry groups such as the Bahamas Aviation Association and Bahamas Pilots Association.

Both the private aviation industry and commercial airlines have reacted angrily to the imposition of the new fees and charges. The former has expressed annoyance at the extra $50 fee being levied by Customs to process their forms when they land in the Bahamas, plus a fee - also $50 - being charged for refuelling stops in this nation.

Both private and commercial airline flights are being charged $75 for arrival and departure, making for a grand total of $150 per flight.

In addition, the commercial airlines - especially the foreign carriers - slammed the Customs service charge for planes arriving after 5pm, and before 9am, on any given day.

Commercial aircraft with a seating capacity of less than 30 will be charged $50 per hour; airliners with seats numbering between 31-70 will be charged $100 per hour; and those with 71 seats or more will be charged $200 per hour.

They have also expressed concern over Customs’ new 1 per cent administrative processing fee, which will be added to brakes, tyres and other aircraft parts imported to the Bahamas for repairs. This fee, capped at $500 per import, replaces the previous $10 Stamp Duty levy.

Captain Butler, meanwhile, pointed out that airlines - both Bahamian and foreign - would likely have to pass the fee increases on to passengers in the form of ticket price hikes.

And any cut backs in services and schedules, which the international carriers have threatened, will impact both the tourism industry and wider Family Island economies.

The latter, especially, rely on air transportation for the movement of goods and personnel, and Captain Butler told Tribune Business: “Air is the only way to bring people to those islands. What we’re doing now is closing that door.

“This is the Bahamas’ lifeblood being impacted. If we do not revisit these increases, we may see airlines stop flying to the Bahamas, or making adjustments to their schedules and stops in the islands.

“This is serious, very serious. There’s no way in the world we believe this was the intention. I believe this is an oversight, and the Government will correct it,” Captain Butler added.

“I believe everybody in the industry wants to pay their way on a cost basis; pay for what they use. We’re waiting with bated breath to see what the Government’s response is. We need airlift.”

Putting the aviation taxes into a ‘bigger picture’ analysis, the Sky Bahamas chief said they were being imposed in a context where the Airport Authority and Nassau Airport Development Company (NAD) were facing their own tax increases in the form of having to pay a Business Licence fee for the first time.

These costs, Captain Butler added, were likely to at least partly be passed on to Lynden Pindling International Airport (LPIA) users, such as the airlines.

And already scheduled NAD and Civil Aviation Department increases were set to be implemented later this year.

“On and on across the board,” Captain Butler said of taxation’s impact on aviation. “We have 126 employees who might be potentially impacted, because we now have to increase our fees.”

He added that Bahamasair’s increased Budget subsidy would insulate it from the fee increases, as would the subsidies provided to various Bahamian resorts.