The Tribune

By ADRIAN GIBSON

ajbahama@hotmail.com

IN order for true national development to be attained, the government—if only for a period—must pass essential air services legislation and/or implement regulations that would foster a greater interconnectivity of our archipelago. In such instances, the government would subsidise airline services to the most rural airports of the archipelago, that is, those airports in islands that are presently seen as destinations with unprofitable routes and may be outside of what many may view as outside the realm of the nation’s mainstream air transport network.

An essential air services programme, spread across multiple carriers, will certainly assist in providing Family Islands with reliable travel options, serving as an economic safety net and guaranteeing commercial air traffic to the most far-flung islands/cays and nurturing the development and strengthening of these societies and economies.

Frankly, in establishing an essential air services programme, carriers would put in bids to get routes to various islands and Local Government could speak to, and represent their community’s interest, the principals of individual carriers. Indeed, there has to be a strategic plan in terms of how one sees sector development, particularly as Family Island development, aviation and tourism are closely intertwined. Frankly, we can reduce funding after a route becomes sustainable, building individual destinations over time. There must be strict oversight of the number of trips, seats and types of aircraft that would be used to service Family Island communities. Indeed, there are many Bahamians who still fear flying on very small planes!

According to Sky Bahamas CEO Captain Randy Butler:

“We need to change the mind-set of our policy makers. The laws and regulations currently in place show that the government never anticipated Bahamians owning airlines. In implementing an essential air services programme, we must follow ICAO (International Civil Aviation Organisation) standards and recommended practices. There should be consultation with the Ministry of Tourism, civil aviation, local boards on islands, industry partners and the community at large.”

So, how do we fund an essential air services programme?

Captain Butler asserts: “We can get money to fund this from user fees and collected taxes like those that are collected by the Family Island Development Board. The taking over of our airspace, which we could perhaps rent in the interim, could directly see to monies being deposited into a fund to support such a programme. However, ICAO forbids for any monies taken from aeronautical services to be deposited into the Central Government’s treasury. We could spend $10 million on domestic carriers and have a vibrant system, but such a system must be regimented, meeting certain safety standards, certain types of aircraft, creating community incentives for airlines to go and do these things. It could totally stimulate the aviation economy. In the US, domestic carriers don’t pay for airspace.”

“Frankly, the minister could simply implement an essential services programme by making regulations. However, if that route is explored, an Act of Parliament should follow. My only fear with regulations is that ministers come and go and just as they can make it with the swipe of a pen, they can also take it away. My preference is an Act as it could be put to the community and debated. As it stands, they could just as well seek to amend the Civil Aviation Act,” Mr Butler said.

As it stands, aviation is one of the only sectors of our economy that is truly owned and operated by local Bahamians.

Transitioning a bit, there has also been talks of late of the government possibly seeking to privatise Bahamasair or enter a joint venture. However, one is told that developers Genting are thought to be the frontrunners in a proposed deal to sell the cash-strapped airline. That said, why not seek out qualified local companies and/or enter a joint venture partnership with a reputable local entity? And, if Genting or another foreign outfit does purchase Bahamasair, the government must ensure that such a grouping truly has the development of the Bahamas at heart and not merely the bottom-line.

Is Genting also in line to become the government’s joint venture partner at BEC?

In nearly 38 years, Bahamasair has been grossly mismanaged and has astoundingly had more than 20 general managers in that time. These days, due to the proliferation of private aircraft servicing the islands, the argument that Bahamasair provides essential services to the islands is no longer germane and shows that the further usage of taxpayers’ monies to underwrite a failed enterprise is no longer warranted.

Bahamasair is not a self-sustaining entity. Over the last 40 years, Bahamasair has proven to be a financial albatross around the necks of Bahamian taxpayers and nothing more than a failed government experiment. As a taxpayer, it’s saddening when one hears that Bahamasair has even lost the code share it once shared with US Airways due to inefficiency and poor management. What’s more, further projected losses of $125 million in five years—or $25 million per year—on an airline with eight airplanes and hundreds of political hires is even more disturbing!

Without question, the privatisation of Bahamasair will lead to more unnecessary union drama, but what the government must do, must be done.

In the 2009/2010 budget, Bahamasair requested and received $17 million and, later on requested additional funding as a result of a reforecast of the airline’s subvention requirements. In response, the Government provided additional funding in the amount of $3.5 million.

In the past, the national airline has been embroiled in scandal about the discrepancies with, and/or the unavailability of financial reports, which showed that the carrier has been pillaged by some thieving, unscrupulous employees who pocket airfares and freight fees and arrange free trips for friends and family members.

The national flag carrier has become synonymous with tardiness, delays, lost luggage, persons being “bumped” off flights to accommodate the relatives and associates of aircraft employees and horrendous customer service.

Visitors and locals alike, who have experienced and complained about the crummy service provided, have modified the airline’s logo to reflect its reputation of belatedness to state—“if you have time to spare, fly Bahamasair.” However, to be quite honest, today one notes that there has been some improvement relative to the airline’s on-time performance in recent years.

Because of the oil crisis in the 1970s, when British Airways and other major airlines discontinued flights, the then government decided to establish Bahamasair on June 18, 1973, following its acquisition of Out Island Airways and Flamingo Airlines. From the onset, the airline was faced by financial woes, second-rate maintenance services and a feebly configured setup that continues to plague it to this day. During the 1980s, Bahamasair unsuccessfully attempted to expand its routes to include Philadelphia, Washington, DC, and Newark. By 1989, their experiment with flights to these north-eastern US routes were unprofitable and futile, even though they have developed a niche market at several Florida-based routes and have incorporated regional routes (eg, Havana).

According to audited financial statements of Bahamasair Holdings Limited—year ending June 30, 2006—the company incurred a net loss of $19,919,242 and has had significant recurring losses that, up to the aforementioned date, had left the airline with a mounting deficit of $397, 989,377. Furthermore, as of June 30, 2006, the airline’s liabilities were in excess of its total assets by $70,006,867.

In the 2007/2008 Budget, Bahamasair was once more subsidised by taxpayers’ and in 2008 the government allocated $11.3 million in supplementary funds to the carrier during its mid-year budgetary exercise. Bahamasair has always been an over dependent burden that relies on its government subsidy to cover expenses—ranging from hanger repairs, ground handling charges, engine maintenance, landing gear repairs and medical insurance—and looks to continue being that way.

In his contribution to the 2010/2011 Budget, then Transport Minister Mr Grant said that relative to Bahamasair:

“All industrial contracts have expired and negotiations for new contracts have commenced. Under the current circumstances, we are compelled to persuade the union leadership that the time is here to live frugally until we ‘turn’ the airline around.”

I would not want to see the projected losses for the next 10 years!

It is past due that Bahamasair entirely out source less profitable routes to smaller, local carriers and instead refocus its attention on more profitable domestic and, in large part, international routes. What happened to the proposed purchase of smaller aircraft? Wouldn’t smaller airplanes—say 19 seaters—better suit certain routes? And, why not combine some of the less profitable routes?

During a few of my travels via Bahamasair, I’ve encountered scowling, discourteous ticket agents who seem too comfortable in their government jobs to care for customers. I have rarely encountered such behaviour at the private airlines.

In a supposedly service oriented company, why should it take certain bungling employees nearly an hour to sell tickets or check-in a handful of passengers? Why are certain lousy employees always on the phone or chattering away without any recognition of waiting customers? What’s more, when flights are delayed, I have found that a number of Bahamasair employees would rather congregate and gossip at ticket counters instead of catering to the concerns of frustrated travellers.

Currently, the national airline is over-saturated with employees and used as a cesspool for political cronies. In order to reduce Bahamasair’s operating costs and prepare the airline for privatisation, a serious downsizing exercise must be undertaken. In April 2010, the airline had 610 employees, which is unconscionable and unexplainable considering that the fleet is so small. What’s more, this number is even harder to imagine considering the skeletal front desk staff that is usually seen at the airport’s poorly manned, check-in counter!

In his communication, Mr Grant further noted that:

“As Bahamasair’s operating expenses (particularly labour/personal emoluments followed by fuel maintenance) are very high in comparison to other carriers of similar size, I am pleased to note that reductions in terms of head count have been realized through attrition. This number has declined from 709 in January, 2009 to 667 as of 30 April, 2010. The industrial agreements must be negotiated to reflect significant reductions in labour costs which will be the only controllable. Fuel and maintenance on the other hand, will continue to be determined by the equipment in operation.”

Admittedly, although Bahamasair is plagued by several setbacks, it has a near perfect safety record, highly-trained pilots and a first-class website. Honestly, due to its nearly impeccable safety record, I am one of those Bahamians who are most comfortable when flying on-board Bahamasair. That said, it’s time we cash in on whatever little capital the airline has left and follow Guyana, Jamaica and Trinidad’s lead and sell our government’s failed aviation experiment to local or international investors, whilst also considering becoming a part of a regional airline service.

Privatisation of Bahamasair will undoubtedly reduce the public service and our national debt, free up monies for government services, improve the airline’s efficiency, foster fair competition (without Public Treasury bailouts) and lead to a general sense of dependability and satisfaction among travellers.