The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

Revenues from the private aviation sector will continue to decline at an “accelerated pace” if the Government does not roll-back “wrong headed fees” on the sector, an industry expert warned yesterday, calling on it to offer more incentives instead.

Jim Parker, president of Caribbean Flying Adventures.com, a top pilot’s guide for planes flying in the region, in an email to Tribune Business reiterated that the volume of private aircraft arrivals to the Bahamas has been declining steadily for the past five years.

He explained that the reason for the decline was two-fold. “Private pilots have been coming to the Bahamas for years, and are now looking for something new and different, and the fees for private pilots keep increasing,” said Mr Parker.

“Departure tax from $15 to $20 to $25 over two years; increased hotel taxes; increased fuel taxes; and lastly, the new $50 arrivals fee (document processing).

“When revenues are falling from private aircraft tourism, what is needed are more incentives, not more fees and taxes. The continuing fee and tax increases are bad business for the Bahamas economy. Any economist will confirm this. This latest $50 processing fee is basically the final straw following the two departure tax increases and the hotel and fuel tax increases.”

Mr Parker added: “I have heard from several thousand pilots that use my pilot’s guide telling me they will no longer be spending their tourism dollars in the Bahamas.

“They will either take advantage of fee free airports in Florida and the Florida Keys, or fly to the next island beyond the Bahamas, which is the Dominican Republic. Most of the airports there are fee free because they want the tourism dollars that private aviation generates. And their hotels are extremely affordable.”

Tourism Minister Obie Wilchombe told Tribune Business last November that an increase in the departure tax to replace some of the 2013-2014 Budget’s new and increased aviation fees appears to be “an acceptable position” for all sides, though dialogue with industry stakeholders was continuing. Tribune Business was unable to confirm yesterday what, if any, final decision had been made on the issue.

“If the fees are not rolled back, private aviation tourism will continue to decline, as it has steadily for the past five years, but at an accelerated pace. The notion that the new fees can be cancelled but rolled into yet another departure tax increase is absurd. Is it thought that pilots will somehow not notice another departure tax increase?” Mr Parker questioned.

“I used to say: Charge the commercial passengers but leave the private aircraft alone. Apparently, that is no longer wise advice, since even the commercial carriers are threatening to reduce service because of the fee increases.

“Increased taxes and fees on aviation result in reduced tourism revenues and a net negative for the Bahamas economy. The Cuban tourism market will be opening soon for private aviation from the US and for tourism by all US citizens. The Bahamas needs to completely rethink its tax and fee structure if it’s going to survive in the 21st century.”

Mr Parker added that most private aircraft spend between $3,000 and $5,000 during their visit to the Bahamas.

“These monies get pumped into the Bahamian economy with all of the well-known multiplier effects,” he said. “And the Government Treasury receives a minimum of $400 to $600 in taxes,” he said.

“Put up additional disincentives, like the new $50 processing fee, and the result is to turn away these pilots. So what do we have? The first thing we do not have is another $50 in the Treasury. The pilots are not coming.

“What you do have is $400 to $600 less in the Government coffers and $3,000 to $5,000 less percolating in the economy. The Government needs to roll back these wrong-headed fees or continue to lose tourism dollars. The hotels and businesses that service these private aircraft in the Out Islands are hurting. This is undeniable. These fee increases are losing money for the economy and the Government Treasury.”