The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamasair has been accused by a rival of “acting like a spoiled child” over having to pay Business Licence fees for the first time, a development that helps ‘level the playing field’.

Captain Randy Butler, Sky Bahamas’ president and chief executive, told Tribune Business that “the Government should be ashamed of itself” for placing private airlines at a disadvantage by protecting Bahamasair.

The national flag carrier, in its 2013-2014 annual report, bemoaned the fact that its year-over-year operating expenses increase would only have been $200,000 had it not been forced to pay a $1.086 million Business Licence fee.

That represented the first-ever such payment by Bahamasair, bringing to an end one competitive advantage it had enjoyed over smaller, privately-owned Bahamian airline rivals.

“Every time you have to protect something it’s very weak,” Captain Butler told Tribune Business, “and the Government should be ashamed of itself for allowing smaller, Bahamian-owned airlines to have to work every day and pay Business Licence fees when Bahamasair did not.

“It’s shameful that Bahamasair talks about its expenses increase being as low as $200,000 if they hadn’t had to pay that $1.086 million.

“They continue to act as a spoiled child, where they’re subsidised by the Government, as regulator and operator, while airlines like Sky Bahamas have to pay Business Licence fees, and pay them on time.”

The 2013-2014 Budget amendments finally mandated that Bahamasair, and all public corporations engaged in ‘business’, pay annual licence fees just like their private sector counterparts.

While that move was driven by the Government’s need to raise extra tax revenues, Captain Butler described Bahamasair as “the dinosaur in the room” when it came to developing a national aviation industry strategy.

“The Government is not looking at small and medium-sized businesses, it is not looking at Family Island development, and it does not understand the key role aviation plays by bringing in tourists and connectivity,” the Sky Bahamas chief said.

“The Government fully understands instead that Bahamasair is like a child that has to be protected by its parent from the real world, rather than having to go out to work and compete like everyone else.”

Bahamasair’s latest financials confirmed it continues to bleed the Public Treasury, albeit at a slightly slower rate. For the year to end-June 2014, it cut its losses by 33.9 per cent or $8.074 million year-over-year, dropping them from $23.788 million to $15.714 million.

The latter figure was actually less than the $17.064 million taxpayer subsidy granted to the airline by the Government.

However, rather than return the ‘unused’ subsidy to the Treasury, Bahamasair instead use it to reduce its ‘negative net worth’ by almost $1.35 million.

Captain Butler again alleged that Bahamasair was able to engage in “predatory practices” because it had the Public Treasury, and an endless supply of taxpayer dollars, in its corner.

Such practices, he argued, included dropping fares to levels ‘below cost’ on Family Island routes just prior to regatta time. Privately-owned airlines, lacking the same government subsidies, were unable to follow suit.

With some of Bahamasair’s best-performing international routes, particularly its Havana flights, under extreme competitive pressure, Captain Butler reiterated his concern that the national flag carrier’s new fleet will be used to compete with the private sector for the more lucrative Family Islands.

Freeport, Marsh Harbour, Exuma and Eleuthera are the routes he expects to be targeted, and the Sky Bahamas chief said: “The thing that worries me is that there is no plan.

“What’s the role of Bahamasair? Are they going to put these airlines out of business now? We’re living from God’s hand to hand monthly. The thing that gets you are the predatory practices, the lack of government-driven strategic planning for the industry as a whole...

“I think you are going to see some of these airlines going out of business, the smaller ones, and more people will lose their jobs unless the Government brings the airlines together and says this is how we’re going to develop our modern Bahamas.”

Bahamasair has cost the Bahamian people a total $555.124 million (more than half a billion dollars) to keep it flying since its inception in the early 1970s.

Captain Butler expressed disappointment that the airline’s latest annual report contained nothing on potential future growth strategies that might take it to profitability, or details on plans for its new fleet.

Again suggesting that Bahamasair should be used to open up new tourism markets and routes, he added of the annual report: “Again, it will only mean that the Government have to protect their baby.

“The whole thing is just expending more money from the Treasury to support it.”