The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Freeport will not attract "new money" and a Grand Lucayan buyer until its airport costs "fall in line", warns a Bahamian airline chief who stopped flying to the city two months ago.

Captain Randy Butler, Sky Bahamas' chief executive, told Tribune Business that the carrier had downsized its Freeport operations to a call centre and office presence as it bids to work out a deal with Grand Bahama Airport Company's (GBAC) owners to facilitate its return.

He revealed that Sky Bahamas suspended flights two months ago because it had simply become too expensive to operate flights into Freeport, due to a combination of cost and what he described as the advantages enjoyed by rivals such as Western Air and Bahamasair.

But Captain Butler's account was refuted by Dionisio D'Aguilar, minister of tourism and aviation, who told this newspaper that GBAC's costs "are in no way different" from the charges imposed on airlines by the Lynden Pindling International Airport (LPIA) and other regional rivals.

While "everybody always beat up on the airports", the minister argued that the airlines were just as responsible - if not more so - for the high costs on certain Bahamas routes that have been blamed for deterring tourists and investment.

Besides monopolies on certain Family Island routes, Mr D'Aguilar said price hikes often occurred when airlines reduced seat capacity by a greater amount than demand. He added that the industry was frequently adding on fees for baggage handling and other services that also increased ticket prices.

Still, Captain Butler cited holiday time as one charge Sky Bahamas had to pay in Freeport that was not faced elsewhere. He added that GBAC also charged for use of passenger wheelchairs, and said his airline was not operating on a "level playing field" when set against competitors.

"I don't operate in Freeport any more. It's too expensive," the Sky Bahamas chief told Tribune Business. "The fees are not balanced. They charge one set of people one set of fees, and another set of people another. We're using Freeport as a call centre and offices. In another month-and-a-half, if things don't change we will pack up our bags completely.

"It's still up in the air. I like Freeport, have good customers in Freeport, and never want to say I'm not coming. I'm just working on it to make the experience better and more affordable. It's the only airport you have to pay holiday time for, the parking you have to pay for. The other airline, with their own terminal, doesn't have to pay for their parking.

"I have to pay the airport for ground handling and airside services that the person across the street doesn't have to pay for. Bahamasair is next door. How do you compete against two people sitting next door getting some kind of incentive and you're not? You're holding us hostage here."

The level of fees charged by GBAC, which is 50/50 owned by Hutchison Whampoa and the Grand Bahama Port Authority Group of Companies (GBPA), with the former having management control, have long been cited as an obstacle to attracting more airlift and investors to Freeport.

They are perceived as far higher than other airports in The Bahamas and the wider Caribbean, although Mr D'Aguilar denied this was the case. Several observers, though, have suggested that the Government should have sought to acquire or gain control of GBAC to ensure it attracted potential purchasers for the Grand Lucayan.

Captain Butler said private jets often flew to Nassau and Marsh Harbour to refuel rather than incur the higher costs in Freeport, and warned that the airport will be a "key first impression" for potential Grand Lucayan buyers and other investors.

"If they want fresh money to come to Freeport they're going to have to fix the airport, and prices at the airport, and fall in line with the rest of the world; international standard," he told Tribune Business.

"The airport is your living room, and gives the first impression of what the rest of the island is going to be like. Folks coming to Freeport for the first time must have a 'wow' experience in terms of how fast things move. Start with the airport, fix the accommodation and then the leisure activities.

"Freeport is in a bit of a depression; you can still see the tarp on the roofs. The airport is key because if any quality investor comes in they will likely come through the airport, and that makes an impression. The investor is coming to make money, not give away money. You don't want to leave all the money at the airport; save some of it till you get up town."

Captain Butler said the Government would likely have to "bring pressure" on Hutchison and the GBPA over the airport, but he questioned "how motivated" the former will be to reduce airport fees and charges now that it has exited the Grand Lucayan - and did not act when it owned the hotel.

"The companies that the Government has been begging to come in here, they're pulling out," the Sky Bahamas chief said of the recent Sunwing withdrawal. "That's serious stuff. Crazy. It makes investors very nervous, and our international partners are looking at this and saying: Hmmm."

Mr D'Aguilar, though, argued that GBAC's costs were not too different from LPIA's. "The greater effect on cost is a supply [of airlift] reduction by a greater amount than demand," he told Tribune Business, "and then increasing the price.

"There are certain airlines that operate monopoly routes to Nassau, Grand Bahama and the FamIly Islands, and that has a greater effect on the price of a ticket than fees at the airport. Everyone keeps on harping about fees at the airport, but it's the supply of seats to a destination."

Mr D'Aguilar cited the $700 fare charged to fly between Miami and Marsh Harbour, and Christmas fares that went as high as $1,700, as empirical evidence to support his case.

"Everybody always beats up on the airport, but no one beats up on the airlines to reduce their prices," the Minister reiterated. "They charge to seat alignment, baggage. All these fees are tacked on to make it more expensive.

"I haven't bought into the idea that costs at airports in The Bahamas have grown so substantially that they are deterring people from going to the destination. There are other factors involved. The cost at the airport might be a part of it, but they are not one or two on the list."

Mr D'Aguilar added that Freeport was "not out of whack at all" when it came to the cost of travelling to Caribbean destinations from Miami, and said: "Airlines are always quick to say it's the cost of the airport. Hello. It's all the fees you keep adding on."