The Tribune

By NEIL HARTNELL

and YOURI KEMP

Tribune Business Reporters

A top Freeport hotelier yesterday warned the government it has little time to acquire Grand Bahama International Airport "before it's too late" to swiftly rebuild the island's tourism product.

Magnus Alnebeck, Pelican Bay's general manager, told Tribune Business it was "very wise" for the Minnis administration to consider purchasing Grand Bahama's key transportation link given that the major international route servicing the island is unlikely to re-open until December 18 at earliest.

He disclosed that American Airlines, which pre-Dorian provided the key global connection to Freeport from Miami, had "cancelled all flights in their system to Grand Bahama" until that date - despite previous pronouncements from the airport's current owners that it will be re-opening to international airlift one month earlier around November 15.

The Grand Bahama International Airport is owned 50/50 by Hutchison Whampoa and Port Group Ltd, the Grand Bahama Port Authority affiliate, via the Freeport Harbour Company, and Mr Alnebeck yesterday suggested "the writing was on the wall" for the Hong Kong conglomerate's exit since at least last year.

Pointing out that Hutchison Whampoa had shown little interest in the airport prior to selling the Grand Lucayan to the Government in September 2018, the Pelican Bay chief said its decision to get out of hotel ownership meant it had even less "incentive" to maintain "an airport that works".

Mr Alnebeck spoke after Dionisio D'Aguilar, minister of tourism and aviation, confirmed the Government is mulling the acquisition of Grand Bahama International Airport. He yesterday blasted Hutchison Whampoa's failure to "demonstrate an effort" to urgently restore the asset to its pre-Dorian state.

Disclosing that it will likely cost between $20-$40m to rebuild the airport terminal and associated facilities, Mr D'Aguilar pledged that the Government will not make any purchase decision "on the fly".

He promised that, rather than rush into a deal as it was accused of doing over the Grand Lucayan, the Government will first determine how to make the airport profitable before it commits the Bahamian taxpayer to another potentially risky multi-million dollar outlay.

"Certainly it is under consideration to buy the GBIA," Mr D'Aguilar confirmed when questioned outside the Cabinet Office. "Hutchison Ports have not demonstrated an effort to rebuild the airport to where it was before. They seem somewhat reluctant, so the Government is considering its options."

The minister's comments contradict recent interviews given by Sarah St George, the Grand Bahama Port Authority (GBPA) co-chair, which sought to reassure Freeport residents and businesses that both the GBPA and Hutchison were fully committed to restoring the airport so it can receive international flights from mid-November onwards.

However, Mr D'Aguilar said the Government will not rush blindly into any acquisition. "Buying the airport is the easiest thing," he warned. "It is what you do once you get the airport. The focus of the Bahamian people is now for Hutchison Ports to do something with that airport. Once the Government buys it, the focus will now go towards the Government, and what will the Government do about it?

The minister estimated that rebuilding Grand Bahama International Airport could cost between $20m to $40m, and added: "You have to figure out where that money will come from, and you have to consider who the operator is going to be, and you have to consider how that airport is going to make money.

"So before we spend the money of the people of The Bahamas, you have to consider these things and I don't think the Government wants to be rushed into this thing. We have to think through the purchase."

Mr D'Aguilar continued: "You can't just buy it where it will just sit there. You have to have a plan. We just can't make a decision on the fly. You have to do the research and look at the business model and study the financials. You have to consider all of these things.

"The objective is going to be revenue source. How will the airport fund itself? Obviously we will look at the Nassau Airport Development (NAD) model at the Lynden Pindling International Airport (LPIA); obviously the LPIA has more traffic than what they have in Grand Bahama.

"So, are we considering it? Yes. But we are working through all of the proposals and considering how we will make it work once we acquire it."

Prominent businessmen such as Mr Alnebeck, together with Michael Scott, the Hotel Corporation and Grand Lucayan chairman, have previously urged the Government to acquire Grand Bahama International Airport given that the island's tourism and industrial business model "won't work" if it is unable to receive international airlift.

While Freeport's stopover tourism product is still moribund in Dorian's wake, the airport - and associated airlift - are set to assume greater importance in the coming months due to the development of Carnival's $100m cruise port and the proposed ITM Group/Royal Caribbean joint venture that includes the $195m first phase acquisition of the Grand Lucayan and harbour redevelopment.

"That's great news," Mr Alnebeck told Tribune Business of the minister's comments. "I think it would be a very wise thing to do. I think the airport should belong to the Government, and then they should hand it over to someone who knows how to run airports. They have the perfect people to do that as NAD is already set up and running Nassau.

"Anything that can be done to get international airlift back into this market will be welcome to Grand Bahama. I wouldn't be surprised if Hutchison and the Port Authority welcomed getting rid of it. It's just a matter of getting it done before it's too late. The longer it takes, the more we're going to have to rebuild."

The Pelican Bay chief added that the little international airlift Grand Bahama enjoyed pre-Dorian was already under threat. "I know American Airlines has cancelled all flights in their system to Grand Bahama up until December 18.

"I don't know if that will be revisited if the airport opens, but at the moment the earliest you can book American Airlines for Miami to Grand Bahama is December 18. That's what it looks like... Most of the people who connect and come from elsewhere to Grand Bahama comes through Miami and American Airlines."

American Airlines may have decided there is insufficient tourism product and room inventory on Grand Bahama post-Dorian to justify resuming flights, given that demand will be minimal to non-existent. Mr Alnebeck said that while Pelican Bay is "still full", this is mainly due to persons assisting with the storm relief and recovery efforts.

Besides American Airlines, he added that the other carriers servicing Grand Bahama internationally were Silver Airways and Bahamasair. Yet the scheduled start of Sunwing's winter airlift programme in mid-December from Canada also added to the urgency in resolving the airport's immediate future.

"We need an airport that is open, and I think most people in Grand Bahama will welcome this taking over of the airport," Mr Alnebeck added, pointing out that the NAD model had worked in Nassau despite Mr D'Aguilar's caution.

"One of the problems we've had in Grand Bahama is that we've always had an airport that is too expensive, even when Hutchison owned 60-70 percent of the hotel rooms on the island," he told Tribune Business. "They were not interested in the airport.

"When they closed the hotel down and sold it to the Government after Matthew, the writing was on the wall as they were no longer the largest hotel room owner on the island. What's the incentive for having an airport that works?"

Tribune Business sources yesterday confirmed that the Government had placed Hutchison Whampoa and the GBPA "on notice" of its intent to acquire Grand Bahama International Airport. They said the Minnis administration's initial grounds for doing so were "eminent domain", which is taking private property for public use, and national security on the basis that the ownership duo had "abandoned" the facility.

"The problem with that is the signal that is sent to the private sector about the Government seizing private property and assets. That's not a good signal to send to businesses and investors," one contact, speaking on condition of anonymity, told this newspaper.

"The Port has yet to do anything with the airport. They've propped up some fences but done nothing to rebuild the terminals. Hutchison does not want to invest money, and the Port has no money to invest."

They added that Grand Bahama International Airport's private ownership meant it enjoyed none of the subsidies given to LPIA and others, and said: "That's the biggest problem. It's a private company that loses money and doesn't subsidise anything."

The source said that while the airport loses money its immediate parent, Freeport Harbour Company, is profitable and suggested that the Government also consider trying to acquire this valuable strategic asset too.

Calls by Tribune Business to Grand Bahama International Airport chief executive, Godfrey Smith, were not returned yesterday before press time.