The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Grand Bahama Airport Company's demand that a prominent Bahamian airline pay it $371,353 in "outstanding airport fees" has been rejected by the Supreme Court.

Senior justice Estelle Gray-Evans ruled that the Grand Bahama International Airport operator had failed to prove its claim that Western Air owed this debt for "services rendered" after the airline moved into its own purpose-built terminal on September 5, 2015.

The verdict comes after both sides' facilities received a devastating blow from Hurricane Dorian's storm surge in early September 2019, forcing each to operate from temporary facilities. It has also been handed down as the airport company's 50/50 owners, Hutchison Port Holdings and the Grand Bahama Port Authority (GBPA), mull selling the vital infrastructure asset to the government.

The airport's dispute with Western Air centred on seven invoices issued over a two-month period between mid-February and mid-April 2016, which was several months after the airline relocated from Grand Bahama Airport Company's facilities into its own $6m terminal.

The move followed a lease and operating agreement signed between the two parties on October 1, 2009, which gave Western Air a three-acre site next to the airport's domestic terminal park lot for a 20-year term.

The deal also set out the terms of their relationship, and it was only after the airline discontinued its presence in Grand Bahama International Airport's terminal buildings following its September 5, 2015, move that the legal battle began.

Senior justice Gray-Evans said the seven invoices sent by Grand Bahama Airport Company were for security, passenger facility usage and departure fees allegedly incurred by Western Air from the period October 2015 to April 2016. After the airline refused to pay, it claimed it was in breach of both the lease and operating agreement and initiated legal proceedings.

Western Air admitted in its defence that the Grand Bahama Airport Company had offered to reduce these charges by $6, from $18.50 per passenger to $12.50 per passenger, which it rejected with a counter-offer to pay $4 per passenger.

Grand Bahama International Airport has long been criticised for having among the highest passenger and airline fees in the region, which tourism officials view as a cost deterrent to attracting more airlift and stopover visitors.

Western Air, though, justified its stance by arguing that the Grand Bahama Airport Company had "refused to fully express what services" had been supplied to the airline to earn the fees claimed. Arguing that the demand was "not justified", Western Air denied that the monies claimed were owing because it no longer used the services that underpinned them.

Chanan Jones, Grand Bahama Airport Company's airport director, alleged that Western Air had "erroneously" refused to pay the fees demanded on the basis that its used its own terminal and provided its own security services.

"The airport fees, however, comprise more than the two mentioned items that the defendant asserts as the reasons why they ought not to pay the airport fees levied by the company," Ms Jones alleged in her witness statement, pointing to fire and crash rescue services, the control tower and navigation upkeep, facility security and runway/taxi maintenance.

She added: "The truth is the defendant, in furtherance of its obligation under the operating agreement, collected airport fees from each of its passengers but, instead of turning those fees over to the company, pursuant to its obligation then and presently, it instead collected and pocketed the airport fees that were rightfully due to the company."

However, Sherrexcia Rolle, Western Air's vice-president of operations and general counsel, countered: "In the days leading up to Western Air's relocation to its private terminal, the plaintiff [Grand Bahama Airport Company] sought to require Western Air to continue to use its services in order to ensure that the plaintiff continued to receive fees for such services.

"Western Air refused to agree to use the services of the plaintiff after moving into its own facility. The operating agreement provided that Western Air would pay the plaintiff 'for services rendered' only."

Ms Rolle added that the airline worked with the Royal Bahamas Police Force and a US Transport Security Administration (TSA) instructor to set up its own baggage screening facilities, and it invested in other technology such as surveillance and camera systems, water tanks and power supply units for its planes.

The first disputed invoice arrived at Western Air's terminal one month after the airline's move, and Ms Rolle said Grand Bahama Airport Company was immediately told it was inaccurate as it had "billed for services which the plaintiff was no longer providing".

She added that nothing further was heard for three months as Western Air paid down more than $2m in fees owed to the airport operator from when it used its facilities. This balance was reduced to zero, Ms Rolle alleged, but shortly thereafter Grand Bahama Airport Company began asserting its demand for fees allegedly owed after the move.

Senior justice Gray-Evans said "the real issue between the parties" was whether the 2009 operating agreement required Western Air to pay the sums claimed. "Under cross examination, Ms Rolle admitted that while the defendant operated from the plaintiff's domestic terminal facility, the defendant collected airport charges on behalf of the plaintiff," she found.

"However, she said that was because the defendant's passengers used the plaintiff's terminal facility, and that since moving the defendant no longer collects such charges on behalf of the plaintiff as the plaintiff no longer renders the services therefore."

Senior justice Gray-Evans ruled that "nowhere in the operating agreement is there a provision which imposes an obligation on the defendant to collect airport charges/airport fees on behalf of the plaintiff".

As a result, she found that Western Air was not indebted to Grand Bahama Airport Company for the claimed $371,353, and also determined that the latter had failed to supply evidence showing it had "rendered services" justifying the sums demanded from the airline.

"It is, in my view, unclear from the evidence exactly what services are covered by the charges in the aforesaid seven invoices," senior justice Gray-Evans ruled. "In the absence of evidence as to the specific services provided by the plaintiff to the defendant during the period post September 2015 for which the aforesaid seven invoices have been issued, I am unable to find that the defendant is obligated to pay the sum of $371,353 as claimed by the plaintiff pursuant to clause 2 (7) of the operation agreement."