The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A member of the government’s Air Transport Advisory Board says “somebody need to finds the fortitude to shut down” Bahamasair after three of its jets were blocked from flying to the US.

Carey Leonard told Tribune Business that the failure to install the required tracking technology, despite having ten years’ advance warning of US regulatory requirements to do so, “proves that we [the government] shouldn’t be in this business”.

He argued that “there could be no clearer example” of why Bahamian taxpayers should be relieved of the burden of annually subsidising the national flag carrier, adding that the episode showed” we still don’t know how to run it after 45 years”.

Describing the failure to ensure Bahamasair’s three 737-500 jets complied with US regulations as “absolutely outrageous”, Mr Leonard said annual taxpayer subsidies enabled the national flag carrier to both distort the domestic aviation sector and deprive the local economy of much-needed consumer spending.

He argued that privately-owned Bahamian airlines are unable to properly develop with Bahamasair able to use its subsidy to undercut them on ticket prices, while the taxpayer-funded Florida “discounts” helped suck spending away from local retailers.

Bahamasair said over the weekend that its flight schedule remains unchanged, having switched its 737-500 fleet to service domestic and non-US international routes. Arguing that the situation is far from the disaster some are portraying it to be, the national flag carrier said the three impacted jets have simply swapped roles with its turbo prop places, which will take their place on the Florida routes.

The national flag carrier added that it would “wet lease” jet aircraft to handle flights into Miami, Fort Lauderdale and Orlando should the smaller ATR turbo props be unable to meet passenger demand at certain times, as occurred over the weekend.

Mr Leonard, though, argued that “wet leasing” - where Bahamasair rents a plane complete with its crew, maintenance and insurance - was “horrendously” expensive for an airline that is due to receive a $22.4m annual taxpayer subsidy this year.

He added that using jets on short-haul routes between Nassau and domestic destinations such as Exuma, Eleuthera and Freeport would be highly inefficient, especially when measured against indicators such as fuel economy, and result in increased ‘wear and tear’ and associated maintenance costs. This, though, was denied by Bahamasair’s present chairman.

“Somebody in government needs to find the fortitude to shut it down,” Mr Leonard blasted of Bahamasair. “The cost of running a jet with a few passengers to Exuma, Eleuthera, Abaco and Freeport is just outrageous. You’re going to send them on a 15 to 30-minute flight. It’s crazy; it’s absolutely crazy.

“This is a good example of why this airline should be shut down. Unless I’m much mistaken this airline has cost us more than Bahamas Power & Light. The cost of wet leasing is horrendous. This whole thing makes no sense If ever the Government is going to get to grips with balancing the budget and the money it loses, get rid of Bahamasair.”

Mr Leonard added that the less than 200-mile trips between Nassau and Miami were themselves only profitable with high passenger load factors of at least 80-90 percent, and said: “I’m just absolutely astounded that this airline has been in existence for 45 years and has not figured out how to comply with the rules when it’s had 10 years to do it.

“It goes to prove the fact that we shouldn’t be in the business at all because we don’t know how to do it. We’ve been in it for 45 years, and still don’t know how to do it, so we should get out of the business and shut it down. You couldn’t have clearer example of why Bahamasair shouldn’t be in existence.”

The airline’s latest controversy stems from the inability of its three older 737-500 jets to fly to the US as of January 1, 2020, because they have not been fitted with the necessary flight tracking technology required by industry regulator, the Federal Aviation Administration (FAA).

The FAA’s requirements have been known of by the global aviation industry since 2010, leading many observers - including Mr Leonard - to question why Bahamasair seemingly left the upgrades until the last minute.

ADS-B (Automatic dependent surveillance - broadcast) equipment needs to be installed, costing $195,000 per plane. This was supposed to have been completed through one aircraft being outfitted every month between September and November last year.

However, Bahamasair is alleging that the initial supplier, to which it paid a $200,000 deposit, was unable to deliver and only informed it of this after the third aircraft deadline was missed. This prompted a scramble to locate another supplier, which has promised to source the necessary equipment and complete the installations by end-January.

Tommy Turnquest, Bahamasair’s current chairman, explained that the installations had been awaiting a decision on whether Bahamasair will keep its aging 737-500 fleet or upgrade via purchases of new aircraft. This was also the rationale given by Opposition leader, Philip Davis, on Friday for why the upgrades did not take place under the former Christie administration during its five years in office.

Mr Leonard, though, argued that there were other sound reasons for why Bahamasair should cease to be owned and supported by the Bahamian taxpayer. “Because we subsidise this airline to compete against the private companies, it stymies any form of aviation sector development in The Bahamas,” he told Tribune Business.

“It’s holding Bahamians back from developing real airlines. The poor private airline trying to get going is paying taxes that help Bahamasair to put it out of business. The whole thing is outrageous.”

Pointing out that Bahamasair did not play a prominent role in bringing tourists to the country, Mr Leonard added: “All it does is offer discounted prices to Bahamians to shop away using Business Licences and other taxes to put Bahamian airlines out of business and, quite frankly, Bahamian shops as well.

“They’re subsidising these cheap tickets so people can shop in Florida and come back. If we want to fix the economy, shutting this airline would go a long way to doing that.”

Bahamasair has cost Bahamian taxpayers more than $500m, or half a billion dollars, in subsidies to cover its annual eight-figure losses since being launched in 1973. Given that its most recent financial statements have yet to be released, that figure is likely to be approaching somewhere in the $600m-$700m range.

However, given that the overstaffed carrier employs between 600 to 700 persons, the Government is unlikely to desire Bahamasair’s sudden, complete closure because of the impact on employees and their families, and the knock-on effect for general election votes.