The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

The Bahamas is aiming to levy fees on aircraft flying through Bahamian airspace by January 1, 2021, a Cabinet minister revealed yesterday, adding: “We think we’re close to a solution.”

Dionisio D’Aguilar, minister of tourism and aviation, said the government’s consultants were preparing to submit recommendations on how such overflight fees will be structured, priced and collected in a bid to progress long-running ambitions to monetise the country’s air space.

He added that the government was hoping to release the proposed fee structure by July 1, 2020, so that the aviation industry will be given the mandatory six-month notice period to digest, study and adjust their own operations and ticket prices accordingly.

Hitting that date would enable The Bahamas to start charging by New Year’s Day 2021, thereby generating a new government income stream at a time when the Public Treasury requires every cent available.

“What the government did was we hired a consulting firm to guide us on what to charge, how to charge, how to collect,” Mr D’Aguilar told assembled reporters outside the Cabinet Office. “Obviously we have never done this before, so we had to get some advice on how best to do that. That consultancy is almost at an end, and they are ready to make their recommendations.

“So, once we receive that recommendation, we will roll out a fee structure, hopefully by July 1, because it takes six months for it to take effect. You have to advise the airline industry at least six months in advance before you impose a charge on them so they can adjust their ticket prices accordingly. So, even if we were to roll it out on July 1, it wouldn’t take effect until January 1.

“We’re heading towards that deadline, but it is very interesting, very fascinating. We have done a lot of work on it, and we think we are close to a solution on how to finally make something off of our God given airspace.”

The new dates are the timeline Mr D’Aguilar said he was targeting when he revealed that the government and its evaluation committee had rejected all bids seeking to operate the overflight fees regime on the government’s behalf.

These fees have long been seen as a potential multi-million dollar revenue stream that The Bahamas has failed to tap due to the fact thousands of aircraft travel through its air space annually due to this nation’s location off the Florida/US east coast and its position on major transatlantic aviation routes between Europe and the Western Hemisphere.

While current earnings would be low due to the reduction in aviation traffic as a result of COVID-19, charging overflight fees would likely generate sufficient income to finance the Bahamas Civil Aviation Authority and this country’s regulatory regime, thereby eliminating the need for taxpayer subsidies.

Asked whether the fees would subsidise ticket prices for Bahamians wishing to travel to the Family Islands, Mr D’Aguilar said: “Let’s put it this way. The money that you receive from that, you can only use it in the aviation sector; you can’t use it to build prisons and schools and what not.

“The aviation sector has been starved of funds for many years. A lot of our air traffic control devices and our navigation aids have fallen into disrepair. Obviously it will be a revenue source for our aviation sector so we can enhance the safety and oversight of the aviation sector. We have a very complex aviation sector, given the fact that we are an archipelagic nation and we have all of these islands. It costs a fortune to run the sector, but we never got funds for it.”

Discussions surrounding the management of Bahamian sovereign airspace have been ongoing for the last 25 years. Since 1952, some 75 percent of the air traffic through Bahamian airspace has been managed by the US Federal Aviation Administration (FAA), with Cuba handling the other 25 percent.

Air traffic within 60 nautical miles of the Lynden Pindling International Airport (LPIA), and up to an altitude of 12,000 feet, has been managed by Bahamian air traffic controllers, but the FAA has been the one collecting the overflight fees involving Bahamian air space.

As a result, Bahamian-owned aircraft and commercial flights have been confronted with the ridiculous situation of having to pay the US to fly in their own country’s air space - an anomaly that cost them hundreds of thousands of dollars per year. The Christie administration rectified this during its final months in office through an agreement with the FAA.

The US Office of Inspector General stated in its December 2017 audit that the FAA has billed an astonishing $800m in over-flight fees between 2006-2016. It billed an estimated $106m in 2017, with an estimated $126m to be billed in 2019. A significant portion of this revenue will involve flights that have used Bahamian airspace, giving an insight into the potential earnings for this nation.

Mr D’Aguilar, meanwhile, encouraged Bahamians to engage in domestic tourism with the borders closed and the ongoing fear of flying. “I’m sure a lot of people will be very fearful of going far, so I think intrinsically that bodes well for domestic tourism,” he added.

“The Government’s finances are strained, but they are challenged so be patriotic. Travel within your country; go and visit your family members, go back to the Family Islands, keep your dollars here, help your brothers and sisters the best you can to rebound.

“I’m sure the Out Island Promotion Board used to have the ‘buy one ticket, get one free’. I’m not sure what promotions they have in mind. They generally drive that promotion, but we are going to encourage as many people as possible to travel within the country. You have to want to; Bahamians like to travel to Miami.”

Describing the viability of regional tourism as “minuscule”, Mr D’Aguilar said this only accounts for 4 percent of total visitors to The Bahamas. With North America and Europe accounting for 96 percent of the country’s total, he added that this nation must continue to focus on its core markets to rebound.