The Tribune

• ‘Nurture’ sector instead, urges Flying Ambassador

• ‘Fickle’ market faces VAT hit as well as NAD fees

• Just as ‘everything lining up nicely’ for Bahamas

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas must “nurture rather than exploit” a booming private aviation market that can become increasingly “fickle” if hit with increased taxes, a prominent industry executive is warning.

Rick Gardner, director of CST Flight Services, which provides flight co-ordination and trip support services to the private aviation industry throughout the Caribbean and Latin America, told Tribune Business that The Bahamas is “very well-positioned to benefit” from the sector’s explosive post-COVID growth.

Revealing that his company’s “numbers through the end of September” 2021 show more flights than for the whole of 2019, the last full year before the pandemic, he added that “everything is lining up very nicely for The Bahamas” when it comes to expanding a niche that has been a key driver in the country’s post-COVID rebound.

However, Mr Gardner warned that The Bahamas could find itself on “a slippery slope” if it over-exploits its private aviation success by targeting the industry and its clients as an increased source of taxes and fees for a cash-strapped Public Treasury as well as airport operators.

With the Nassau Airport Development Company (NAD) still planning to tap private aviation clients for a $28 per passenger fee to help finance $30m worth of infrastructure improvements, the Government has now removed the industry’s previous ‘zero rating’ status via reforms enacted alongside the VAT 10 percent rate cut.

The Prime Minister, in unveiling the changes to the House of Assembly, said they will mean private aircraft have to pay VAT on their fuel purchases and all other goods and services they access in The Bahamas. The industry is now VAT-able, and subject to paying the 10 percent rate, whereas it previously avoided the levy on both its inputs and outputs.

While some will perceive the private aviation industry’s relatively wealthy clients as being able to easily afford such tax increases, and question why such breaks were afforded in the first place, Mr Gardner warned that the sector can be “fickle” in his experience with just small fee and tax increases deterring some from flying to other destinations on principle.

And he warned that private aviation was becoming an increasingly competitive business, with other countries in the Latin American and Caribbean taking note of how The Bahamas and others have benefited from the industry post-COVID to help rebound their economies faster.

“It’s a great story to tell,” said Mr Gardner, a member of The Bahamas Civil Aviation Council as well as a Bahamas Flying Ambassador. “It’s an easy story to tell, and The Bahamas is perfectly positioned. The market is looking very attractive in terms of the dynamics; the demand for private planes and its growth.

“You put all those things together, and The Bahamas is very well-positioned to benefit. The only thing I see looming on the horizon is this new COVID variant; we’ll have to work our way through that. Other than that, I’d say everything is lining up quite nicely for The Bahamas and we should focus on ensuring that continues rather than exploiting that something because once we start that we will go down a slippery slope.

“You’ll reap the rewards if you look at it as something to nurture rather than something to exploit. The message is: ‘Keep doing what you’ve been doing, keep investing in it, it will pay back’.” Mr Gardner reiterated that his “loyalties” remain with The Bahamas even though he has been asked to examine the private aviation potential of other countries.

“The Bahamas has something that is unique that people want to pay for but, like everything else in life, the question is: Where is the bar?,” he added. “I understand that between COVID and everything that has transpired that the Government is looking for money, and they’ve got to do what they’ve got to do.

“And private aviation, if it is within their grasp, will keep coming, and if not they will look somewhere else. If you raise prices there will be less demand, but the Government has to do what is necessary to raise funds.”

Mr Gardner said the private aviation market has “grown tremendously” since the COVID pandemic really took hold in the western hemisphere in March 2020, driven by high net worth individuals who are increasingly turning to charter flights because of perceived health safety as well as purchasing their own planes.

“I can also say there’s been an increase in interest by many countries in private aviation, as they see that as an attractive market compared to mass tourism,” he added. “It’s not gone unnoticed that The Bahamas has found success as a destination because of its proximity, it’s history, it’s people and because the Government has made it very simple and economic for people to travel there.

“The Government has done a lot of great things; not just good things, but great things, over the years and set The Bahamas apart as a very desirable, attractive destination.... It’s unfortunate if the Government has to raise fees, but it has to do what it has to do, and we’ll do our best to communicate that, understand it and hopefully people will continue to travel.”