The Tribune

By Fay Simmons

Tribune Business Reporter

jsimmons@tribuneemedia.net

The Bahamas is aiming to implement revised overflight fees in the 2024 third quarter to address the US government’s concerns over the cost, the deputy prime minister revealed yesterday.

Chester Cooper, also minister of tourism, investments and aviation, told the House of Assembly that the Bahamas Air Navigation Services Authority (BANSA) has reviewed the overflight fee charging regime and had hoped to implement the new schedule from July 1, 2024, after initiating industry consultation. This, though, has been extended to the third quarter to allow for further talks with operators.

“BANSA undertook a comprehensive review of the existing charging regime, which involved a revision of the underlying cost basis of the original model to better reflect the actual outcomes relative to the previous traffic forecasts utilised and a detailed mapping of BANSA’s costs between flight categories,” Mr Cooper said.

“Although the Notice of Intent indicated an implementation date of July 1, 2024, for the new fee scheme, at the request of the airspace users BANSA has agreed to an extension of the consultation phase, which is expected to be concluded during the third quarter of 2024 with the implementation of the new scheme.”

The Bahamas’ original air navigation services, or overflight, fee regime, which charged both aircraft passing through this nation’s air space or landing/taking-off from this nation, was almost immediately embroiled in controversy upon implementation.

The Airlines4America consortium, whose members include American Airlines, Jet Blue, FedEx, Delta, Southwest Airlines, United Airlines, and the United Parcel Service, filed a complaint against the Bahamian regime with the US Department of Transportation alleging that the fees were discriminatory against foreign airlines and favoured domestic carriers.

The US Department of Transportation, though, dismissed the complaint as it found that the same air navigation service fees applied regardless of whether aircraft were landing in, or taking off, from The Bahamas or simply passing through this country’s air space headed towards another destination.

As a result, it ruled: “We cannot conclude in those circumstances that the fee structure constitutes unjustifiable or unreasonable discrimination.” But, while the US regulator rejected the airline industry’s allegations of “unfair practices”, it voiced “serious concerns” about the fees’ costs and whether they are excessive when compared to the actual expenses The Bahamas incurs for providing air navigation services.

The US Department of Transportation also raised concern over whether the level of charges is compliant with the Air Transport Agreement treaty agreed between The Bahamas and US, sparking discussions at the diplomatic level between the two countries resulting in the revised BANSA fee structure. 

The air navigation services fees and origin/destination fees are split between the Bahamas Civil Aviation Authority (BCAA) and BANSA, while the former is the sole recipient of the passenger levy.

Mr Cooper maintained yesterday that within less than a year of the fees’ implementation, BANSA was facing ‘“several challenges” over fees that were created to provide a financing mechanism for civil aviation regulation and oversight in The Bahamas so that the sector no longer has to rely on the taxpayer.

He said: “You may be aware that, since December 2022, the Bahamas Air Navigation Services Authority has faced several challenges to the air navigation services charging scheme that was implemented in May 2021. This scheme provided for BANSA to be an independent and sustainable air navigation services provider through the introduction of a schedule of fees.

“First there is an overflight fee, which is applicable to flights transiting The Bahamas’ administered air space but neither landing in nor departing from any airport in The Bahamas, and then there is the origin and destination charge which is applicable to those flights landing in and/or departing from an airport in The Bahamas.”

Mr Cooper said since the US Department of Transportation’s dismissal of the complaint there has been “considerable effort” put into revising the fee schedule so that it is ‘fair, equitable, and sufficient” to cover BANSA’s operational and capital investment costs.

He said: “Since that time, considerable effort has been expended towards ensuring that our ANS charging scheme is compliant with the principles of cost-relatedness, and that it is fair, equitable and sufficient to support BANSA’s detailed operational and capital investment costs.”

Last year, Mr Cooper revealed that The Bahamas was forecast to generate $42.93m from its air space fees during the 2022-2023 fiscal year, although the outcome is “expected to be higher based on the faster-than-expected recovery in air traffic movements” post-COVID.

“Between May 2021 and November 2022, fees invoiced under the air space scheme totaled $49.693m, of which $44.69m represented air navigation services fees; $4.45m origin/destination fees, and $1.3m was for the passenger levy,” he added. “Total fees collected through November 2022 are $42.68m, with receivables at $6.46m.”

The Bahamas, in 2021, signed a 10-year deal that outsourced management of 75 percent of its air space above 6,000 feet to the Federal Aviation Administration (FAA), with the US agency agreeing to waive the air navigation fees it previously levied for using this country’s air space.

However, arguing that these fees should only cover the cost of providing the service, the US airlines alleged there was no justification for “the tens of millions of dollars” that The Bahamas is collecting given that it is just paying, at most, $80,000-$100,000 to the FAA - sum equivalent to 1 percent of the charges. They claim this “runs afoul” of global best practice and agreements, plus the US International Air Transport Fair Competitive Practices Act 1974.

The Bahamas had established a sliding scale for its air navigation services fees that ranges from $8.50 to $51.60 per 100 nautical miles based on the aircraft’s weight. Several observers have privately suggested to Tribune Business that the US airlines are seeking to bully The Bahamas by placing no value on the worth of this country’s sovereign air space.