The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamasair’s managing director yesterday voiced optimism that the leading American airlines will fail in their bid to prevent it gaining regulatory permission to operate in the US.

Tracy Cooper told Tribune Business that the national flag carrier “doesn’t anticipate there’ll be any issues” from the Airlines for America consortium, whose members include American Airlines, Jet Blue, FedEx, Delta, Southwest Airlines and United Airlines, urging the US Department of Transportation not to renew Bahamasair’s authority to offer passenger and cargo services to and from the US.

His comments came as Airlines for America threatened that they will now object to all applications by any Bahamian airlines, such as Western Air and Southern Air, for approval from the US Department of Transportation and its regulatory affiliates to operate in the US. This, if their advocacy efforts succeed, could have a chilling effect on Bahamian airlines’ ability to expand via new routes and more frequent service.

The airline consortium, in regulatory filings with the US Department of Transportation that have been obtained by this newspaper, makes it crystal clear that its bid to create roadblocks for Bahamasair and other local carriers is merely a tactic to obtain leverage and force The Bahamas to bow to its will over the revised air navigation services charges that this nation plans to impose on all users of its air space.

While the US Department of Transportation dismissed Airlines for America’s initial complaint over the Bahamas’ air navigation services charges, also known as overflight fees, in February 2023, finding they did not represent “unfair practices” or “unjustifiable or unreasonable discrimination”, the US carriers have returned with a new angle of attack that seeks to ground Bahamian airlines if they do not get their way.

Aviation trade media reported that Bahamasair’s present regulatory exemption, which gives it authority to provide both scheduled and charter services into and from the US, expires this Thursday on October 3, 2024, thus seemingly making it urgent that the Airlines for America obstacle be resolved and the permission renewed.

Mr Cooper, though, expressed optimism to Tribune Business that the challenge will be resolved in Bahamasair’s favour and could be cleared up within the next 48 hours. While declining to go into much detail, he pointed to the US Department of Transportation’s dismissal of Airlines for America’s initial challenge as grounds for his optimism.

Hinting that the issues raised are exactly the same as those contained in the consortium’s late 2022 complaint, he said: “If the Department of Transportation rejected it already, there’s a good chance they will reject it again.” 

As for the objection to US regulators renewing Bahamasair’s authority to operate in their territory, Mr Cooper added: “The reality is that’s not the full story. They’re making an objection but we don’t anticipate there’ll be any issues with it. We’re still dealing with it, and no doubt we’ll have a resolution within the next two days. It’s more than likely it’s not going to be an issue.”

But, given that the US Department of Transportation’s decision is presently unknown, it remains to be seen whether there is any disruption to Bahamasair’s US passenger and cargo business - and Christmas and Thanksgiving shopping trips to Florida and elsewhere - from an adverse ruling in the American airlines’ favour.

Should that occur, it would also have potential repercussions for Bahamian tourism in terms of visitors’ ability to access this nation via the national flag carrier and its role in opening up new routes and visitor source markets in the US, as it has done for Grand Bahama with Raleigh, North Carolina, for example.

Chester Cooper, deputy prime minister and minster of tourism, investments and aviation, did not respond to a Tribune Business message seeking comment before press time and an update on negotiations between the Bahamian and US governments over the proposed revisions to the air navigation services charges that the US airlines are objecting to.

However, one Bahamian private aviation operator told this newspaper it was “disheartening” that the major US commercial airlines were seeking to achieve their goals by impacting his business and those of his colleagues.  

“I find it disheartening that Airlines for America would choose to use this venue to object to air space fees that both they and Bahamian carriers are billed for,” said Paul Aranha, founder of Trans-Island Airways. “I can understand that they feel like they need to voice their concern and have it be heard as there are limited avenues in The Bahamas which they can explore.

“Rather than taking a divisive approach with objecting to Bahamian applications, I would welcome the support of Airlines for America to create a cross-border coalition to address these fees as we are all in the same boat.”

Bahamasair submitted what is understood to usually be a routine application, requesting that the US Department of Transportation grant it a two-year “exemption” permitting the national flag carrier to provide passenger (including charter), cargo and mail services to and from the US cities and markets it currently serves on August 28, 2024.

“Approval of this application is in the public interest,” Bahamasair and its attorneys argued. “These services will enhance travel options for the public travelling between The Bahamas and the US.

“Granting broad Bahamas-US exemption authority will also provide Bahamasair with greater flexibility to introduce new services, while minimising the Department’s and Bahamasair’s unnecessary administrative burden with respect to the submission and review of multiple exemption amendment or renewal applications and foreign air carrier permit (FACP) amendment applications.”

The major US airlines, sensing an opportunity to pressure The Bahamas, duly pounced with a September 12, 2024, filing that urged the US Department of Transportation to “defer action” on Bahamasair’s application until the Government and Bahamas Air Navigation Services Authority (BANSA) backed down over “excessive” air navigation services charges.

Deftly making no mention of the reverse suffered over its original complaint, Airlines for America asserted: “These unjustified and excessively astronomical charges to users are related to the overflight navigation of The Bahamas where the services were actually provided by the Federal Aviation Administration (FAA) at a very low cost to The Bahamas, and certainly at a substantially lower amount than what The Bahamas was requiring users to pay.”

Noting that itself, its individual airline members and the US government held talks with BANSA following rejection of its original complaint, Airlines for America added that they still remain dissatisfied with the fee revisions to both “overflight and origin/destination (O/D) traffic” that have been proposed.

Overflight refers to flights that transit The Bahamas, passing through the country’s air space without landing or taking off, while O/D refers to international flights that either originate from or land in The Bahamas. “Unfortunately, despite many comments submitted by industry, BANSA is planning to implement the new charging scheme despite the strong objections of Airlines for America’s members,” it said.

These objections include The Bahamas’ alleged failure to resolve the “significant overpayments on overflights that occurred” under the first set of fees between 2021-2022 and 2023-2024, and continued demands for “clearly improper amounts due”. The US carriers are also claiming that the new fees will “allow a debt transfer affecting carriers unequally”.

And they added: “Despite recent public consultation and previous consultations with the US government, the proposed new charging scheme appears to be a ‘shell game’ of shifting charges to newly proposed excessively high O/D fees.” BANSA has yet to publicly release full details of the proposed new fee schedule, although Airlines for America alleged that consultation ended on August 27, 2024.

That was just one day before Bahamasair filed its application, and two weeks before Airlines for America filed its objection. The latter is arguing that the charges breach The Bahamas’ air transport agreement with the US, which requires both sides “to ensure the fundamental fairness of the user charges imposed on carriers”.

“We note that The Bahamas is an important market for Airlines for America members and, as such, Airlines for America members and the US government have both repeatedly and unsuccessfully engaged the Government of the Bahamas to take action to address the excessive charges to air carriers,” the consortium asserted.

“The US government has engaged in consultations and discussions with the Government of The Bahamas several times over the past two years. Unfortunately, to-date, the Government of The Bahamas still has not taken satisfactory action to address the excessive charges to air carriers or the significant concerns of Airlines for America and its members with respect to BANSA’s proposed new charging scheme.

“Airlines for America objects to the Department granting Bahamasair’s application at this time because approval is not consistent with the public interest as long as the Bahamian government continues to unjustifiably and unreasonably discriminatively impose unjustified excessive user charges.”

Bahamasair, in its rebuttal to Airlines for America, argued that it is “separate and distinct” from the Government of The Bahamas even though the latter is its 100 percent owner. And it argued that the consortium’s latest complaint raised the same arguments as those previously rejected by the US Department of Transportation in February 2023.

Noting that the US and Bahamian governments have been addressing between them whether the “cost-basis analysis” for the fees is correct, Bahamasair argued that the US carriers’ intervention “seeks to usurp the authority” of the Biden administration to negotiate an amicable resolution.

It also asserted that bowing to the US airline lobby would be “an extraordinary proposed punishment” for Bahamasair over an issue - air navigation service fees - that it itself will be subjected to, and over which it has no control or influence.

“BANSA’s revised fee structure maintains the previous differentiation per flight category that was already recognised as non-discriminatory by the Department [of Transportation],” Bahamasair asserted, adding that they were also based on international principles for developing charges based on the cost of providing the service.

“Airlines for America asserts that consultations with BANSA ended on August 27, 2024, but offers no explanation for how suspending or curtailing Bahamasair’s authority to operate to the US benefits the US government’s consultations with the Government of The Bahamas.

“It also directly contradicts Airlines for America’s previous assertion that their ‘members do not seek to disrupt the US-Bahamas air transportation marketplace.” Bahamasair also accused the consortium of singling out and targeting it, adding that had not objected to regulatory approvals sought by Western Air, Trans-Island Airways, LeAir Charter and Golden Wings Charter.

To which Airlines for America gleefully replied on September 25, 2024: “Airlines for America thanks Bahamasair for encouraging us to object to every Bahamian carrier that seeks exemption authority to serve the U.S. Airlines for America will certainly object to any and all applications made by Bahamian carriers going forward until our concerns are resolved...

“While Bahamasair is not itself a party to the air transport agreement, the Government of the Bahamas is and, as such, Bahamasair is subject to the repercussions of its government’s violations of the air transport agreement as would a US carrier should the US be in violation of the air transport agreement.....

“Since consultations between the US and The Bahamas have failed to resolve serious legal concerns, the application of Bahamasair must be denied. Violations of the air transport agreement by either party (The Bahamas or the US) have repercussions on the operators of the offending marketplace, in this case Bahamasair, in the form of counter-measures including denial of an application to serve the US,” it added.

“Because the Government of the Bahamas continues to violate the air transport agreement, Bahamasair’s application to serve the US must be denied. Bahamasair does not get to reap the substantial benefits of the air transport agreement while also denouncing the counter-measures that would protect Bahamasair if the shoe was on the other foot....

“Until a resolution is reached between the two governments, no applications should be granted under the air transport agreement.”