The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Western Air’s principal yesterday warned air fares will “inevitably” increase after the carrier was told its fuel costs will quickly spike by more than 40 percent due to the Middle East conflict’s impact on global oil prices.

Sherrexcia ‘Rexy’ Rolle, the Bahamian-owned airline’s president, chief executive and general counsel, in a messaged reply to Tribune Business inquiries said Western Air had also been told to brace for further aviation fuel cost increases beyond the initial 40 percent surge. And, given that fuel is the industry’s major cost item, she added that increased “pressure” on air travel costs and “accessibility” to destinations such as The Bahamas is bound to result.

“Unfortunately, we have already felt the impact of the global surge in oil prices. We were advised a week ago that our jet fuel price will increase by over 40 percent in this very short period of time, with additional increases expected in the future,” Ms Rolle disclosed.

“Fuel is the top operational cost in the airline industry, and this will inevitably result in increased ticket prices. Rising fuel costs place additional pressure on travel accessibility for the simple fact that it is costlier to provide the service. Like many carriers, we are closely monitoring the situation and remain hopeful that fuel prices will stabilise in the near future.”

The anticipated spike in fuel and air travel costs will hit just as many Family Island resorts are recovering from a “lousy” start to 2026. Emanuel Alexiou, the Bahama Out Island Promotion Board's president and proprietor of the Abaco Beach Resort, told this newspaper yesterday that occupancies for his property were “down almost 50 percent” in January and off in February by almost 27 percent - with other Board members experiencing similar trends.

He attributed the drop-off to the collapse of Silver Airways las June, which has “decreased tremendously the amount of seats into Abaco and Exuma” and other Family Islands, as well as the impact of the new and increased boating fees that are deterring short-stay visitors. However, Mr Alexiou said March has thus far seen a recovery with numbers “as good as previous years”, and he voiced optimism that a strong performance from now through July could “save the year”.

The Promotion Board chief, though, said he is “crossing my fingers” that “things are not going haywire for long” in the Middle East as he acknowledged that the conflict between the US and Israel on one side, and Iran on the other, will have “a big impact” on the Bahamian and world economies if it becomes protracted and lasts for months.

“It if continues for a long time and prices go up, it will definitely have a big impact,” Mr Alexiou told Tribune Business. “Right now, at the pump, the prices are the same as they were were this time last year. Nobody’s felt the difference yet. It’s the wholesalers, and how that trickles down to the retailers, and that will have some impact to people who cannot really afford the difference. It hurts everybody, and I’m just hoping and optimistic it’s not something that lasts for a long time.

“If you say how the [tourism] season’s going right now, we had a lousy January and even more lousy February, but March is making up for it. March is as good as previous years. March, April, May, June and July, if we get those results good it could save the year.”

Mr Alexiou said June and July will likely “get a little tighter” because this is when the impact from the new and increased boating fees, including the just-created anchorage fee and split-out fishing permit levy, are set to be felt more keenly by Family Island resorts and marinas. He also disclosed that, with the Palm Beach Boat Show now less than two weeks away, the tourism has yet to receive any details on the two new cruising permit fee categories promised by the Prime Minister in the mid-year Budget.

“We are suffering from two separate issues,” Mr Alexiou confirmed. “One issue is the boating fees. The same boating fees haven’t changed. The longer people intend to stay in The Bahamas, the less they worry about the fees. It’s the shorter term person who now has to pay for a year even if they are only here for a week.”

Philip Davis KC, in the mid-year Budget presentation almost two weeks ago, pledged that the Government will introduce two new boating fee categories to allay private sector concerns, and help The Bahamas regain market share and lost business, after marinas - especially those in Bimini, Abaco and the northern Bahamas - saw winter season occupancies plunge and said they would be happy to do just 50 percent of the prior year’s business.

Several sources suggested that the two new cruising permits are for 30-day and 90-day durations, both of which have been proposed to the Government by the private sector and are designed to address the concerns raised by Mr Alexiou. The Promotion Board chief, revealing that the industry is seeking a further meeting with the Prime Minister on the issue, said no details on the new cruising permit categories have been provided.

“All we have heard is that, yes, it’s been discussed, yes, it’s been passed in Parliament, but nobody knows what the numbers or when they are coming out with it, and we have got the Palm Beach Boat Show in a week-and-a-half,” he added. Once May ends, the Bahamian boating industry relies heavily on the families that will be “most affected by the boating fees, and fuel if it goes up,” to carry it through summer. “We don’t know what June and July look like,” the Promotion Board chief said.

Mr Alexiou then identified the loss of airlift capacity from Silver Airways’ failure as another major factor undermining visitor access to the Family Islands, including Abaco, Exuma, Eleuthera and Bimini.

“The collapse of Silver Airways decreased tremendously the amount of seats into Abaco and Exuma,” he told Tribune Business. “January, our room occupancy was down almost 50 percent as a result, and February was off 27 percent. March may be 5 percent down. Generally, the Out Island Promotion Board [members] are seeing the same trends. That seems to be related to the lack of airlift and seats.

“Airlines with smaller planes have tried to come in and fill that gap and can’t quite do it.” Mr Alexiou said that, while Bahamasair and Western Air servicing Abaco and Exuma direct from Fort Lauderdale will “help tremendously” in plugging the void created by Silver Airways’ demise, the latter had also provided key “feeder” connectivity into its former south Florida hub from cities such as Tampa, Jacksonville and Orlando.

“Having the additional airlift will help, but it will not help with the feeder,” Mr Alexiou added. “We just have to hope that other airlines come in to fill the feeder.” And aviation and stopover tourism are not the only market segments set to be impacted by an increase in fuel costs relating to travel to The Bahamas.

Peter Maury, the Association of Bahamas Marinas (ABM) president, told Tribune Business that demand for this destination - already impacted by the boating fees fall-out -could take a further hit if fuel costs skyrocket further as a result of the Iran war. While crude oil prices eased slightly yesterday, the Brent crude index was still over $100 per barrel as this newspaper went to press.

Forecasting that boating fuel costs could soar by between 30-40 percent based on the crude oil price spike to-date, Mr Maury warned: “It certainly doesn’t help our cause. It’s just one more expense that a lot of boaters are probably not going to want to pay.

“We were hoping we were going to have a little bit of relief with the new cruising permits the Prime Minister mentioned in the House of Assembly; maybe a cheaper rate to get boats over. A lot of our marinas are very slow. If that is not done, and fuel costs are high, that’s a concern. Everybody is waiting to see what happens. It’s certainly not great and doesn’t help our cause.

“It’s one of those things,” Mr Maury added. “It [the oil price] went from around $70-$80 per barrel to $100. I imagine we’re going to see on our end at least a 30-40 percent increase, and it’s expensive enough now. Add that to the cost of groceries and cruising permits, we’re going to have a tough time in tourism. It would be a good time to assess some kind of discount to help us out.”

Senator Darren Henfield, the Opposition leader in the Senate, yesterday urged the Government to both “cap” VAT levied on gasoline sold at the pump and raise the VAT-free threshold on electricity bills from $400 to $600 for residential customers as a way to mitigate the worst effects of the oil price spike for Bahamians.

“First, the Government should immediately impose a short-term cap on the VAT charged on fuel. This approach was used successfully in Barbados during a similar global oil spike,” he argued in a statement.

“Under this model, VAT would only be charged up to the current average pump price on each island. If global prices push fuel higher than that level, VAT would not be charged on the increase. This protects consumers from sudden price jumps while allowing the Government to maintain its planned revenue.

“The Government should not collect extra VAT revenue simply because global oil prices are rising. Bahamian families should not pay the price for international conflict. The Government must act now to protect them from rising costs.”

Mr Henfield then added: “Second, the Government should immediately raise the VAT-free electricity threshold from $400 to $600 for residential customers.

“If global oil prices increase, fuel surcharges on power bills will rise. Raising the threshold now gives families breathing room before bills climb higher. This is a temporary measure to cushion households during a global price surge and protects the government’s revenue base.” Bahamas Power & Light (BPL) has already hedged, or locked in, the price of two million oil barrels at around $70 per barrel thanks to its December trade.