The Tribune

By FAY SIMMONS

Tribune Business Reporter

jsimmons@tribunemedia.net

A Cabinet minister yesterday voiced optimism that The Bahamas’ proximity to its major visitor source market may offset the impact of higher travel costs caused by the Middle East conflict’s impact on fuel and oil prices.

Michael Halkitis, minister of economic affairs, said increased airline ticket prices are a concern for tourism-dependent economies such as The Bahamas. However, he added that this nation’s proximity advantage to the US could make it a more attractive option if travellers become more cost conscious.

“When you talk about an increase in fees, perhaps brought about by what’s happening in the Middle East, airline prices are already very high,” said Mr Halkitis. “Those of us who travel know that airline prices are very high, so anything that impacts the price we are concerned about.

“The fortunate thing about The Bahamas is that most of our visitors come from the US, and we are still very close. If people are deciding whether to go further afield from the US or just take a vacation, and they consider the cost of the airline ticket, we might actually benefit from that.”

Mr Halkitis said tourism officials are increasing marketing efforts to ensure the country remains competitive, and are keeping a close watch on developments in global markets and travel costs. “We are redoubling our marketing efforts,” he added.

“It’s something that the Ministry of Tourism is monitoring, and any adjustments that need to be made in terms of marketing or promotion we will do.” Still, he expressed hope that geopolitical tensions driving the uncertainty will ease soon.

“We are hopeful that the hostilities and unrest in the Middle East are resolved sooner rather than later,” said Mr Halkitis.  Global geopolitical tensions can affect aviation costs because fuel is one of the airline industry’s largest operating expenses. When oil prices rise or supply routes are disrupted, airlines often pass the higher costs on to passengers through ticket prices.

The Bahamas’ proximity to major US cities has long been considered one of its key tourism advantages, with relatively short flight times compared to destinations in Europe, Asia or other long-haul markets.

However, local resort operators are warning that rising global fuel prices could begin weighing on travel demand for The Bahamas. In the meantime, Mr Halkitis said the country’s geographic advantage could help cushion any potential impact on tourism demand.

“One of the blessings that we have in this country is that we are very close to our source market,” said Mr Halkitis. “So if people are looking to save, we might actually be more cost-effective than going further.”