The Tribune

Dear Editor,

The current debate over airport and aviation charges raises a broader question that deserves a clear public answer: How have the airport projects themselves been financed, and which costs are now intended to be recovered from aviation users?

The public record indicates that Family Island airport development has been financed or proposed through several channels over time. These include public-private partnership (PPP) investment, Government capital expenditure, National Investment Fund (NIF) resources, Airport Authority revenues and borrowing, and external development or government-guaranteed financing. Some projects have moved from one financing model to another, or appear to involve more than one source.

That does not establish duplication, double charging or wrongdoing. Blended financing is common in major infrastructure projects. But where public money or publicly-financed assets are combined with a private concession and new user charges, the accounting should be transparent enough to show how each contribution is treated.

Governor's Harbour is a useful example of the question. It was included in the original Family Island airport PPP programme. The Government later publicly associated NIF resources with airport works there, but the project is now included in the Island Airport Development Partners (IADP) concession. North Eleuthera was also part of the PPP concept, and was to receive concessional financing from a Saudi Fund for Development loan, but the latter was dropped after Chester Cooper, deputy prime minister, said the funding was too slow to materialise. Instead, the IADP consortium took over responsibility for making improvements and raising the financing. Exuma, likewise, appears in government statements concerning external or guaranteed financing, and is part of the very same IADP concession arrangement. The private sector group says it has received a 50-year concession to manage and operate these three airports, which will allow it to recover its total $132m outlay and earn a return on investment.

These facts do not prove that the same cost is being recovered twice. They do, however, make a project-by-project ‘sources and uses’ statement essential before users are asked to accept new or substantially increased charges. The need for reconciliation is reinforced by the Government's own description of the Family Islands Airport Renaissance programme. Public statements have continued to place directly contracted airport works, including projects at Farmer's Cay and Staniel Cay, within that wider initiative. This makes it even more important to distinguish, airport by airport, what was financed directly by the Government, what came through the National Investment Fund, what was financed through the Airport Authority or external borrowing, and what represents genuinely new PPP capital.

For each airport, the Government and the relevant airport entity should publish the total project cost; the amount funded from the Consolidated Fund or capital budget; any NIF allocation; Airport Authority resources or borrowing; external or Government guaranteed loans; and the amount of genuine private equity and debt placed at risk by a concessionaire. Where publicly funded assets are transferred into a concession, their value and treatment in the concession's recoverable cost base should also be shown.

The same discipline should apply across the wider aviation system. The Airport Authority receives airport and commercial revenues, rent, government support and may borrow. The Bahamas Air Navigation Services Authority (BANSA) receives air navigation user revenues and government support. The Civil Aviation Authority of The Bahamas (CAA-B) receives regulatory fees and government subvention. The Nassau Airport Development Company (NAD) operates Lynden Pindling International Airport (LPIA) from airport revenues and financing while paying rent to the Airport Authority. These are different functions and different revenue streams, and they should not be casually combined.

I have not seen sufficient documentary evidence to conclude that BANSA revenue is being used to finance airport construction, and it would be wrong to make that assertion without the accounts or an identified transfer. The appropriate question is whether any such transfer or earmark exists and, if so, under what authority and for what purpose?

Similarly, the existence of several funding sources does not establish double recovery. That conclusion would require evidence that the same capital or operating cost is being recovered more than once from users or taxpayers without an authorised and transparent offset. The executed financing agreements, asset valuations, concession financial model, tariff methodology and audited transaction records should answer that question.

Modern airports require substantial investment, and investors and lenders are entitled to understand how their capital will be repaid. Aviation users are equally entitled to understand what they are paying for.

The question is therefore not whether airport development should be funded. It is whether each expenditure and charge is transparent, properly governed, demonstrably necessary, equitably allocated and protected against duplication.

A simple airport-by-airport financing schedule would go a long way towards answering that question. It should identify the originally-approved project cost, each funding source, the contractor, amounts paid to-date, outstanding commitments, ownership of the completed asset, who now operates it and whether any portion of a publicly-financed asset is subsequently included in a concessionaire's recoverable cost or user-charge calculation. In short: Who paid for what, who owns what, and what exactly are users now being asked to pay for?

Respectfully

Captain Randy L. Butler

Aviation consultant, pilot and former civil aviation safety inspector

Principal consultant, Aviation Safety & Security Consultants Ltd