|The Bahamas Investor Magazine
July 13, 2011
July 13, 2011
Many schoolboys dream of becoming a pilot, but very few grow up to operate their own airport. “I’ve always been interested in flying, ever since my sixth birthday when my parents purchased an airplane sight-seeing ride for my brother and I over Toronto,” says Stewart Steeves president and chief executive officer of Nassau Airport Development Co (NAD)–a company owned by The Bahamas government under a 10-year management agreement with Vancouver Airport Services (YVRAS) and charged with the redevelopment of Lynden Pindling International Airport (LPIA). “This interest grew over the years and I got my private pilot’s licence in 1994.”
Now head of the team tasked with overseeing the airport’s multi-million-dollar modernization, Steeves has taken his enthusiasm for the industry to new heights. “The job marries my interests in aviation and finance,” says the civil engineering graduate and chartered financial analyst. “The aviation industry is a very natural fit for me.”
Joining the Nassau team in January 2007 as vice president and chief financial officer, Steeves was instrumental in developing and obtaining government approval for a dual-currency, three-stage financing structure to fund the five-year $410-million development programme at the airport. The completed syndication and funding of the $265-million multi-tranche financing for the Stage One development during a period of global economic turmoil in March 2009 was acknowledged by Project Finance magazine as the 2009 Latin America Project Bond Deal of the Year.
“We were pleased to accept the award,” says Steeves. “NAD was able to secure the funding during a very tough global economic market to finance the redevelopment project.”
On schedule, Stage One of the redevelopment was completed under budget, with the opening of the new $191-million US Departures Terminal on March 16, 2011. Appropriately, the first flight to leave the new 247,000 sq ft, state-of-the-art terminal was Bahamasair flight 221 to Miami.
“It marked a big achievement for the whole team,” says Steeves of the transition day. “It had been years of work. Our goal for the first day was for no event to occur that we didn’t have a contingency plan for, so everyone had been preparing for months beforehand. The broader project, of course, goes back years prior to that.”
Rare opportunity, unique challenges
The redevelopment project presented a rare opportunity to do something entirely new, according to Steeves. “Because of the size and nature of the facility, we can offer unique elements such as the roof top patios and green spaces, free Wi-Fi throughout the facility and a very Bahamian-centric experience, reflected in the retail programme and local art exhibits. All of that would be a lot harder to do in a large international hub facility. We believe the customer experience–for the size and type of facility–is becoming the best in the region, if not the world.”
As well as opportunities, though, the project also presented unique challenges. “A project like this is never going to be easy, because it is one of a kind. It’s a national asset, and it will only be done once. A redevelopment of this nature has never been done before in The Bahamas. When it comes to the administration side, such as permits and environmental issues, for example, there is no template. We have to create the path as we go along.”
This can obviously present frustrations, but Steeves says that the advantage of doing a project of this type in a small jurisdiction such as The Bahamas is that “you can talk directly to the people who effect change. Consequently, change can happen very quickly, even though there are not necessarily any systems in place at the start.”
The other advantage of overseeing the redevelopment of Nassau’s international airport is that there was no one that did not think it was a good idea. The Bahamas derives 75 per cent of its gross domestic product from tourism and the airport is the first and last memory many visitors have of the islands. Lynden Pindling International Airport was originally built in 1957, and much of it was in clear need of updating.
“Unlike in many other places, everyone in The Bahamas was united behind the redevelopment project. Everyone knew this had to happen, so in that respect it was easier. It was entirely a case of ‘how to do it,’ rather than ‘why do it.’ That is a very refreshing place to be in the aviation industry.
The following two stages of the airport-wide redevelopment are being rolled out over the next two years, with Stage Two construction beginning just days after the airport management company opened the new US Departures Terminal. It involves the selective demolition of the old US Departures Terminal and construction of a new International Arrivals Terminal and Pier at a cost of $129 million, to be completed by fall 2012. Approximately $36 million will be awarded to Bahamian contractors and subcontractors, and at least 70 per cent of labour will be Bahamian, with an equivalent number of total construction jobs to those generated in Stage One, which was around 2,600.
Stage Three involves the construction of a new Domestic and International Departures Terminal and new Domestic Arrivals Terminal at a projected cost of $84 million, scheduled to be open by fall 2013.
With NAD having already obtained an investment grade credit rating without government guarantees, and completed $165-million syndicated long-term project bond financing for the redevelopment programme, Steeves foresees little problem in securing the final raft of finances.
“The funding is in place for Stage Two. We will have to go back out to the market for a refinancing for funding for Stage Three, probably early next year, but the structures are in place and previous fundings were over sold. In fact, the fundamentals on which the credit rating was based have actually improved with the completion of Stage One. This type of infrastructure project is sought after by the large institutional investors, such as insurance companies and pension plans. They tend to be our primary investors.”
Aside from all the excitement of the redevelopment efforts, there is still the small matter of the day-to-day operation of the nation’s premier international airport, which currently services 2.5 million passengers annually and falls under NAD’s management mandate.
“We have over 3,000 people employed here, by a wide variety of shareholders, with only around 160 directly employed by NAD. In essence, it’s like running a small city,” explains Steeves. “It’s a shopping mall, a phone company, a business management company; there’s parking, maintenance, tenant management, plus aeronautical and environmental aspects, regulation and utilities. Above all else, there are the needs of the ultimate customer:
“The key is to get all the individual stakeholders to line up behind one single vision for the airport. That takes up a large part of my day.”
Managing such a diverse operation is both the hardest and most enjoyable part of the job, says Steeves. In any given day, it is not unusual for the CEO’s conversations to range from the intricacies of corporate financing to airport security issues to carpet cleaning, and everything in between.
“The management style that works in the airport industry is best described as collaborative, because there are so many different aspects, all happening at the same time, all the time. You cannot simply come up with a strategy and execute it vertically throughout the organization, there is too large a number and variety of stakeholders. The view from the executive suite can’t be just to tell people what to do. You have to have an open dialogue.”
The airport operating business is also fairly unique in that although it is intrinsically linked with government, it has to operate as a private business that generates profit and services its debt, whilst all the time remaining in public view. “People have very strong opinions about airports, because of the manner in which they use them and the time they spend in them. They are also regarded as a public asset that represents the country. The key is to balance functionality, while managing these expectations.”
Sense of community
Having a young family, the community aspect of his job is particularly important to Steeves. “One of the things I like about The Bahamas is feeling part of the local community. In Canada, often your professional and personal lives are kept very separate, but not so here. I enjoy servicing the community and feeling that we are contributing to making a place better. We can invest pride in our work.”
Being in The Bahamas also allows him to indulge his other passions for sea kayaking, boating and snorkelling, although his interests in downhill skiing and mountain biking have obviously been put on the back burner, living as he does on a tropical island with three young children.
On a professional level, Steeves adds: “There is a lot left to accomplish in my career. We have much more to accomplish at LPIA–not only to complete the redevelopment, but also to achieve our goal of having the airport recognized as one of the best airports (in terms of facilities, customer service, and passenger experience) in the Caribbean and North America. Beyond that, my interest extends to other meaningful projects and assignments where I can contribute to effect change and make a positive impact within the community.”
Sidebar: LPIA development stats
Sidebar: Art programme