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Features - July 2017



The Bahamas Investor

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Aviation headway and headwinds

Aviation headway and headwinds

Bahamas airline industry readies for takeoff

The Bahamas Investor Magazine
August 21, 2017
August 21, 2017
Tosheena Robinson-Blair

The winds of reform have begun to blow through the aviation industry. The sector is gaining momentum in a transformational journey designed to further the growth and development of a vital link for an archipelagic nation.

Spread across 100,000 square miles of translucent sea with a tourism-based economy, The Bahamas is reliant on the aviation sector as a key component of national life. Testament to this is the tiny island state’s 56 airports– 29 of which are government owned and operated.

“We are currently in the process of a major reform initiative that will transform the aviation industry in The Bahamas, producing far-reaching positive implications for future generations of Bahamians,” then Prime Minister Perry Christie said in his opening remarks at the 9th International Civil Aviation Negotiation Conference last year. The assembly in The Bahamas provided a central meeting place for over 100 members of the International Civil Aviation Organization (ICAO) to conduct multiple air services negotiations.

Against the backdrop of the conference, The Bahamas signed six new air service agreements with Qatar, Singapore, New Zealand, Curaçao, Brazil and Kuwait. It added to the pair of agreements previously signed with the United Arab Emirates (in November) and Turkey (in October) paving the way for the establishment of scheduled flights between The Bahamas and those nations.

Transformational reform
However, the reform breeze had begun to blow long before the aviation conference touched down. Earlier in 2016, the Bahamian government tapped into a $35-million, 25-year loan from the Inter-American Development Bank (IDB) to invest in aviation and infrastructural upgrades to four key Family Island airports in Exuma, North Eleuthera, Marsh Harbour and Treasure Cay, the latter two in Abaco.

Designed to place the industry on a firmer footing, the partnership funds “modernization and maintenance of the airports,” including a wide range of aviation and infrastructure improvements such as visual aids, lighting, runway beacons, mobile airport equipment, parking platforms and passenger terminals, according to the IDB.

On another aviation development front, long-term negotiations with the Federal Aviation Administration (FAA) began to bear fruit earlier this year with The Bahamas becoming infinitely closer to gaining control over its airspace, something it has never had.

The Bahamas struck an agreement with the FAA for the agency to continue to manage The Bahamas’ airspace for at least another decade. In the meantime, The Bahamas will no longer have to pay the US fees for flying in its own airspace, as it works to obtain formal recognition by ICAO and neighbouring states of an expanded Flight Information Region largely mirroring its maritime borders.

This modernization of the aviation sector has been a process the government has actively engaged over recent years, involving “multiple approaches on all fronts,” according to the former Minister of Transport and Aviation Glenys Hanna-Martin.

Under her watch, improvement projects were carried out to airports in Mayaguana, Exuma (Staniel Cay), San Salvador and Bimini. In Exuma and Bimini, in particular, large hotel developments and subsequent growth in air traffic to the island are driving demand for modern airport facilities and civil aviation upgrades.

The billion dollar question for the new government is how best to efficiently manage the airports that exist in the country as the frontier of development rapidly extends beyond New Providence and Paradise Island. With 29 airports to own and manage, funding has been a challenge.

Not surprisingly, The Bahamas has explored the feasibility of attracting private investment through a public private partnership scheme for Family Island airports. As Hanna-Martin describes: “The intention is to seek public private partnerships which will attract the capital for infrastructural redevelopment of select airports while at the same time maintaining government ownership, oversight and controls.”

Model airport
The idea is not new. It has been done before at the country’s chief gateway, Lynden Pindling International Airport (LPIA). Under the management of Nassau Airport Development Co (NAD) the airport secured full-financing for $409.5-million redevelopment without any government guarantee.

NAD’s private management agreement with Vantage Airport Group (formerly Vancouver Airport Services, or YVRAS) saw the Canadian company oversee the transformation of a rundown facility into an award- winning, modern airport operating world-class standards of safety, efficiency and passenger experience.

“In view of the fact that this model is the first of its kind to be used in The Bahamas, we are very keen for it to be successful. And it is,” says Vernice Walkine, NAD’s chief executive officer and president. “It allows us to operate LPIA in a commercially viable manner, so that the airport is self-sustaining. The relationship with Vantage Airport Group is highly beneficial as it provides us with access to international best practices across the full spectrum of airport operations, commercial development and customer experience.”

Meantime, NAD’s team members have benefitted from cross-training exercises, building skillsets through their encounters with other airports within Vantage’s network.

NAD is planning for further growth. Considering the impracticality of easily expanding the airport’s physical footprint, the operators have to look at ways to increase capacity within the existing footprint, which often means utilizing technology (automated passport control, electronic boarding passes and border processing kiosk) to increase processing efficiency and cut down waiting times.

A dynamic industry, the sector calls for its leaders to be forward-thinking and proactive. “Aviation professionals are constantly seeking to balance safety and security at airports with an improved passenger experience, providing amenities that meet the needs of today’s discerning and demanding passengers,” says Walkine, who notes the importance of airport upgrades within Family Island communities. “The airports need to not only meet today’s standards for safety and good customer experience, but what they offer needs to be commensurate with the planned touristic developments on those islands.”

A new paradigm
“Great strides” in the aviation sector has created a platform “for great economic growth and development throughout our country,” says Hanna-Martin.

The first step in that direction was to correct a major deficiency. As the Civil Aviation Department celebrated its 70th anniversary in 2016, the government brought two landmark legislations to Parliament. Since its inception, the department had operated as both regulator and service provider in Civil Aviation, an identified weakness which ran contrary to ICAO requirements. The Airport Authority (Amendment) Act and the Civil Aviation Act of 2016 changed the game. The Civil Aviation Department, a government agency, transitioned to the new Bahamas Civil Aviation Authority, a regulator with oversight and enforcement responsibilities for the industry. Heading the authority’s board of directors is Wendy Craigg, former governor and chairman of the board of The Central Bank of The Bahamas.

It is the authority’s job to ensure all participants comply with the required national and international standards. Additionally, it must develop and maintain a safe and secure aviation environment at every airport facility in the country. Among other duties, the authority is responsible for the management of Family Island airports, security and fire services.

The Bahamas’ air transport sector reform initiative is already yielding results by building human, technological and infrastructural capacity within the sector. An Independent Aircraft Accident Incident Investigation Unit has been established. A new radar system was purchased and a new approach control centre constructed, from which radar controllers will operate. New air traffic controllers, radar technicians and aerodrome inspectors have been hired, according to the government.

The former government also set the wheels in motion to acquire a number of crash fire rescue trucks for Exuma, Marsh Harbour, North Eleuthera and Rock Sound at a cost of $2.5 million.

Negotiating headwinds
However, historic reform has been difficult, says Captain Randy Butler, CEO and president of Sky Bahamas Airlines and president of the Bahamas Aviation Association. Butler views the eight newest air service agreements as a step in the right direction, but points to its reciprocal nature in scheduled flight services.

“The air service agreements open the door for these things to happen, but no new airlines have come to The Bahamas as yet,” he says. “With regards to our airspace, there is ‘intent’ for us to sign an agreement for us to control our airspace. Until we have a signed agreement it’s not certain.”

The sticking point for Butler has been the lack of an all-encompassing, long- range plan for the industry. Successive governments, he believes, have merely focused on short-term goals.

“Aviation is an industry where you have 50-year plans,” he says. “In The Bahamas, we need to have more than the five-year plan we tend to have for the election cycle.”

Butler has long-backed the idea of an aircraft mortgage registry, for financiers concerned with maintaining and preserving their collateral and their security rights over the aircraft.

In 2016, the government announced that consultants engaged to study the feasibility of such an initiative within the context of the Bahamian economy recommended that The Bahamas enter the aircraft mortgage registration business.

The implementation plan spans 28 months, with some work to be done beforehand, inclusive, but not limited to, either ratifying existing conventions or enacting legislation to provide aircraft owners and financiers the level of protection over interest in their assets. The report also recommended waiving, or eliminating, the 10 per cent customs duty on the importation of new aircraft.

“I’m ever the optimist, so I look at any forward movement as a step in the right direction,” says Callenders aviation attorney and pilot, Llewellyn Boyer- Cartwright, who has for years pushed for ratifying the convention and doing away with the import tax.

“We knew there were some deficiencies that needed correcting and at least with the implementation of the new Civil Aviation Act 2016, and the establishment of an Independent Civil Aviation Authority, then it’s moving in the right direction.”

He adds: “Someone said, ‘I have many miles to go before I sleep.’ I think that’s where we are as an industry. There’s a lot to be achieved before we can say it’s done.”

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