• Flying Ambassador cautions on airport outsourcing
• Lucrative, but ‘fickle’, sector requires fair treatment
• Confident Bahamas can ‘match or exceed’ 2022
By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
A Bahamas Flying Ambassador yesterday warned this nation not to follow Mexico and Costa Rica by “killing the goose that lays the golden eggs” when outsourcing management of multiple airports to private operators.
Rick Gardner, director of CST Flight Services, which provides flight co-ordination and trip support services to the private aviation industry throughout the Caribbean and Latin America, told Tribune Business that The Bahamas was “rocking and rolling” as he predicted that this nation will “match or beat” last year’s business volumes and arrivals numbers for the sector.
However, he urged the Government to “tread very cautiously” in its plans to outsource 14 Family Island airports to private sector control given what he had experienced first-hand in Mexico and Costa Rica. Both nations, once popular private pilot destinations, had lost significant market share when the operators of newly-privatised airports introduced fee hikes and policies that were unfriendly to the industry.
Noting that private aviation is a “fickle” industry, with pilots able to switch instantly to other jurisdictions because they own/control their planes, Mr Gardner said suggested that The Bahamas include terms in the airport management contracts stipulating “fair treatment” for the sector so as to avoid making its competitors’ mistakes.
“I’ll give you two examples of countries that don’t get it,” he told this newspaper. “They privatised the operation of their airports. One is Mexico, and the other is Costa Rica. They have historically been two popular destinations for general aviation. They contracted out operation of their airports to private third parties, and that’s when the trouble began because the interests of the third party are very selfish in nature.
“They’re not concerned about tourism and the revenues of the country. They are only interested in their revenues. It costs you as much to part a Cessna 182 in Costa Rica as it does a Boeing 747. You can predict what has been happening. In Cancun, the notices of air mission, they are restricting general aviation arrivals on many days or a significant part of the day for the benefit of commercial airlines.
“All that is to the benefit of The Bahamas. You’ll be a far more welcoming, for less expensive and simpler destination. My only thing is: Tread very cautiously The minute you hand over your nation’s assets to a third party, that third party’s interests may not be in line with that of the national interest. I’ve seen that. It killed general aviation in Costa Rica for sure, as well as Mexico,” Mr Gardner continued.
“I’d hate to see that affect all the effort, time and effort spent to promote go to waste. Some people may prefer the commercial airlines, and if you want the mass tourism market, so be it. But if you want general aviation, even a Cessna 182 costs a lot to maintain. You’re dealing with a segment that is very lucrative from a tourism standpoint.
“What I’ve seen, unfortunately, is that when countries like Mexico and Costa Rica promote airport fee structures and penalties are put in place that favour the commercial airlines, private aviation withers away to nothing. Don’t kill the goose that lays the golden eggs. That’s my only concern. If you privatise it, make sure there’s a stipulation in the contract that guarantees fair treatment for general aviation.”
The Ministry of Tourism, Aviation and Investments is estimating that a collective $263m investment will be required to turn the 14 selected airports into hubs of a size and standard appropriate for their location. Exuma and North Eleuthera are projected to require the greatest capital spend, at around $65m each, with Governor’s Harbour, Rock Sound, New Bight and Deadman’s Cay (Long Island) all pegged at around $18m apiece.
San Salvador was projected to carry a $15m price tag, with the quartet of Marsh Harbour, Sandy Point, Treasure Cay and Congo Town in Andros all projected to need a $10m investment. The smaller aviation gateways in the Exuma cays - Staniel Cay, Fowl Cay and Black Point, were each pegged at $2m.
Airport operators tend to see private planes, and their owners/pilots, as having relatively deep pockets that can be tapped for increased fees to help repay debt financing incurred to transform these facilities. Lynden Pindling International Airport (LPIA) backed away from planned fee hikes several years ago after the private aviation industry successfully argued that it was “already paying our fair share”.
Mr Gardner yesterday pointed out that private aviation was a “funny” market where clients were prepared to spend “a lot of money” with hotels, restaurants, taxis, boat and car rentals, and on excursions such as snorkelling and bone fishing, yet were resistant to even a $50 airport-related fee increase.
“They’re really quirky that way,” he explained. “They baulk about a $50 fee but spend thousands of dollars with the destination. The Government makes far more from hotel tax, VAT and departure tax than collecting $50 extra at the airport. It’s tough to understand.
“The Bahamas government has made it simply to fly there, it’s very welcoming, just keep doing what you’re doing. Make it easy and inexpensive for them to come, and they’ll spend a lot of money. The Bahamas does so many things, and does it very well. They have a great model and have been perfecting it over the years. Just keep on feeding the goose that lays the golden eggs.
“We had a number of near misses over the last few years with fees and Customs’ Click2Clear, and to the Government’s credit it corrected them and did what needed to be done. We’re rocking and rolling. The Bahamas is a leader in general aviation tourism and stands head and shoulders above the rest. I want it to stay that way, and it’s just getting the word out to keep it simple, don’t make it complex or expensive,” Mr Gardner continued.
“Think about Click2Clear and how they reacted to that. They were ready to go somewhere else. There’s a lot of sensitivity to complexity and cost. Keep it simple; don’t try to gouge them. Charge them a fair price, and when they come they will spend a ton of money. Start raising the bar, and fewer people are prepared to jump over it. What you’re going to lose is not an extra $50; you’re going to lose thousands of dollars that will be pumped into someone else’s economy.”
The Ministry of Tourism, Investments and Aviation, in a Wednesday statement, said private aviation arrivals to The Bahamas increased by 178 percent compared to pre-COVID levels in 2022, and Mr Gardner yesterday voiced optimism that this nation will match or beat last year’s gross number - even if the percentage rise is lower - in 2023.
“I definitely think it’s very realistic that The Bahamas can match or beat last year’s numbers,” he told Tribune Business. “I think it could; most definitely. I feel confident about that. I say that from looking at my numbers. Our numbers are far beyond the market growth rate, so I think we’re gaining market share.”