[SkyBahamas] ‘Impossible To Stay In This Business’

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[SkyBahamas] ‘Impossible To Stay In This Business’

Unread post by bimjim » Sat Jun 29, 2019

http://www.tribune242.com/news/2019/jun ... -business/

[SkyBahamas] ‘Impossible To Stay In This Business’
Friday, June 28, 2019
NEIL HARTNELL Tribune Business Editor

Increased costs linked to Nassau’s main airport being reduced to one runway are the latest factor “making it impossible to continue in this business”, a Bahamian airline chief warned yesterday.

Captain Randy Butler, SkyBahamas’ chief executive, told Tribune Business that Lynden Pindling International Airport’s (LPIA) closure of Runway 09/27 for $20m worth of essential maintenance had added between 30-45 minutes to his airline’s flight times due to both incoming and outgoing delays.

With planes having to wait longer on the ground and in the sky, he disclosed that “very slim” profit margins are being further squeezed by the increased fuel consumption, labour costs and flight times this produces.

Captain Butler said the longer waiting times were effectively increasing the flight time for a one-hour round-trip flight from LPIA by 50 percent, and told Tribune Business: “I love the industry. I would love to stay, but right now the taxes that are coming in, the increases in fees that are coming in, the increases in operating charges and flight times... everything is going up.

“Some fundamental decisions are being made..... Some of the taxes, fees and extra flying time are making it impossible to continue in this business.”

Captain Butler did not explain what he meant by “fundamental decisions”, or his reference to the fact he would “love to stay” in the industry. However, he said all commercial airlines - foreign and Bahamian-owned - were being impacted by LPIA’s reduction to one runway with effect from June 17.

“This is adding, in some cases, half an hour to 45 minutes to the flight,” he told this newspaper. “The first part is the holding and getting in the queues. Then it’s coming in. You’re all stacked up, so you have to circle until you get in the queue.

“Half an hour to 45 minutes on these flights has the potential to impact your break even and your profit points because you calculate what your operating costs are - fuel, pilots, staff, maintenance - based on flight times. You then work out your operating costs per passenger and that is how you come up with pricing per ticket.

“Now you have half an hour added to this thing. A one-hour round-trip would have 50 percent added on to it. In some cases, you’re making 10-15 percent margins, which are very slim. You’re costs have gone up by 50 percent, and you’re going to have to pass it on. The last thing that the passenger wants is an increase in these times.”

Dionisio D’Aguilar, minister of tourism and aviation, told Tribune Business earlier this month that all LPIA stakeholders - including the commercial airlines that use it - “must be on our ‘A’ game” to cope with the reduction to one runway.

He said the closure of Runway 09/27 for major rehabilitation was an “unavoidable necessary infrastructure upgrade” that is essential to keep traffic at The Bahamas’ major gateway flowing.

Mr D’Aguilar added that non-commercial aircraft, meaning private planes, will be “encouraged” to shift their hours of operation to non-peak times such as between 12-3pm to minimise congestion with flights that bring the bulk of The Bahamas’ high-yield stopover visitors.

However, indicating that delays for both departing and incoming flights will likely be unavoidable this summer, the minister advised Bahamians and residents to allow more than an extra hour to their itineraries if they had to catch connecting flights in the US and elsewhere.

Captain Butler yesterday said the runway closure had coincided with the “peak” season for Bahamian-owned airlines, which traditionally gained extra business from locals going on vacation, and to regattas and homecoming celebrations in the Family Islands.

Describing the aviation sector as “very challenged”, he again lamented the absence of an overall plan and strategy for the industry’s growth. While not afraid of competition, he reiterated that it had to be based on a “level playing field” that is presently not there.

“It’s kind of concerning when the minister gets up to defend the Budget and, even though it’s not going to break even or be profitable, Bahamasair is going to get more taxpayer dollars,” Captain Butler told Tribune Business. “What are we to do?”

Pointing out that the annual multi-million dollar subsidies enable Bahamasair to price its tickets below cost, and price privately-owned rivals out of the market, the Sky Bahamas chief said the Government was also over-saturating certain routes despite possessing data that showed passenger demand and whether it was “reasonable to give another competitor an opportunity to go in there”.

Citing Cat Island as an example, Captain Butler said: “We’re fighting and staying in there, and working with the people, only to hear another airline is going in there.” He added that the Government had failed to follow established procedure by publicly advertising the other airline’s interest, as it is supposed to do, so that any objections can be aired and heard.

A similar situation occurred in Exuma, where a third domestic operator has come in to compete with Sky Bahamas and Bahamasair. “We stuck with Exuma when the hotel [Emerald Bay] closed down and said: ‘We will not leave you, we will support you’,” Captain Butler recalled.

“We had Bahamasair in there, but were doing three flights a day - morning, noon and evening. Western Air joined and we’re all running around at the same time. Exuma can take two, but three?

“How can you plan in this business? You have employees, planes and maintenance that requires planning. If things change like that, you’re putting things out of whack.”

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