Soaring problems for cash-strapped Bahamasair

NASSAU, Bahamas, Monday June 24, 2013 – The Bahamas government says the state-owned Bahamasair continues to suffer from high labour costs; an ageing fleet; escalating fuel costs; and a commitment to unprofitable domestic routes.

Deputy Prime Minister and Minister of Works and Urban Development Phillip Davies said that while US$20 million have been budgeted for the Bahamasair Holdings this fiscal year, the problems facing the airline increased as a result of competition..

 “Its circumstances have been further compounded by competition from smaller local private carriers providing services to domestic routes and ongoing downward pressure on airfares in the Florida market due to competition by low fare international carriers.”

Davis said that subsequent to the May 2012 general election, it was discovered that industrial agreements between Bahamasair and associated trade unions had expired for over three years, and employees were not paid annual increments to which they were entitled.

“In response to these circumstances and in keeping with this government’s campaign promise of ‘putting the people first,’ we moved very swiftly to approve and provide the funding necessary to satisfy this obligation.

“The government, early in the last budgetary cycle, agreed to the purchase of a third 120-seat Boeing 737-500 jet aircraft to permit an improvement in service and efficiency.”

He said the board and the management of Bahamasair are presently reviewing adjustments to the business model as a means of providing options, which would result in greater service to the people as a substantial cost saving over the existing expensive approach.

In March, Davis said the national airline had recorded a loss of US$11.7 million last year as compared with US$9.8 million in 2011and that for the period July-December 2012, the airline’s revenue amounted to US$37.4 million, while expenses totalled US$49.1 million.

“The increase in net loss has been attributed mainly to challenges associated with an aged fleet of aircraft along with increases in airport and fuel charges,” Davis told legislators.

Davis said that a position paper/business plan for Bahamasair has been prepared by its management and was presented to government for consideration with a view towards changing Bahamasair’s business model.

But the minister noted that from a financial standpoint, the airline continues to struggle.(CMC) Click here to receive free news bulletins via email from Caribbean360. (View sample)