The rising cost of fuel prices is negatively impacting Bahamasair, the national flag carrier, according to Aviation Minister Dionisio D’Aguilar who says that this was the greatest challenge to the airline meeting its financial target.
Bahamasair spent $11.8 million on fuel in 2017 and $18 million in 2018.
“As tensions rise between the United States, China and Iran , this will negatively impact Bahamasair’s fuel costs so much so that Bahamasair would not be able to generate sufficient additional cash flow to service these loans,” Minister D’ Aguilar said.
He further noted that in this budget period, Bahamasair will see a $9 million dollar increase from $13.4 million to $22.4 million to pay off some old bills that were left by the previous administration.
“This $9 million increase will be used to make principle repayments of $6 million plus help mitigate some of the annual interest costs which will total approximately $9.5 million for this year and next year.”
“Finally, Bahamasair plans to spend $12 million on capital projects in the 2019/2020 budget year.”
In his contribution to the budget debate in the House of Assembly, Mr. D’Aguilar said, “almost 60 per cent or $9.3 million of that total will be spent on heavy maintenance and engine overhaul, but $1 million is planned to facilitate the move of the company’s headquarters from its current location which is a 50 year old building still reeling from damages inflicted when Hurricane Matthew struck in October 2016 to a building complex on Blake Road, formerly used by Doctor’s Hospital,” he said.
He also noted that Bahamasair’s passenger count continued to grow reaching 944,000 people in 2019 when compared to the 853,000 in 2018.
The airlines also projecting that its annual net loss will decrease from $24 million in 2018 to $21.9 million in 2019to $16.9 million in 2020.
However, despite these increases the Minister says Bahamasair still averages some 60 per cent in load factors annually.
“Most airlines, in order to break even, must operate a load factor closer to 80 per cent so Bahamasair would have to do something seismic to increase passenger loads by one third to get that breakeven point and the competition remains very still Mr. Speaker.
“US carriers, especially Silver Airways, are now making more direct flights into Nassau and other Family Island destinations.
“The increasing competition will continue to impact Bahamasair’s Florida and domestic routes, as fewer tourists will transit to and through Nassau to their final Family Island destinations.
“Note further that Bahamasair currently competes with legacy carriers on its Florida routes,” he said.
Minister D’Aguilar opined that in July the national flag carrier intends to implement check in alternatives using kiosks at local and Florida airports.
This, he said, will speed up the check in process and hopefully lead to lower staff cost.
The airline also intends to implement a new generation digital passenger service system in January 2020 which will save the airline up to $2 million annually in transactional cost, free up human capital to be redeployed to better serve the airlines’ customers; enhance communication with the airline’s customers and enhance communication with the airline’s customer.
