Last updated: 11:19 AM ET, Tue July 09 2013

Major Airlines Threaten to Pull Bahamas Service over New Fees

Features & Advice | Brian Major | July 09, 2013

Major Airlines Threaten to Pull Bahamas Service over New Fees

Several major U.S. airlines representing 90 percent of the airlift to the Bahamas have warned government officials they will significantly reduce service to the island in response to new and increased fees and taxes, many of which the airlines say have been instituted with less than two weeks’ notice.

Members of the Airlines for America (A4A) trade association, whose roster consists of key operators including Jet Blue, Delta and American Airlines, say the new taxes and fees threaten their “exceedingly slim” profit margins, forcing the operators to “reconsider their service levels to the Bahamas.”

“A4A’s members want to maintain and grow, where demand warrants, their operations to the Bahamas,” says Keith Glatz, A4A’s vice president of international affairs, in a June 28 letter to Charles Turner, the Bahamas’ comptroller of customs. “Higher taxes will not encourage A4A members to grow their service to the islands. The proposed fees may have unintended consequences and undermine the desire to stimulate the Bahamian economy.”

Glatz said the A4A airlines represent “over 90 percent of total US-Bahamas scheduled passenger airline capacity” in terms of available seat miles.

The letter comes as the Bahamas seeks to increase airlift into the Bahamas by 400,000 seats in anticipation of the $3.5 billion Baha Mar resort development, which will add 2,100 hotel rooms to the island’s total upon its 2015 opening.

A4A members are particularly disturbed that the new fees were instituted suddenly, without an expressed purpose or consultation with the airlines, said Glatz. “This development is of particular concern to A4A members due to lack of notice, transparency and cost-based justification for the new charges and increased fees. Less than two weeks is insufficient time for airlines to re-program their systems to accommodate the new fees and increased charges.”

In fact, A4A members were notified on Monday that in addition to the other fee increases all ticketed passengers, including infants, will be required to pay a government departure tax of $25, said Katie Connell, an A4A spokesperson. Bahamas Department of Tourism officials contacted by TravelPulse did not respond to requests for comment at presstime.

Glatz said A4A has been told the new customs processing fee for all flights arriving in the Bahamas will be $75 for each arrival and departure. There will also be an increased service charge ranging from $50 to $200, based on the airline’s capacity, for flights arriving or departing after 5 p.m. and before 9 a.m. from Sundays through Saturdays.

Glazt said A4A isn’t even sure how the fees will be applied and “would appreciate additional clarification regarding whether this charge is a per-flight charge or an hourly charge.”

A4A is also concerned over a new one percent administrative processing fee on aircraft parts imported to the Bahamas. This fee, capped at $500 per import, replaces a previous $10 stamp duty levy.

Tourism stakeholders – including the Bahamas’ tourism minister - have urged the government to re-consider the new fees.

Obie Wilchcombe, the Bahamas’ tourism minister, said in local press reports that an airline cut back would be “an implication that the economy cannot afford.” The new processing fee was announced and introduced in the Bahamas’ House of Assembly during an annual budget debate without prior notification to the airlines, he admitted.

“If [A4A members] are informing us that the increase affects them negatively and could cause them to pull out of servicing the Bahamas, then certainly we would have to sit down and talk with them and see what their concerns are. Over the last two years, our airlift was down and we now have to work hard to bring the numbers up.”

Robert Sands, Baha Mar’s senior vice-president of governmental and external affairs, told the Bahamas Tribune that while he has not seen the letter, “Airlift directly impacts hotel occupancy, and it will be important that all parties resolve these issues to ensure there are no impediments to future airlift growth to the Bahamas.”

 “It is important that all these issues are resolved in a manner that is a win-win for both the airlines, private sector hotels and the government of the Bahamas,” said Sands.

An internet petition which aims to collect 1,000 signatures is urging Prime Minister Perry Christie and tourism officials to repeal the new processing fee for general aviation or face ‘devastating’ effects on the country’s tourism product. The petition encourages people to sign “to stop the unfair additional fees for people visiting the Bahamas.” As of Monday 288 people had signed the petition.

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