Tourism minister says Bahamasair 2020 losses expected to be over $50 million
NASSAU, BAHAMAS — Tourism Minister Dionisio D’Aguilar yesterday defended the decision to increase Bahamasair’s domestic fares and baggage fees, noting that “Bahamasair is going to sustain substantial losses”.
Speaking to reporters outside Cabinet, he indicated that at the beginning of the year, the airline was projected to require $19 million in subvention from central government.
“As COVID-19 and the effects of this pandemic have unfolded and Bahamasair has been grounded, yet still paying all of its expenses, payroll, debt service, leases and rent, the estimated losses for Bahamasair is going to mushroom to well over $50 million,” D’Aguilar said.
“The government felt that it has to do whatever it can to mitigate these substantial losses and is looking for every possible avenue.
“And while it is painful and while we obviously don’t want to do it, these losses are just so substantial that they require an intervention and they require charging for the first bag and slight increases in domestic fares, which have not budged in eight years.”
He explained the international fares will not increase because they are governed by a revenue management system that fluctuates based on demand and supply, while the domestic rates are usually fixed.
“It’s unfortunate. Hopefully, the Bahamian people understand the losses of Bahamasair and the fact that the government has made it a policy to not furlough anybody, not sell off any aircraft — as other airlines around the world have done — and to remain and keep the structure as is to safeguard and protect Bahamian jobs, that it does come with a little price.”
Asked whether Bahamasair will suspend its flights to international destinations added last year, including Houston and Denver, the tourism minister said those matters are being reviewed.
“The pandemic has thrown everything for a loop,” D’Aguilar said.
“I think Bahamasair is assessing each of its routes.
“…They will have to reassess based on current demands.”
He noted that world tourism, spanning from travel, hotel stays and excursions, is down 70 percent.
“It’s causing anybody in the tourism sector to assess their whole business model based on how they project demand will be over the next six to 12 months.”
Last week, Bahamasair, the country’s national flag carrier, announced that the changes to domestic fares and baggage fees will be effective January 4, 2021.
The company said the airline has not had a domestic fare increase in the past eight years, and the adjustments have become necessary due to increased operational costs.
The first checked bag on international flights, including flights to and from the US, Cuba, Haiti and Turks & Caicos, will now be charged at a cost of $25.
Previously, the first checked bag was free.
Fees for the second, third and more checked baggage remain the same.