Airline saw massive losses due to Hurricane Dorian and COVID-19
D’Aguilar stresses staff reduction was through early retirement and alongside new hires
NASSAU, BAHAMAS — Bahamasair is expected to realize nearly $15 million in annual savings as a result of a staff reduction as well as adjustments to ticket pricing and baggage fees, according to Tourism and Aviation Minister Dionisio D’Aguilar.
D’Aguilar, while delivering his 2021/2022 budget contribution in the House of Assembly yesterday, noted that the financially challenged airline, over the past four years, through a process of attrition and an early retirement programme that ended last May, has been able to reduce its headcount by 151. He noted that staff emoluments represent the greatest expense for the airline, accounting for approximately 27 percent of overall costs.
“There are now currently 507 employees at Bahamasair. This relates to a 23 percent reduction in staff, with an average savings of some $7.5 million each year,” said D’Aguilar.
“It is noted that this reduction was accomplished through the regular attrition process of retirements, voluntary early retirements and separations running concurrently alongside a laser-like focus on new hires.”
He added: “In January of this year, the decision was made to provide a marginal adjustment to ticket pricing and baggage fees to better align their pricing models with industry norms. Prior to this, Bahamasair had not increased prices on domestic airfare in nearly nine years.
“Indeed, whereas this pricing model is beneficial for the consumer, it ultimately becomes the burden and responsibility of the public’s treasury. These adjustments are expected to provide an additional $7.3 million in annual savings when full operations resume.”
D’Aguilar pointed out that during fiscal year 2020/2021 to date, Bahamasair would have received a subvention of $60-plus million to support both operations and retention of employees.
“In this upcoming budget cycle, fiscal year 2021/2022, the government is allocating $30 million to Bahamasair,” said D’Aguilar.
“This is due to prolonged suppressed operations resulting from COVID-19. However, we are specific in how this support should be used. Twenty million dollars will be used to fund the ATR loan structure and the remaining $10 million will assist with operational support for the Family Islands.
“The government understands that the airline will not fully recover from the effects of the pandemic until there is a complete return to Bahamasair’s full schedule complement of flights.
“It was, and continues to be, our hope and expectation that Bahamasair will be able to reform itself to require less than the yearly sums allocated — with the ultimate goal of it becoming a self-sustaining and profit-generating enterprise.”
D’Aguilar noted the effects of Hurricane Dorian and the COVID-19 pandemic on the airline’s operations, with revenue down 27 percent for fiscal year 2019/2020 and down 84 percent for fiscal year 2020/2021 when compared to 2018/2019.
Plans for GB airport
D’Aguilar also commented on the government’s acquisition of Grand Bahama International Airport, arguing that the purchase was a steal as the government received thousands of acres of land, a recently resurfaced runway and a good number of ramps and taxiways in addition to buildings worth well in excess of $10 million.
“What will hurt us is the operating losses that that airport will incur in the short-term and the tens of millions of dollars that must be spent on that airport to get it up to world-class standards” said D’Aguilar.
“The plans for the development of this airport include rebuilding a resilient facility that can withstand storm surges and monster storms and maximize all the commercial opportunities inherent in a 12,000-foot runway and aprons at this facility.
“I am convinced that this airport should be used as a cargo hub and mirror the marine setup for cargo at the Freeport Container Port.”
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