Tuesday, June 11, 2019
EDITOR, The Tribune.
The Minister recently announced that the biggest drag on Bahamasir’s profit was the high and increasing price of fuel, which he cited as approaching $85 per barrel. Even allowing for a jet fuel premium, can management be so dim as to buy fuel at such a huge margin over the present West Texas Crude quote of about $54, in a flat or even declining trend? That price has come nowhere near $85 since briefly in 2017.
Of course the Minister is not responsible for the PLP’s rash decision to borrow US $120 million in 2016 to buy five new aircraft, which now must be paid off over seven years at an interest rate of 8.3%
But he and his fellow FNM Cabinet members certainly are responsible for doing nothing to end Government ownership, which sucks a subsidy of about $20 million from our Treasury year after year.
While needing time and negotiating expertise to complete, the solution is obvious:
Strip out all Bahamasair’s long-term debt into a special purpose vehicle bearing Government’s direct credit obligation (in effect, Government is already responsible for Bahamasair debt).
Encourage our several competent privately owned airlines to form a consortium to take over and manage Bahamasair, providing services and operating routes as required by URCA in the public interest. The new owner could arrange consultancies or minority interests with foreign groups, but would retain active Bahamian control.
This private sector entity would operate on strict commercial principles without employee featherbedding or favoritism . It would probably hire a considerable number of Bahamasair’s excellent pilots, air crew and ground staff, terminating others with adequate severance pay. It might even retain the Bahamasair name and logo, while emphasizing “under new management”.
It is hard to see any public opposition to This “Bahamian” solution, but the initiative for it will have to be launched by Government .
June 8, 2019