By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Establishing the city of Freeport as an air cargo transshipment hub could generate the extra income required to make its rebuild attractive to private capital and operators/developers, a Cabinet minister said yesterday.

Dionisio D’Aguilar, minister of tourism and aviation, told Tribune Business that additional revenue streams beyond mere tourist and resident passenger traffic may be needed to finance Grand Bahama International Airport’s (GBIA) $50m-$60m redevelopment into a resilient facility that can withstand future Dorian-strength storms.

Given Freeport’s US proximity, location on trans-Atlantic aviation routes and existing status as a maritime transshipment hub via Freeport Container Port, he argued that the island’s main aviation gateway was ideally suited for investors looking for an alternative cargo hub to congested US airports.

With the first investor briefing on the government’s efforts to outsource Freeport and six Family Island airports due to take place on Monday, Mr D’Aguilar said the returns sought by private developers, operators and financiers are typically dependent on fees generated by passenger and aviation traffic.

With traffic at Grand Bahama International Airport depressed due to the reduction in tourism and Grand Bahama Shipyard activity, and storm resilience key, he added that the cargo hub concept could provide the necessary revenue stream to both attract the private sector and generate the necessary financing.

“With Freeport’s airport, we all agree that it’s going to cost a tidy sum to rebuild this airport to make it weather resilient. You’re going to have to think about different revenue streams to make that airport attractive and viable to potential investors,” Mr D’Aguilar told Tribune Business. 

“Just brain storming, the proximity of Freeport to the US serves it well as a container port for shipping. That behooves the question: Why not pursue another type of business such as air cargo? Freeport is wonderfully situated between North America and South America, wonderfully situated between Europe and South America.

“To me, in much the same way that the Container Port fulfills that function, serving as a transshipment hub for marine cargo, so too can the airport serve as a transshipment hub for aviation cargo. It could be any airport in The Bahamas, but Freeport is best suited for that. It has a substantial amount of land and is already in the business. It can do it fairly well, because it’s in the business of marine cargo.”

Much would have to be done to realise such ambitions. While the Freeport Container Port is Hutchison Whampoa’s most-prized Grand Bahama asset, efforts to exploit the Hawksbill Creek Agreement’s ‘free trade zone’ status and menu of tax breaks to turn Freeport into a transshipment, logistics and distribution hub for marine cargo have yet to bear fruit.

The 741-ace Sea Air Business Centre, as an example, remains largely idle and an example of potential unfulfilled. Some observers will also likely question whether there will be any interest in Freeport as an air cargo hub given its proximity to existing commercial aviation centres in Miami and elsewhere in Florida.

However, Mr D’Aguilar added: “Sometimes it may be easier not to go into a large, congested airport like Miami, and some of the business can be directed to Freeport. It just needs someone with the vision and capital to make the investment in the airport. 

“The residents of Grand Bahama want a world-class airport, but to bring about that investment there needs to be traffic to make that a reality. Passenger traffic has been challenged of late. Cargo is a lot more stable, and adds another revenue stream.”

As a result, the minister said Grand Bahama International Airport could thus be attractive to someone wanting to get into the aviation cargo business or an existing operator with a US airport that is being restricted by “capacity constraints”.

Without private capital and investors, Mr D’Aguilar told this newspaper that the Government would be restricted to building new airports at the rate of one every ten years. “The Government builds an airport once a decade at the current rate, the last being Leonard Thompson International Airport in Abaco in 2010-2012,” he added.

“Family Island airports will be done once a decade because that’s the rate the Public Treasury can handle. Everybody wants something larger and better, and you cannot do that from the Public Treasury. The only way to do that is through the private sector married with public land. They, of course, will want a return.”

The Government is now in full ownership and operational control of Grand Bahama International Airport after paying $1, plus around $1m in severance costs, to Freeport Harbour Company and its owners, Hutchison and the Grand Bahama Port Authority (GBPA).

While many have hailed the purchase as vital to Freeport and Grand Bahama’s “economic survival”, others feel Hutchison Whampoa and the GBPA had effectively been allowed to abandon their developmental obligations to Freeport under the Hawksbill Creek Agreement.

The Government (Bahamian taxpayer) also “reimbursed” Hutchison Whampoa for half the costs it incurred in paying due severance and other benefits to the airport’s 60-70 staff, who will leave its employment and be transferred to the state-owned Airport Authority.