By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Hitting Bahamian airlines and other carriers that serve this nation with $1m-plus retroactive fee demands is “akin to sabotaging the industry”, a senior aviation executive warned yesterday.

Anthony Hamilton, president of the Bahamas Association of Air Transport Operators, told Tribune Business that it would “be foolhardy” for the Bahamas Air Navigation Services Authority (BANSA) not to rethink its approach after last week stunning multiple industry operators with billings seeking increased fees for the period May 2021 to end-July 2024.

Warning that the industry’s already “slim margins” will likely leave many carriers unable to meet BANSA’s demands, he added that ticket prices charged to travelling passengers will now “take a hop in order for operators to say in business” and cover these retroactive fees.

Mr Hamilton, warning that the situation will likely spark legal action unless BANSA backs down, told this newspaper that the Authority’s retroactive billing for air navigation services fees highlights wider problems in the aviation industry where the various regulatory and taxing agencies operate in “silos” and fail to see the bigger picture in terms of the overall financial burden on operators.

And, suggesting that the increasing “hardships” faced by existing carriers will discourage new entrants to the industry, he called on both public and private sector operators “to fix it for future generations”. Mr Hamilton said the increased BANSA fees also threaten to “displace” Bahamian-owned carriers and make this nation ever-more reliant on foreign carriers to meet its tourism airlift and air transportation needs.

Meanwhile, a senior tourism executive yesterday indicated that he and other top officials were blindsided and taken unawares by BANSA’s retroactive billing move. Kerry Fountain, the Bahama Out Islands Promotion Board’s executive director, said he and Dr Kenneth Romer, director of aviation and deputy tourism director-general, only learned that carriers were issued with the bills one day later on Friday.

This, he told Tribune Business, occurred when they met with Silver Airways, the Florida-based carrier that is due to deliver between 85,000 and 90,000 seats to this destination between December 2024 to July 2025. Silver, which is presently in Chapter 11 bankruptcy protection in the US, confirmed that it, too, had received a “$1m-plus” retroactive bill from BANSA.

Mr Fountain, in response, argued the approach was “baffling” and voiced fears that the burden of paying the extra fees will be passed - via ever-increasing airline ticket prices - directly to high-paying stopover visitors that inject $5bn in annual spending into the Bahamian economy. He warned that taxation/fee policy appeared to be “going back to the same well, and at some point in time this well is going to run dry”.

Both Mr Hamilton and Mr Fountain spoke out after Tribune Business revealed how multiple carriers were last Thursday hit with BANSA’s retroactive billings. Western Air, which said it has already paid the Authority $1.1m in air navigation services charges for that May 2021-July 2024 period, revealed it has now received a $2.4m-plus bill for the same timeframe - a $1.3m or 118 percent increase.

Meanwhile, Trans-Island Airways disclosed that its air navigation services fee bill has almost tripled, rising retroactively by a six-figure sum. “You and I have discussed continually that there’s a need for a major overhaul of management of the Bahamian aviation industry, and that’s primarily for this reason,” Mr Hamilton said of the BANSA situation.

“There’s a lot of mismanagement of the industry. It’s not just retroactive fees, but fees at large are a challenge for the industry. We need to be talking. Everybody needs to sit at the table.. if we are going to fix it. That’s my only recommendation: To come to the table and fix it. To have fees pit in retroactively, there’s something wrong.

“The system is broken. There’s no question about it. With regard to the fee situation, we keep putting a band aid on something that needs surgery. It truly needs surgery.” Pointing out that BANSA is demanding extra fees for services already rendered to flights that took place as far back as almost four years ago, Mr Hamilton said it was impossible for operators to go back and demand those passengers now pay extra.

“From my financial background there’s some red flags that arise in connection with this,” he added. “If payments were made and you have these retroactive billings, something is definitely wrong. If payments were being made, why were proper reconciliations not taking place to advise” carriers there were outstanding sums owed.

“It’s almost akin to sabotaging the industry,” Mr Hamilton blasted of BANSA’s demands. “Already, in the industry the margins are slim. What are you trying to do? The operator has to eat it. You cannot go back to the customer and demand payment when you have already delivered the service.

“This means that ticket prices will take a hop in order for operators to stay in business. They’ll have to pass the cost on... It’ll be foolhardy not to revisit this. The likelihood is that legal consultations will have to be sought by operators because many operators will not be in a position to meet the demands being made. They’re going to have to seek legal redress in connection with it. It’ll be foolhardy for it to remain as is.

“We have to think of the future,” Mr Hamilton added. “When we think of young aviators coming into this industry it’s very discouraging, and for people already operating in the industry to encounter such hardship, it doesn’t make sense for new people to come in. We need to fix it for future generations.

“What this is shaping up to be right now is displacement of domestic operators, which means this nation will have to go outside to find airlift, which will further diminish domestic providers in the industry. It’s not a pretty picture and we are capable of doing better.

“The buck stops with leadership. The leadership right now is failing us... We are an archipelagic nation, and airlift is integral just to maintain and build the economy. We have our work cut out for us.” Mr Hamilton said he had already reached out to BANSA over the matter and planned to do so again yesterday afternoon.

Mr Fountain, meanwhile, said Silver Airways had “shared” it, too, has joined Western Air in being hit with a $1m-plus retroactive fee increase. “It is baffling,” he told Tribune Business. “I don’t understand, and I’m not knocking anybody. I’m not knocking BANSA, and I’m not knocking the Government, but I don’t understand why a move like this dates back to 2021.

“And how we can retroactively, without any warning - and I’m assuming there was no heads up - how a company or agency can issue to an airline a bill for this amount with no heads-up. It’s not as if, as an airline, you saw it coming and at least budgeted for it and to pay for it. Going back to 2021 and billing someone a $1m-plus bill is crazy.”

Mr Fountain voiced particular concern over the potential knock-on negative consequences for tourism, especially in the Family Islands. “The visitor that is leaving the most money in our economy, that is flying over to use our industry, staying in one of our hotels for five nights, and spending $28,000 a stay, injecting $5bn-plus a year into our economy, I don’t understand why we are constantly taxing that visitor,” he said.

“Instead of exploring or examining how we level the playing field by taxing the nine to ten million cruise passengers that are leaving the biggest footprint, environmentally speaking, in our jurisdiction. And those same cruise passengers are spending the least amount of money. To me, that’s baffling.

“In this regard, we are adding to the cost of getting to the destination. We are adding to the cost of air fare which, as you know, especially with the taxes, are high. The Government has a prerogative to exercise ways to increase the revenue streams but, at the same time, every silo in the Government is not connected because we keep going back to the same well and, at some point in time, this well is going to run dry.”

The fees at the heart of this latest aviation drama are those levied under the fledgling air navigation services regime overseen by BANSA. These fees are split into two types - origin/destination charges, which are levied on planes that take-off and land in The Bahamas, and then overflight fees. The latter are levies paid almost entirely by international carriers that fly through Bahamian air space without stopping in this nation.

BANSA is restructuring its air navigation services fee regime in a way that shifts the financial burden of these fees on to take-off/landing fees, and away from overflight fees. Tribune Business previously revealed how these changes will potentially impose six-fold and greater fee increases over the next four fiscal years through 2028-2029 on carriers that are Bahamian-owned or service this nation.

However, what was not known at that time was the extent to which BANSA planned to impose this new structure - together with the associated fee rebalancing and hikes - retroactively for the period between May 2021 and July 2024. That only emerged with the arrival of last Thursday’s billings, which followed a consultation meeting with aviation industry stakeholders on the reforms on Wednesday, March 5.

BANSA’s February 2025 consultation paper on the air navigation services fee proposals, using heavily-guarded and technical language, did give a hint of what was coming. It referred to the over and under-recovery of fees during the May 2021-July 2024 period, and said these would be adjusted for “the difference between the actual costs for the provision of services as allocated to overflights and origin/destination respectively”.

And, with fee income set to be reallocated according the cost incurred in providing these two separate services, the BANSA paper said airline operators and carriers would either receive a “credit” if they had paid more than their fair share or a “debit” demanding they pay extra to cover their under-billing. Those carriers receiving a “credit” would have this applied against their fees moving forward.

With the burden being re-directed towards take-off and landing fees, their retroactive imposition will largely fall on Bahamian-owned carriers and others that service this nation.

And, given that the overflight fees component is being substantially reduced in the air navigation services regime restructuring, those carriers likely to be the recipients of The Bahamas’ “credits” are the US and foreign-owned commercial passenger and cargo traffic that flies over this nation without stopping here. In effect, the restructuring represents a wealth transfer from Bahamian to US and foreign-owned airlines.

Tribune Business previously reported aviation industry sources as asserting that the jump in BANSA’s origin/destination charges, and simultaneous reduction in overflight fee rates, appeared designed to appease the US government and foreign airlines.

The US Department of Transportation previously voiced “serious concerns” about the level of the fees and whether they are excessive when compared to the actual expenses The Bahamas incurs for providing air navigation services.

And it also challenged whether the level of charges is compliant with the Air Transport Agreement treaty agreed between The Bahamas and US, sparking discussions at the diplomatic level between the two countries over revising the BANSA fee structure. However, Article 28 of the Chicago Convention in International Civil Aviation does appear to give sovereign states such as The Bahamas the right to set their air space fees.

The US Department of Transportation’s concerns over whether The Bahamas’ fees are excessive likely stem from the fact that this nation, in 2021, agreed a 10-year deal where the US Federal Aviation Administration (FAA) continue managing Bahamian air space above 6,000 feet. The FAA also agreed to waive the cost of air navigation services it was providing and accept a mere $80,000 fee per annum.

As a result, both the US government and members of the Airlines4America consortium - the likes of American Airlines, Jet Blue, FedEx, Delta, Southwest Airlines, United Airlines, and the United Parcel Service - are arguing that The Bahamas was offering very little in services for the money it is taking in.

Asserting that the fees should only cover the cost of providing the service, they allege here was no justification for “the tens of millions of dollars” that The Bahamas is collecting given that it is just paying, at most, $80,000-$100,000 to the FAA - sum equivalent to 1 percent of the charges. They claim this “runs afoul” of global best practice and agreements, plus the US International Air Transport Fair Competitive Practices Act 1974.

The commercial passenger and cargo airlines, especially, have been using regulatory challenges and other aggressive lobbying/pressure tactics to force The Bahamas to back down. And it is they who stand to benefit most from the proposed cut in the rates for transiting Bahamian air space as they constantly have flights moving between the North and South America continents.

The Bahamas, though, will argue that it needs the air navigation services revenue to build the human, financial and physical resources necessary to eventually take over management of its entire air space from the FAA. And the monies raised are also designed to ensure its civil aviation regulatory regime - Civil Aviation, BANSA etc - no longer has to be financed and subsidised by Bahamian taxpayers via the Budget.

Civil Aviation, for example, is due to receive an $8m subsidy during the current 2024-2025 financial year.