By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The triple-digit retroactive fee hikes being imposed on Bahamian airlines and other carriers were yesterday branded “absolutely nuts” by the ex-Cabinet minister who first introduced the charging scheme.

Dionisio D’Aguilar, who as minister of tourism and aviation in the Minnis administration introduced The Bahamas’ air navigation services fee schedule in early 2021, told Tribune Business that to now more than triple these charges for flights dating back up to almost four years ago was “totally crazy and stupid”.

Siding with Bahamian aviation executives, who have warned it is impossible to recover these surprise multi-million dollar levies from passengers who paid for their flights years ago, he demanded that such bills issued by the Bahamas Air Navigation Services Authority (BANSA) just last week be torn up and thrown in “the garbage can”.

The former minister, questioning the identity of the “BANSA brain surgeon” who dreamt up the retroactive fee increases, nevertheless voiced confidence that “right-thinking politicians” in the Davis administration will reverse course once they understand the implications of unexpected charges that threaten the Bahamian aviation industry’s very existence.

And Mr D’Aguilar hinted that the retroactive fee hikes have resulted from The Bahamas being “bullied” by the US government and that nation’s major commercial airlines, who subsequently objected to - and have lobbied against - a charging scheme for use of this nation’s sovereign air space that the ex-aviation minister says they initially agreed to.

Calling on the Government to emulate the Minnis administration’s approach, which “stood firm” against cruise line opposition to increased per passenger fees at the upgraded Nassau Cruise Port, Mr D’Aguilar argued that The Bahamas “needs to push back as best we can” having already “backed down” significantly over the air navigation services charges.

Mr D’Aguilar hit out after Sherrexcia ‘Rexy’ Rolle, Western Air’s president, chief executive and general counsel, clarified to Tribune Business that BANSA is demanding the carrier now pay an extra $2.4m over and above what it has already paid in air navigation services fees. 

“BANSA is requesting $2.4m separate from what we have already paid to them, and separate from what was previously invoiced,” she said. “Thus it is not ‘$1.3m-plus’ increase. It is $2.4m they are requesting despite never invoicing or notifying of such charges.”

Based on the fact Western Air has already paid $1.1m in fees for the relevant period, May 2021 to end-July 2024, the additional $2.4m will take the total demand to around $3.5m -  more than tripling its bill via a 218 percent increase. Similarly, fellow Bahamian carrier, Trans-Island Airways, has seen its bill more than triple and grow by almost 260 percent compared to the original for the same period.

“First and foremost, it’s absolutely crazy and stupid to bill something retroactively,” Mr D’Aguilar blasted, “primarily because, as a business, you have priced your charges based on your costs and your customers have already paid these. Now BANSA rises up and says we have not charged you the right amount, here it is, here is your bill.

“How the hell are you going to recoup that cost because you have delivered the service that customers have already paid for. It’s crazy to now come back to a business and tell them we should have charged you this, we didn’t, and that’s now your loss. Absolutely nuts.”

Mr D’Aguilar contrasted BANSA, and the Government’s, treatment of Bahamian airlines and those foreign carriers which serve this nation, landing and taking-off here, with the transition period they provided to the cruise industry to allow it to adjust for the recently-increased departure taxes plus new tourism development and environmental levies.

“When we look at the cruise industry, and the Government wants to impose fees and taxes on the cruise industry, we had to give them at least six to 12 months so they can build these into their pricing structure,” he added. “What’s good for the cruise industry should be the policy adopted for the aviation industry.

“You have to give the airline companies the ability to build charges into their ticket prices so that, when the customer pays the airline companies, the airlines can recoup the fees paid to government agencies. You cannot come and, three to four years later, say this is the cost when they cannot recoup it from their customers. It’s crazy.

“I don’t know who the brain surgeon is at BANSA who did this, they’ve clearly made an error and sensible and clearer heads need to prevail in this instance,” Mr D’Aguilar continued. “Who jacked up the price 200 percent, 300 percent, 400 percent and wanted them to pay retroactively? Whoever came up with that policy need to put in the drawer or garbage can.

“You need to give them a period to recoup that cost because they’ve already sold tickets at fees that they have to pay. To have you come back and say pay 200 percent, 300 percent, 400 percent more retroactively, you have to give them [the airlines] the ability to build that into their tickets so they can recoup that from customers when they pay.”

Attempting what appeared to be a bit of reverse psychology with the Davis administration, Mr D’Aguilar added: “I’m sure the politicians will step in. Any sensible, right-thinking politician will understand you cannot come and whack businesses with amounts they should have collected from customers but didn’t know anything about or that they should be collecting.”

While acknowledging that BANSA will “have their reasons” why take-off and landing fees need to be increased, he argued: “I think to a certain extent The Bahamas is being bullied by those airlines and the great powers around us. When we negotiated they seemed fine with it, and it was much, much lower for taking off and landing in the Bahamas.

“They’ve [the Government] allowed those airlines to come in and bully them.” Mr D’Aguilar did not identify who he was referring to, but there is little doubt that he was making a thinly-veiled reference to the US and its Department of Transportation when he spoke of “great powers’. And the airlines will be the Airlines4America consortium members, who include the likes of American Airlines, JetBlue and FedEx.

Contrasting the Government’s position with the Minnis administration’s stance over increased Nassau Cruise Port fees, the former minister recalled: “The cruise industry tried to do that with the Government when we built the port, and we told them: ‘Go to hell’. They were paying 70 cents a passenger, and now they’re paying more than $10.

“These multinationals came in and tried to bully us. We stood firm. Now these airlines have come in, and we’ve moved back significantly from our position that was approved. Now Bahamian airlines and those that fly to The Bahamas are being asked to pick up significantly increased fees while those that fly over is pay a much lower fee while they pump their exhausts and damage our environment each and every day of the year.

“Airlines are bullying The Bahamas, and we need to push back as best we can. We’ve moved significantly from where we get approval from them. We had gotten their approval. Now we have backed down significantly to the detriment of our aviation industry. This retroactive payment is asinine.”

Lenn King, BANSA’s director, acknowledged that he has received Tribune Business written questions on the retroactive fees via return e-mail but did not reply to any of them. Michael Pintard, the Opposition’s leader, told this newspaper he was aware of the Bahamian aviation industry’s concerns but he and his team needed to have wider discussions with more industry stakeholders.

“I do know we have had discussions with one of the stakeholders from the aviation sector. They talked about the damage to then survival of their business, and the potential damage it’s going to do to a number of operators in this environment,” he said. The 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.