Thursday, January 26, 2017

The Bahamas: Family Island Airports Require $106m By 2022

Family Island airports need an immediate investment of $87 million to make them all compliant with international safety and regulatory standards, and help reverse economic stagnation and depopulation.

A study submitted to the Government and Inter-American Development Bank (IDB) in June 2016 said that besides bringing the 28 airports into compliance with International Civil Aviation Organisation (ICAO) requirements, a further $54 million in capital investments are required between 2017 and 2041.

The report by ALG Transportation Infrastructure and Logistics, which has been obtained by Tribune Business, reveals that a total $141 million investment is required for the Bahamas to upgrade key Family Island tourism and commercial infrastructure to world standards.

Out of that, the $54 million is needed to enable the Family Island airports to expand and meet anticipated increases in passenger traffic over the next 25 years.

And with some $19 million in capital expenditure required immediately, the study said $106 million needed to be found over the next five years between 2017-2022, once the $87 million required for ICAO compliance was factored in.

ALG said the $106 million figure represented a 43 per cent decline on the $187 million estimate produced two years previously by another consultancy firm, Stantec.

It explained that the reduced estimate had been produced because the new San Salvador airport terminal was already under construction at a cost of $13.5 million.

ALG added that a further $37 million in construction costs would be saved via its proposal to relocate the North Eleuthera airport terminal rather than build a new runway, while that building - and the new terminal planned for Exuma - would be less grandiose, saving some $5.5 million and $8.5 million, respectively.

But, while disagreeing on cost estimates, both the ALG and Stantec reports were united in warning of the dire consequences for Bahamian and Family Island tourism, and their economies, if this nation failed to act on the needed infrastructure upgrades.

Explaining the consequences of not investing in Family Island airports, Stantec said: “Tourism growth has been stagnant for the past 12 years and this could actually see a decline of the product, and that includes the Family Islands airports, if [they’re] not invested in to provide the aviation community with a safe and well managed airport environment.

“Additionally, it only takes one incident to create an international reaction and impose tremendous liability on the Bahamas as well as reputational damage.”

The reports are part of a $53.8 million joint venture by the Government and IDB that aims to bring the main Family Island airports - Marsh Harbour, Exuma and North Eleuthera - into compliance with ICAO standards, and enable them to cope with increased visitor volumes.

“The conditions of the Family Island main entry ports are limitations for the regional and global integration of the Bahamas,” an IDB document obtained by Tribune Business concludes.

“The main ports of entry for the Family Islands - Exuma, North Eleuthera and Marsh Harbour/Treasure Cay - are in need of investment and require a wide range of aviation and infrastructure upgrades.

“Security deficiencies like visual aids, lighting and marking, mobile equipment, the layout of the runaway, apron and taxiways, impose a risk to the operation and compromises new traffic demand.”

As an example of these deficiencies, the IDB paper said North Eleuthera’s airport had a “separation” between the aircraft parking area and runway, which forced planes to park “within 75 metres” of the centre of the runway.

“Other improvements would be adequate visual aids and improved conditions of the runway,” the IDB document added.

“The airports face challenges to meet the International Civil Aviation Organisation (ICAO) safety and security standards, and to respond to events related to climate change. The required investment to meet ICAO standards focuses on the non-compliance related to airfield physical characteristics, maintenance and firefighting and security.

“Such events require action in order to maintain certification by the Bahamian Civil Aviation Authority, to guarantee safety for passengers and crew, and keep the operation of this transport mode. Delayed implementation of these measures could also have an adverse impact on future traffic flows, and the economy.

“For the country, to have a strong market presence in the competitive Caribbean tourism industry, it is crucial that the island gateway airports offer the highest possible level of safety and quality of aviation infrastructure and services.”

The aviation industry, and the airports, are essential to Family Island tourism and their wider economies, and their commercial integration with the wider world. Deficiencies in airport safety, operating standards and opening hours thus present a major impediment to a better distribution of economic benefits.

The IDB added: “Increased capital expenditures to bring the airports up to ICAO standards, improve the operating procedures, safety management system, emergency response plans, and internal capabilities in the Bahamian Airports Authority are recommended.

“Enhancing of local capacities within the Ministry of Transport and Aviation and the Airports Authority will be needed to put in place a management framework to ensure the sustainability of the upgraded assets, and a proper airport operation. “

The IDB paper suggested that the Bahamas adopt the ‘NAD model’, and outsource the management - and some of the risk - associated with Family Island airport upgrades to the private sector via a public-private partnership (PPP).

ALG estimated that the 28 Family Island airports would require a further $65 million investment between 2023-2028, and another $82 million in the period 2029-2041.

Much of that sum, some $111 million, will be needed for maintenance, ALG added, taking the total spend between now and 2041 to $254 million.

Still, stripping out the maintenance expenditure, ALG said its long-term projections (ICAO compliance) and airport expansion were some 38 per cent lower than Stantec’s estimates of two years previously, standing at $141 million compared to $227 million.

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