As regional airlines like Air Jamaica and BWIA are quickly finding out that privatisation is not the saving grace they had hope for, Bahamasair remains steadfast on its course to privatise.
In taking this route, however, the national carrier hopes to use the privatisation blunders of countries like Trinidad and Jamaica to Bahamasair’s advantage.
Speaking to The Guardian on Friday, general manager at Bahamasair, Paul Major affirmed that the airline is still moving ahead to meet the privatisation deadline set a while back of July 2005. And with all the examples out there, the national airline can have its pick of successful and unsuccessful models to learn from.
According to Mr Major, the airline is currently on the brink of making the final decision on a consultant from three short listed companies, among them, German carrier Lufthansa AG.
This will be followed by the construction of a business plan with the aid of the selected consultant and preparation for an initial public offering (IPO) or partnership. He noted however that the favoured alternative would be to have the airline 50 per cent owned by the Bahamian public.
While Bahamasair looks towards privatisation, Air Jamaica, often praised for the significant contributions it makes to the growth of the Jamaican tourist industry, was last month reacquired by the Jamaican government.
After losing its ability to raise capital, on top of other mounting problems that included consistent losses and a growing deficit, the government took back control of the privatised airline and is currently instituting massive cost cutting schemes.
In similar straights, another privatised regional carrier, BWIA recently received an ultimatum from the prime minister of Trinidad and Tobago, Patrick Manning, to either fix the airline or the government will step in.
As Bahamasair works to turn its reputation around from being, as described by the minister responsible for the airline, Bradley Roberts, “a mill stone” for Bahamians, Mr Major reported some progress in this initiative.
He noted that half way into the company’s 2004/05 fiscal year, losses already appear to be going down. Bahamasair made profits of $1.1 million for the first two months of its year, July and August, he said.
Furthermore, had the country not suffered the double hurricane assault in September; he claimed the airline could have broken even during the first quarter.
With the hurricanes occurring during a period he described as a rough for the airline industry, the national carrier saw its revenue drop by $2 million, forcing it to end the quarter with a $1million deficit.
He predicted that second quarter losses would be in the range of $2 to $3 million.
With the Bahamas having already suffered through the privatisation of a public corporation that failed to come to fruition, Mr Major pinpointed this experience as another one Bahamasair could learn from.
“We certainly don’t intend to pay consultants the tens of millions of dollars to make this happen as in the case of BaTelCo,” he said.
He added that other decisions would have to wait on the recommendations provided by the consultants regarding staff and other areas of operation. Mr Major is hoping the short stint he served on the privatisation committee of The Bahamas Telecommunications Company will also give him insight into what to expect.
But as the national airline attempts to reposition itself, it is about to do battle with another U.S. low cost carrier targeting its most profitable market.
Set to begin direct service today, Spirit Airlines will soon have two daily direct flights into Fort Lauderdale from Nassau.
Mr Major assures however that Bahamasair will fight to keep its customer and if that means having to lower fares, so be it.
“If people on our direct route are cutting fares it would be foolhardy of us to try and stand our ground in charging the same fares,” he said. “…Everybody is competing for the same travel dollar and people make decisions primarily based on price… Bahamasair has to do its best to position itself to eek out its own market share given those circumstances.”
He added that Bahamasair has taken to continually monitoring Internet airfares offered for routes that the airline flies to make sure it remains in sync with the rest of the market.
Bahamasair is also betting on the national bias of Bahamians towards the national flag carrier and its lenient excess baggage policies as other factors that will work in its favour.
“Nine out of 10 times you know the person behind the counter,” Mr Major said. “In the case of the Spirit and all the others. It isn’t likely you will. To them you are just a nameless face. It makes a difference.”
Martella Matthews, The Nassau Guardian
