Airport Budget Savings To Ease Fee Increases

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Savings of $7 million resulting from the new U.S. departures terminal coming in under budget will go a long way in reducing the need for additional airport fee increases. The industry has seen fees increase nearly 20 percent in the last three years.

While the terminal will still be opening two weeks behind schedule on March 16, only around $191 million of the budgeted $198 million for the new terminal was used for the construction of the state-of-the-art facility. President and CEO of the Nassau Airport Development Company (NAD) Stewart Steeves said the money saved would put the facility in a good financial position going forward.

"It's a savings that we take... and we're quite happy about that," he told Guardian Business last week. "It lessens the financial burden on the airport and therefore the rates we need to charge for the future, so it's a benefit for the long term."

Steeves said the savings was influenced by various factors, including competitive pricing, tight management of the subcontractors, value engineering and the tendering process. The money saved will not go towards stages two and three of the entire airport redevelopment project, he confirmed, given financing for those components were completely independent from each other. The $7 million will just be added to the airport's coffers to mitigate any immediate future need of fee hikes. It's news that may be well received by many in the aviation industry now faced with new fee hikes since 2007.

An aviation insider told Guardian Business recently that those in the industry went from paying nothing to facing two separate hikes that resulted in a near 20 percent increase in fees for airlines. The source noted that while most of the local carriers will not be using the new terminal, they will still be contributing to the maintenance of the new facility.

An opening ceremony for the terminal was held on Friday, where Prime Minister Hubert Ingraham asserted the facility was expected to become commercially viable and a net contributor to the local economy.

He also revealed that the Cabinet has approved the construction of stages two and three. Construction of the new arrivals terminal - part of stage two - is scheduled to begin on March 17 — the date when the present departures terminal will be vacant, said Steeves. The contractors for the project have already been determined, he added, with formal communication on the matter to follow shortly.

Steeves is confident that visitor arrivals to The Bahamas will increase in the coming years, courtesy of the $3 billion Baha Mar project now in the pipeline, among other projects. The new airport is expected to be able to accommodate any growth in the market, something he asserts the current facility is unable to do.

The Nassau Guardian