NAD saves $100M from existing infrastructure
The Nassau Airport Development Company (NAD) has saved “in the order of $100 million or so” by preserving and working around existing infrastructure, Guardian Business has learned, as its net revenue continues to rise through an innovative approach to commercial offerings.
During a tour of the construction site, Stewart Steeves, the president and CEO of NAD, said rather than rip the original structure down, the company has reused materials for the new International Arrivals building and achieved huge savings.
“In step two, we’re reusing the structural elements,” he told Guardian Business.
“The immediate savings from that is $10 million. But we’re also using the existing site. That allows us to make use of the roads, utility corridors, parking lot… We haven’t quantified that yet, but I would say it’s in the order of $100 million or so.”
Taxiway access, new aprons, servicing for power, water and sewers, site preparation and filling would all have been large expenditures if the second phase of the project started from scratch.
Standing at the open-air apex of the new International Arrivals building, Steeves pointed to a new steel plate welded to an existing supporting beam. That will serve as the bridge between the old structure and the new as the roof begins to take shape.
This resourceful approach by NAD is just one of many cost-saving techniques to help boost the bottom line. But perhaps the life blood of the $409.5 million project, apart from the fees charged to airlines and passengers, is the focus on bringing a commercial presence to Lynden Pindling International Airport (LPIA) in unusual ways.
In its annual report, NAD reported that net operating revenue increased from $41,397,376 in 2010 to $46,666,869, as of June 30, 2011.
Net Income decreased from $12,112,588 in 2010 to $7,769,556 in 2011, primarily due to the depreciation of interest charges, according to the annual report, and total assets went from 257,250,108 in 2010 to 370,889,786 in 2011.
According to Steeves, a major driver behind the increase in operating revenue is the more than 100 stores and 3,000 employees behind Nassau’s rising strategic asset.
In October, Guardian Business reported on the thriving commercial heart in the U.S. Departures Terminal. Phase two, Steeves said, promises to continue this trend.
In the next few weeks, NAD is expected to announce its much-anticipated hotel partner at LPIA.
“What I can tell you is we are in discussions and getting ready to conclude those. It’s not quite finalized,” he said. “By the end of the year we should be able to make an announcement on that.”
While the introduction of the hotel should provide a considerable and reliable lease for NAD, its introduction may also spark a wave of other small businesses around it. The new terminal will also feature an unique arrivals facility with hotel reception lobbies. Local tourism stakeholders have submitted proposals for a spot in the arrivals facility and NAD is in the process of making selections.
The most out-of-the-box method of attracting businesses to LPIA, however, just might be NAD’s plan to set back the new International Arrivals building approximately 50 feet from the street, when compared to the new U.S. Departures Terminal beside it.
The idea, Steeves said, is to create an open space where more business kiosk space can be leased and live performances can take place.
In stark contrast to the typical, congested arrival at an international airport, NAD seeks to break the mold – and make more money, too.
“You don’t have that experience where it’s congested and it will be a free flowing space for businesses or performances,” he added.
Indeed, while on a tour of the site, big, open and free flowing is the theme for NAD.
The new International Arrivals will include even more free space and windows than the U.S. Departures Terminal. While it is the same in width, it is much longer, Steeves said.
Paul Ward, the vice president of finance and chief financial officer at NAD, told Guardian Business that the International Terminal is 36 percent complete.
More than $37 million in contracts have been awarded to local construction workers in this phase, and 66 percent of the total workforce has been Bahamian.
In total, one-third of the $409.5 million airport redevelopment will be done by Bahamians worth more than $81 million in contracts. He called NAD’s current financial position “very solid”, and said that apart from labor, energy remains their primary concern.
“Next to the wages, utilities are the next biggest expense,” Ward said. “Utilities is a measure and one of our working focuses. Overall, we are very financially solid.”
John Terpstra, vice president of operations, agreed that energy is a tricky business and has a dramatic impact on the financial success of the project.
“I’m dealing with temperatures and humidity I have never experienced before,” he told Guardian Business. “The only thing you can do is AC, which is money, money, money. Every little thing counts. You’re always trying to find the balance between energy and comfort. You have to be very creative in how you use energy.”
Fortunately, as reported by Guardian Business last month, NAD has invested millions in energy efficiency, including geo-thermal cooling, high efficiency air conditioners, collecting rainwater for toilets and lights that dim and brighten based on the conditions in the terminal.
What it adds up to, Steeves said, is an airport that remains healthy financially and provides a centerpiece and sparkplug for the local tourism industry.
“I believe most will agree, the new terminal is a significant improvement – and there is more to come,” he explained.
“With this comes the opportunity for expanded air service. We and our partners are active to bring more service our way.”