Cash-strapped Bahamasair is looking at “innovative” cost containment measures, with its Chairman Tommy Turnquest insisting that job cuts would be a last resort.
While Bahamasair has already implemented two revenue enhancement measures – a domestic fare increase and a charge for the first checked bag on its international flights – Turnquest said the airline has not yet nailed down all of its spending cuts.
“We are looking at cost containment measures and a number of cost reduction measures. I don’t want to say anymore than that because it’s a process,” he said.
Turnquest continued, “We’ve been having some discussions. Hopefully that’s going to be the last resort. But you would have seen the remarks from the minister a couple of weeks ago talking about why we needed to raise the domestic fares and introduce the first baggage fee. Just to put that in context, from July 1 to December 31 the government has provided Bahamasair with a subvention of $37.5 million. That’s a lot of money and just for six months. Now, things can change fairly quickly we think, but Bahamasair has some structural costs that are extensive.”
Last month Minister of State for Finance Senator Kwasi Thompson announced that the government approved the fare increases and new baggage fee along with operational changes to “eliminate the need for reliance on government subsidies over time”.
He also announced an increase in Water and Sewerage Corporation rates, all in an effort to cut $100 million in recurrent government expenditure.
There are some areas, Turnquest pointed out, that the airline will not sacrifice for the sake of reducing costs.
“We have a maintenance regime for example, where Bahamasair has an enviable safety record. That record has been achieved because Bahamasair goes through a very rigorous maintenance program in terms of the engines going for repair after a certain amount of rotations. And because we are running in a South Florida to Bahamas route, it’s a 35-40 minute rotation, for Orlando it’s 55 minutes. And certainly doing a lot of rotations, take offs and landings that adds to the wear and tear of an engine,” he said.
“So Bahamasair has some issues and then you have 550 employees – the salaries and benefits – you’ve got to cover that. So we’re looking for ways in which we can be innovative. I’ve had extensive discussions with the pilots’ union and extensive discussions with the management union for the last three months and we’ve been talking through some issues. I haven’t had the same discussions with the line union, the AAAWU, but the president of that union and myself have had a number of offline conversations and so we all recognize the challenges. When life gives you lemons you try to make lemonade.”
Bahamasair has lost on average $3.5 million a month since the onset of the COVID-19 pandemic in The Bahamas.