Minister Fahy On Air Terminal Fees Amendment

Home Affairs Minister Michael Fahy provided an overview of the Bermuda Air Terminal [Fees] Amendment [No. 2] Regulations 2015 in the Senate today [July 27], saying that the new fee should generate an annual revenue stream of approximately $6.25 million.

Minister Fahy said, “In order to recover the purchasing and on-going maintenance costs; and the labour costs associated with baggage screening, the DAO proposes that an amended Aviation Security fee of $8.25 [previously $4.25] be charged for each enplaned passenger travelling to, or through, the United States of America; and $7.25 [previously $4.25] for each enplaned passenger travelling to Canada, the United Kingdom or elsewhere.

“Senate will be aware of the need to redevelop the Airport facility and this Government remains committed to bringing about a solution that would enable us to realize that objective. When pursuing a major capital investment the size and scope required in Bermuda, Airports typically look to introduce an industry-standard, Airport Improvement Fee [AIF] to help finance the project.

“Accordingly, the DAO proposes a flat rate of $16 be applied to the passenger ticket as a supplemental charge. The funds accumulated would be placed into an escrow account and in accordance with the International Civil Aviation Organisation’s [ICAO] requirements for AIFs, be earmarked solely for civil aviation services and projects.

“It is estimated that the new Fee would generate an annual revenue stream of approximately $6.25 million into the escrow account, based on the recent total number of annual departing air passengers,” said Minister Fahy.

“With the introduction of these new and amended fees, and inclusive of the $50 departure tax, the maximum total of Airport fees paid by air passengers departing Bermuda will be $78.25. ”

Shadow Transport Minister Lawrence Scott previously raised objections to the price increases saying, “It makes us that much more expensive to a potential tourist or potential visitor coming into Bermuda, but it also makes it that much more expensive for the average Bermudian that is going out.

Mr Scott  said it “seemingly contradicts exactly what the Government says they want to do”, to attract more business to the island, as it increases the cost of doing business for airlines.

The Minister’s full statement follows below:

Madam President, the Government wishes for Senate to give consideration to the Regulations entitled the Bermuda Air Terminal [Fees] Amendment [No. 2] Regulations 2015.

Madam President, by way of standing policy, Government reviews its fee structure on a regular basis to ensure that there is reasonable cost recovery for the provision of the various services it offers. In operating the L.F. Wade International Airport, the Department of Airport Operations [DAO] is responsible for providing security screening of all checked passenger luggage as mandated by the U.S. Transportation Security Administration [TSA] and the U.K. Department for Transport [DfT].

Madam President, in order to fulfil this regulatory obligation, the DAO purchased seven new Passenger X-ray machines at a cost of $905,975.00. These units ensure that all checked and hand-carried luggage and personal items are screened during the departures security process. The machines have an estimated life span of just over ten [10] years.

In order to recover the purchasing and on-going maintenance costs; and the labour costs associated with baggage screening, the DAO proposes that an amended Aviation Security fee of $8.25 [previously $4.25] be charged for each enplaned passenger travelling to, or through, the United States of America; and $7.25 [previously $4.25] for each enplaned passenger travelling to Canada, the United Kingdom or elsewhere.

The higher fee for U.S.- bound travellers takes into account the added provision of U.S. Customs and Border Protection services at the Airport pre-clearance facility.

Madam President, Senate will be aware of the need to redevelop the Airport facility and this Government remains committed to bringing about a solution that would enable us to realize that objective. When pursuing a major capital investment the size and scope required in Bermuda, Airports typically look to introduce an industry-standard, Airport Improvement Fee [AIF] to help finance the project.

Accordingly, the DAO proposes a flat rate of $16 be applied to the passenger ticket as a supplemental charge. The funds accumulated would be placed into an escrow account and in accordance with the International Civil Aviation Organisation’s [ICAO] requirements for AIFs, be earmarked solely for civil aviation services and projects.

The funds would be managed in accordance with internationally-accepted accounting standards for airports. The International Civil Aviation organisation [ICAO] considers it desirable that international airport users bear the full and fair share of the cost of providing the airport infrastructure.

Madam President, it is proposed that the AIF commence September 1, 2015 with an end date linked to the Redevelopment Project. Consultation will take place with representative user organisations advising them of the pending fee introduction.

The users and their representative bodies must be consulted on the proposed plans to ensure where possible the developments concerned meet the needs of users and that users are aware of the financial implications in terms of the charges that would be paid by them.

These stakeholders include the International Air Carrier Association [IACA]; the International Air Transport Association [IATA]; the International Business Aviation Council [IBAC]; and the International Council of Aircraft Owner and Pilot Associations [IAOPA].

It is estimated that the new Fee would generate an annual revenue stream of approximately $6.25 million into the escrow account, based on the recent total number of annual departing air passengers.

Madam President, with the introduction of these new and amended fees, and inclusive of the $50 departure tax, the maximum total of Airport fees paid by air passengers departing Bermuda will be $78.25.

This proposed amount was benchmarked against fees levied by several airports within the Caribbean. The results of the benchmark study concluded that with the new and amended fees, Bermuda will compare favourably to Bahamas [$76]; Dominican Republic [$82.60]; Turks & Caicos [$70] and Jamaica [$93].

Thank-you Madam President.

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