HON. DIONISIO D’AGUILAR, M.P. MINISTER OF TOURISM & AVIATION BUDGET SUBMISSION 6 JUNE 2019

Mr. Speaker, I rise on the behalf of the great people of Freetown to support this third FNM Budget. Mr. Speaker, I must say I was immensely impressed with the Budget presentation of the Minister of Finance. Mr. Speaker, There were no new major taxes, a tweek here and a tweek there, and the Bahamian people were assured of a Government that is honest, transparent, free of scandal that is responsibly managing the economy of The Bahamas in the best interests of the Bahamian people. Yes, there was no new sexy programs like Mortgage Relief, or BAMSI or Carnival which sounded great on paper but when it came to execution, cost the Bahamian people tens of millions of squandered taxpayer money and provided the genesis for the introduction of the dreaded VAT. What Exuma failed to mention is that, after all the failed programs launched by the Christie Davis Hanna Martin Administration, we need a period where the private sector is encouraged to do what it does best and that is grow the economy and create real …… jobs instead of the thousands upon thousands of

2 government jobs that the Bahamian taxpayer could ill afford to support. Mr. Speaker, I humbly ask the Bahamian people, whose hands would you rather trust the future of your children? A PLP government that is full of great promises, that will have big parties and splash out millions upon millions to their friends and supporters for unnecessary, poorly planned projects while bills to the ordinary Bahamians go unpaid .or a FNM ……… government that will manage your money prudently and ensure that you see where your valuable tax payer money is being spent as you move about in your Bahamaland. I heard Exuma go on about $2.5 billion in borrowings under this FNM government and I was surprised at how misleading that statement was. Obviously, if I owe a million dollars and the loan comes due and I roll the loan for another year ..that does NOT …… represent any new borrowings. But may I draw his attention to the Central Bank Reports .yes google is indeed a powerful …… tool and draw his attention to the National …… Debt .everybody can understand that. ……

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The National Debt, at end of 2012, stood at $5.0 billion and, five years later, at the end of 2017, the National Debt stood at $7.9 billion – an increase of of $2.9 billion or a whopping 58%. And what is so amazing about that staggering increase in the National Debt under the PLP is that it came about despite collecting almost $1 billion in VAT off the backs of the Bahamian people. So, I caution my fellow Bahamians. Don’t get sucked into the PLP vortex about how they have changed. After five years of careful and responsible management of this economy by the FNM, please, please, do NOT let them get their hands back on the cookie jar and run us back up on rocks again. They haven’t changed. They will never change. Just look at who has put their names forward to run for them again. Fred Mitchell, Obie Wilcombe and Leslie Miller! Same ole! Same ole! Mr. Speaker, I have been honoured and humbled to represent the great people of Freetown in this House and I have thrived on the personal relationships that I have forged with my many of constituents as I moved from house to house in my constituency.

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Mr. Speaker, the constituents of Freetown want what every Bahamians deserves .a decent home, a job …… with a liveable wage and a safe and clean environment to enjoy time with their friends and families. As I move through my constituency, I have come to realize that the needs are the great but the resources are limited. To assist as best as I can, my constituency office remains open daily, Monday to Friday from 9am to 4pm. I have also continued with my Freetown business empowerment programme and I am delighted to report that I have sponsored over 150 would be entrepreneurs through this programme. The constituents have attended various seminars and workshops to help them start and grow their businesses. Most recently, I hosted an accounting seminar for small businesses at Uriah McPhee Primary School on Kemp Road which was very well attended.

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Mr. Speaker, my jobs assistance program has also been very successful. Basically, I help constituents build their resumes and apply for jobs .online or …… otherwise and I am delighted to report that all that …… have wanted to work have been to able secure employment through this initiative. Mr. Speaker, I have continued to support the young people in Freetown with a weekly after school art programme at the Uriah McPhee Primary School and I have sponsored a number of Freetown constituents to be a part of the Swift Athletic Track Team, all of whom have done remarkably well. While the larger Junkanoo groups continue to achieve success, I continue to steadfastly support the Fancy Dancers Junkanoo Group from Kemp Road and I have been delighted with their success during the Christmas and New Years Day parades. Mr. Speaker, I know that crime, of late, has been of huge concern to the residents of Freetown. My discussions with the Royal Bahamas Police Force has led to a greater presence on the ground and more cameras are being installed to deter would be criminals.

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But I encourage the young men of Freetown. Please! Settle your differences with your mouth and not with a gun. Killing your friend, your neighbor in the heat of the moment has lasting effects on the children and family of the deceased and will inevitably lead to you being brought before the courts. So, take it easy! Calm things down! And reason, man, reason! Finally, Mr. Speaker, as we move into the new Budget year, I will be directing most of my resources this year into local parks in the community and the building of a community center near the Anne’s Town Clinic. Once again, Mr. Speaker, I am humbled and honoured to represent the good people of Freetown in this place and I promise to remain faithful to their cause!

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TOURISM Mr. Speaker:

I was delighted to see my colleague Minister, the Member for East Grand Bahama, admit last week that The Bahamas continues to be on fire in the tourism sector with a level of performance that has translated into positive economic growth for The Bahamas, which will always remain our number one priority in the Ministry of Tourism.

Tourism Performance (2018) Ever since I was appointed the Minister of Tourism, some two short years ago, the Tourism Sector has boomed! The growth in visitor arrivals has been nothing short of exceptional. In fact, I deemed 2018 as a historic year for the Bahamian economy in that 6.6 million foreign visitors made The …… Bahamas their vacation destination the most ……… foreign visitors to come to The Bahamas in any one year ..in the history of this country! In 2017, 6.1 …… million foreign visitors came to The Bahamas .so …

8 almost half a million MORE visitors came to The Bahamas in 2018 versus 2017.

Mr. Speaker, if you delve further into the numbers, as I am minded to do given my Accounting background .you will see that The Bahamas was …… firing on all cylinders in its tourism sector in 2018.

If one were to look at the cruise stats, The Bahamas received almost 4.9 million cruise passengers or just over 13,000 every single day. Approximately half of those 4.9 million cruisers were on itineraries that made two or three stops in The Bahamas. So, those 4.9 million cruise passengers made 7.3 million visits to various destinations in The Bahamas in 2018 or 20,000 visits every single day.

Never in the history of The Bahamas did we receive as many cruise passengers as we did in 2018. And remember, Mr. Speaker, I stopped the payment of any rebates to the cruise companies to bring cruise passengers to Nassau and, guess what, Mr. Speaker, they kept on coming! That should save the taxpayer $12 million a year! It is amazing, Mr. Speaker, what

9 happens when you get business people ..with … sense .running your government! ……

But most importantly, Mr. Speaker, our stopover visitor arrivals were off the chain in 2018. Stopover visitors generally come to The Bahamas by air, take a taxi to their hotel, stay 3 to 4 nights in a hotel, shop in our stores, dine in our restaurants, gamble in our casinos and go on an excursion ..touching Bahamians … time and time again. We love cruise passengers .but we love stopover …… passengers even more since our studies reveal that they spend 20 times more that a cruise passenger. So, when I stand here today and say that our stopover passengers grew by over 220,000 in 2018 or a whopping a 16.7% when compared to 2017 Mr. ​ …… Speaker, that is significant! Once again, Mr. Speaker, never in the history of The Bahamas did we have as many stopover visitors as we did in 2018. So, a record in cruise visitors! And now a record in stopover visitors! Now you understand Mr. Speaker why I was named Caribbean Tourism Minister

10 of the Year in 2018. They simply could not pick anyone else!

In 2018 .globally, tourism visits increased by 6 …… ​ percent to 1.4 billion visits. So, the world grew by 6 percent and The Bahamas grew by 16.7 percent. ​ ​ Regionally, the Caribbean received 25 million visits in 2018 down 2.3 percent in visits over the preceding …… ​ ​ year probably due to the devastating effects of Hurricane Irma and Maria. Mr. Speaker, I think there are four reasons why we are experiencing this incredible growth in our Tourism arrivals. First and foremost, I think that the staff and leadership at the Ministry of Tourism are doing a phenomenal job. Under the joint leadership of the Director General of Tourism, Mrs. Joy Jibrilu and the Permanent Secretary Mr. Charles Albury and their respective teams, they have been ..simply put ..a dream team. I have … … allowed them to use their vast knowledge and experience to take risks, go with their gut, and just get on with the business of growing our tourism arrivals. They have launched new edgy and sexy marketing

11 campaigns, broken into new markets like China and Latin America and grasping that the internet is where most of our foreign visitors do their research and book their holidays, stayed focused on that medium to spend most of our scarce marketing dollars. And while I may stand up in this place and brag about our tourism arrivals, it is really the hard work and creativity and ingenunity of the 350+ employees who work at the Ministry of Tourism that give us the success that we are achieving today. The second reason for the incredible growth in the tourism numbers is the robustness of the American economy. Mr. Speaker, 8 out of every 10 or 80% of our stopover visitors hailed from the United States. That’s HUGE! And in 2018, the United States enjoyed GDP growth of 2.9% up from 2.2% in 2017 and the best growth numbers since 2015. That translated into an unemployment rate of 3.9% at the end of 2018, down from 4.1% in 2017, down from 4.7% in 2016, down from 5% in 2015. Just last month, in April 2019, the US unemployment rate hit 3.6% which is the lowest rate in 50 years. Incomes are also rising with the average per capita disposable income reaching $48,000 in 2018, up from $46,000 in 2017 up from $44,000 in 2016. So, with unemployment at record lows, incomes rising, the stock market reaching record highs, the

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Americans have consequently felt that a Caribbean vacation is now within their reach and thereby wanted to travel to The Bahamas in unprecedented numbers. The third reason for the incredible growth in the tourism numbers was the completion of the opening of Bahamar in 2018 and a renewed interest in the Family Islands brought about by an island by island marketing campaign spotlighting our 16 different destinations. Mr. Speaker, there is no doubt that the opening of Bahamar with its 2,300+ rooms has significantly impacted the economy of New Providence and by extension the economy of the entire Bahamas. There was a fear, Mr. Speaker, that the opening of Bahamar would have caused a cannibalization of our existing hotels with all of our foreign visitors simply shifting from the older properties to the brand new Bahamar causing no noticeable uptick in overall foreign visitor arrivals. Thankfully, given the previously mentioned incredible stopover numbers and the creative and ingenious marketing strategy of the Ministry of Tourism, our fears of cannibalization have NOT materialized. In 2018, the number of room nights sold in New Providence increased by a whopping 28%...... a growth rate we have not experienced in ten years. But what is

13 truly amazing is that even though the number of room nights sold increased by 28%...... there was no degradation in the average daily room rate. That was not luck, Mr. Speaker that took, once …… again, creativity and ingenuity. In fact, quite remarkably the average daily room rate in New Providence managed to increase by 4.7% despite the vast increase in the supply of rooms. That can only be attributed to the combined efforts of the marketing teams from the respective hotel properties, the Nassau Paradise Island Promotion Board and the Ministry of Tourism who, COMBINED, spent well over $60 million keeping the Islands of The Bahamas and specifically, Nassau, front and center in the minds of the travelling public. In addition, even though Nassau received 188,000 or 19.2% more stopover visitors in 2018 versus 2017, many of the Family Islands recorded remarkable increases as well. Abaco, our second largest destination for stopover visitors recorded 16,000 or 15.2% more in 2018 versus 2017. Eleuthera recorded 13,000 or 26.8% more in 2018 versus 2017. Overall, the Family Islands received almost 390,000 foreign visitors in 2018 .another record .up …… …… from 356,000 in 2017 and based upon our preliminary

14 numbers for 2019, and barring no weather calamities, we expect to burst through the 400,000 barrier this year as our foreign visitors, in more and more numbers, discover the beauty of our Family Islands and return time and time again telling more and more of their friends along the way! The fourth reason for the increase in the tourism numbers in 2018 was tragically caused by Hurricanes Irma and Maria in October 2017. Those Monster storms caused widespread damage to a number of islands in the southern and eastern Caribbean allowing visitors that would have typically visited those islands .to divert to The Bahamas. I remember …… speaking to a marina operator recently and he commented, that business in 2018 was the best it had even been! Persons who had historically gone south with their yachts were giving The Bahamas a second look and falling back in love with the beauty and diversity that The Bahamas has to offer with its wide array of gorgeous islands and cays. So, Mr. Speaker, what do all these incredible numbers mean for the average Bahamian. More employment opportunities and more money in their pockets at the end of the week. With more and more foreign visitors coming to The Bahamas, each and every week, I have been approached by taxi drivers telling me to keep up

15 the good work because they are busier than before, hotel workers are getting more in gratuities, restaurant workers are making more in tips, beach vendors, straw vendors .there is no doubt, Mr. Speaker, that there …… is more and more money circulating in the economy. I conservatively estimate, Mr. Speaker, that the increase in foreign visitors in 2018 led to at least $350 million of additional spending in our economy over 2017. Mr. Speaker, that is good news for the Bahamian people .very good news indeed! …… In addition, Mr. Speaker, when we came to office in May 2017, there were 200,155 employed individuals in The Bahamas. At the last Labour Force Survey completed in November 2018, there were 210,560 employed individuals in The Bahamas. Mr. Speaker, under this FNM Administration, in the first 18 months of being in office, just over 10,000 new jobs have been created for Bahamians which, given the robustness of our Tourism sector, I am not in the least bit surprised! In short, Mr. Speaker, spending is up and employment is up. We are doing what the Bahamian people sent us here to do! I note with caution, therefore, the rumblings of industrial action coming from the hotel sector. I implore both sides to negotiate in good faith. I implore both sides not to rush to judge or make any drastic

16 moves that put our number one industry, the engine of our economy, the contributor of over 50 percent of our GDP, the largest employers of Bahamians outside of the Government, the source of income for many many Bahamians who do NOT work in hotels such as taxi drivers, straw vendors, beach vendors, excursion operators ..talk to one another, tone down this …… strong rhetoric, act responsibly because our entire …… country is relying on both sides to get this right! I hear a lot of harsh words but I am dismayed that there has been little or NO negotiations. That is not good! Negotiations must be exhausted before we even start talking about the nuclear options! I will say no more on this other than I am available to both sides to help where I can to bring this to an amicable compromise. Mr. Speaker, as the preliminary numbers for 2019 have been rolling in, the good news from the Tourism sector has been that .the numbers remain strong and the …… growth is still off the chain! Cruise visitors to The Bahamas, for the first four months of 2019, have increased by 191,000 or 10.9% with Nassau, the economic hub of our country, receiving all of that increase and then some. Almost 250,000 MORE people came to Nassau by cruise between January and April this year versus last year so hopefully, the merchants in downtown Nassau have

17 been able to turn those additional visitors into additional sales. For the four first months of 2018, last year, stopover visitor arrivals increased by 14.1%. Well, Mr. Speaker, stopover visitors for the first four months of 2019 increased by another 17.7%...... on top of the 14.1% from last year. Cooking with gas, Mr. Speaker! Cooking with gas! And the good news is going all around so far this year! For the first four months of 2019: Nassau is up a whopping 21.5% on top of the 16.5% from 2018. Abaco is up a 6.9% on top of the 19.2% from 2018. Eleuthera is up a whopping 17.9% on top of the 27.2% from 2018. Exuma has rebounded nicely up 20.1% coming off a small 2.1% decrease from 2018. San Salvador (mainly Club Med) is up 3% on top of the 13.5% from 2018.

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Mr. Speaker, Bimini’s air arrivals declined by 29% for the first four months of 2019 on top of a 1.7% decline in 2018, which we know can be attributed, in part, to Bahamasair’s recently discontinued air service to that island. This shows how important airlift into our Family Islands is for their viability as a tourism destination, and why my ministry must continue to persevere on this front. The good news for Bimini is, however, that Virgin Cruises will be coming to that island in April 2020. Their brand new ship will bring 2,700 passengers 78 times a year. Resorts World is currently building a beach club to provide a beach experience for these visitors but I encourage the residents of Bimini specifically and Bahamians in general to prepare to offer these new visitors excursions and other opportunities to experience all that Bimini has to offer. Although Grand Bahama continues its struggles, with ​ stopover visitors flat and cruise passengers down 24% when compared to last year, it is anticipated that with ​ the new investments due to become operational within the next 24 months, Grand Bahama will soon rebound. Negotiations with Royal Caribbean and the ITM group are continuing within the agreed schedule and I am advised that all is going well. Obviously, there are some tough negotiations to take place but indications from the RCCL side are that we

19 should be optimistic that this deal will happen. In addition, negotiations with Carnival are also progressing and we remain optimistic about a positive outcome as well. Mr. Speaker, things are looking up for Grand Bahama with both of these deals in play ..but I don’t want to pop the champagne yet! … Let us get the deals done so that we can show the naysayers who said that we should NOT buy the hotel how wrong they were. This FNM government cares deeply about the people of Grand Bahama and, as the Member of Killarney has said time and time again, we cannot fix the economy of The Bahamas until we fix the economy of Grand Bahama. As a result, we are singularly focused on getting these deals done! Mr. Speaker, how times have changed in the Tourism business. Many moons ago, we would all go to a Travel Agent to book our holidays and get our tickets. Well, Mr. Speaker, as you well know, many of our potential foreign visitors now use online booking engines to do their research about a potential destination and then pay for their holidays online. We estimate that 70% of Americans, who make up 80% of our foreign visitors, now book their holidays entirely online. As a result, Expedia is now the largest producer of foreign visitors for The Bahamas. And the incredible

20 benefit of these online booking engines is that provide The Bahamas with a wealth of information about our customers. For example, they have reported that 1 in ​ 3 booking transactions are now made via the mobile phone using an app! Bookings using mobile APPS grew nearly 50 percent in 2018, with Puerto Rico, the U.S.A, The Bahamas and Spain reporting the highest growth in mobile demand for the full year 2018. Imagine that, Mr. Speaker, The Bahamas, Spain and the USA in the same sentence for the highest growth levels in a tourism offering! Expedia has also reported that demand for luxury and upscale accommodations is on the rise, with Bahamas four-star property stays representing 75% of all packages booked. These packages including the …… four star property stays among US travellers is ……… showing a 65% increase year-over year, and among Canadian travellers, a 160% increase; and for the UK, an almost 40% increase year-over-year. Mr. Speaker, Canada, has been our best performing market in terms of year-on-year growth, with arrivals up 14% percent in 2018 and with forward bookings ahead by 23% from April to June of this year. Canada’s market growth is undergirded by improved air capacity to Nassau by Air Canada and West Jet,

21 from Toronto, which increased 32% in March of this year, supported by extensive consumer and trade marketing.

Advance bookings from the USA are tracking positively as a reflection of the continued strong demand, particularly from the Atlanta hub, by Delta to Nassau and year-over-year (Fiscal Year 2018/2019) business by Delta grew 41% into North Eleuthera, 39% into Abaco, and 9% into Exuma. The increase in demand also resulted in an extension of seasonal daily winter flights from Detroit to Nassau.

Mr. Speaker, a similar pattern has emerged with American Airlines, which dominates share of market by carriers to The Bahamas. American recently added a second daily flight from Dallas to Nassau and new, non-stop weekend flights from Charlotte into Marsh Harbour and North Eleuthera. The airline will add a third daily flight into Nassau from Miami in its summer schedule.

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Mr. Speaker, Silver Airways, with a 47% share of our market, has emerged as the largest supplier of international seat capacity into the Family Islands. Silver plans robust increases in seat capacity to Exuma, Abaco and Eleuthera from Florida gateways and the national flag carrier, Bahamasair, also plans an additional jet flight into Freeport from Ft. Lauderdale this summer.

Demand also continues to trend positively in Europe. Based on the success of its programme in 2017, Alpitour continued to operate its charter from Milan to Grand Bahama in 2018. They had increased the number of weeks for the programme and plan a continuation into 2019.

Tourism Objectives Mr. Speaker, in the coming fiscal, the Ministry of Tourism will continue its objective of improving the competitiveness of our tourism industry and laying the foundation for more sustainable livelihoods for Bahamians.

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Mr. Speaker, the key strategic priorities of the Ministry of Tourism are geared toward: ▪ Modernization of plant and infrastructure to support increased and more comfortable visitor access to our tourism destinations; ▪ Sustainable and enhanced product development initiatives; ▪ More efficient destination management for an improved visitor experience; ▪ Partner-driven marketing initiatives for effective promotion of our tourism destinations; ▪ Regulatory reform, policy development and 2030 Agenda Implementation; and ▪ Capacity building in management and technology to support the Ministry of Tourism’s goals and growth in entrepreneurship

Infrastructure & Product Enhancement Mr. Speaker, our tourism plant is undergoing an exceptional physical makeover which, complimented by unprecedented international media spotlight, has

24 resulted in significant consumer interest and bookings to The Bahamas.

In terms of tourism product, new and/or continued investments in Baha Mar, the Pointe, Wynn in Nassau and Paradise Island, and new builds of high-end boutique hotels, marina-based and eco-friendly resorts throughout the Family Islands and there are …… numerous of these projects .too many in fact to …… list .. is transforming the touristic landscape of The …… Bahamas and raising the profile of the islands in the minds of consumers. But more importantly, what this is doing is creating for Bahamians more entrepreneurial opportunities and a more sustainable plant and support system for long-term growth of the industry. Mr. Speaker, the Caribbean continues to dominate the global share of market in cruising and, The Bahamas is leading the way. Plans are well underway for further revitalization of the City of Nassau with initiatives which will see Bahamian ownership in a new, state of the art cruise port at the Port of Nassau. Mr. Speaker, I am very excited by this new project! The cruise port of Nassau is in desperate need of an upgrade as it

25 consistently ranks in the bottom ten ports in terms of customer satisfaction in the Caribbean.

And, Mr. Speaker, when you go on these new cruise ships, where customers can do so much whether it …… be outdoor activities or a multiplicity of food and beverage and retail and nightlife options in a clean, …… harassment free, wonderfully correographed and completely safe environment, you come off those boats sick to your stomach with concern .worrying …… that we have so much to do to improve the overall experience of cruise passengers that come into Nassau to entice them off the boats. I mean, Mr. Speaker, those new cruise ships are so nice, more and more cruise passengers will not want to come off unless we do something about our overall port experience. And then you add in something like Royal Caribbean’s recently re-launched Coco Cay or MSC’s soon to be opened Ocean Cay or any of the private islands for …… that matter where the experience is as close to …… perfect as you can imagine .it worries me, Mr. …… Speaker, why would anyone want to come to Nassau or Freeport, our two main population centers, the destinations where these cruise passengers can have the most impact on our people, unless we do

26 something now to upgrade and improve those ports and the overall customer experience. Mr. Speaker, don’t get me wrong, I am delighted with all the interest that the cruise companies are showing in The Bahamas. As mentioned, you have Royal Caribbean’s recently opened A Perfect Day at Coco Cay in the Berry Islands, MSC is hoping to launch their private island, Ocean Cay (near Bimini), on 9 November 2019, Virgin Cruises will commence stops to Bimini in April 2020 and of course, there is Disney’s investment in Eleuthera at Lighthouse Pointe, Carnival’s desire to build a new cruise port in Freeport and Royal Caribbean’s partnership with the ITM Group to not only build a new port in Grand Bahama but to also purchase, upgrade and transform the Grand Lucayan property in Freeport. Mr. Speaker, these investments by the cruise companies are evidence of increased confidence in The Bahamas! Our challenge now, Mr. Speaker, is to make all these investments work to improve the opportunities for Bahamians. And, Mr. Speaker, there are many, many opportunities that I am not convinced we are fully exploiting. We must remember that cruise passengers make 20,000 visits to The Bahamas every single day, 365 days of the year.

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Reach out to the Tourism Development Corporation (TDC) to help develop your idea, pool your resources or apply to the Small Business Development Corporation for funding, reach out to your friends and family and well off Bahamians willing to fund start ups ..just …… figure out a way to capitalize on the amazing job that the Ministry of Tourism is doing to attract so many visitors to our country .and then get on with it. …… Mr. Speaker, this Minnis led Administration is focused on approving projects with cruise companies that are on islands were Bahamians can work and live with their families in the same place. Working on remote islands, away from your families for long periods of time is not always attractive to Bahamians so you will note that this Minnis led Administration has approved transactions with cruise companies on Eleuthera, Bimini and Grand Bahama where we feel their presence will be most impactful to as many Bahamians as possible. That is who we are! That is what this FNM government is all about! These developments in the cruise industry, Mr. Speaker, complemented by public investments in port and airport infrastructure, will improve international and national transport and distribution channels,

28 safeguard the tremendous tourism assets we have throughout our Family Island destinations and provide the catalyst for increased local investment in tourism. Marketing and Promotion

Mr. Speaker, it can be no secret that increased air service, hotel development and marketing efforts have all contributed to the positive state of affairs in Tourism. The Ministry recently conducted promotional campaigns and media blitzes in Toronto ​ and New York and, in November last year, we, in conjunction with four of our industry partners, flew ​ to Beijing and Shanghai in China to launch what was a hugely successful marketing mission and media blitz. ​ We know that to continue to grow and expand, we need to broaden our customer base and the response from travel agents, tour operators and the media in China demonstrated that The Bahamas is indeed a much-desired destination.

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Mr. Speaker, given the success of the China mission, when the Ministry of Tourism planned its next mission – this time to Mexico City, none of our private sector partners wanted to be left out and fourteen (14) partners from throughout The Islands of The Bahamas, (hotels in Nassau, Freeport and the Family Islands, promotion boards and DMCs) as well as COPA airlines, helped to launch the Mexico mission last month to develop new routes and business development opportunities for The Bahamas. Mr. Speaker, we are seeing positive results from these promotional initiatives and investments, including the possibility of Aero Mexico establishing direct service in the winter season of 2020, and the potential for daily service into Nassau by COPA Airlines from Colombia and Brazil within three years. These missions, and the desire of the industry to be a part of everything the Ministry is doing, reminds us of the glory days when the Ministry of Tourism was the leader in the industry.

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Also, in May, Mr. Speaker, we dedicated one million dollars to a special sales mission, dubbed “Summertime in Freeport” for promotions throughout cities in the Florida panhandle and Atlanta, in partnership with transportation partners and industry stakeholders in Grand Bahama. Additional advertising of Grand Bahama is planned on completion of the Grand Bahama television spot, which is currently in production as I speak, and is due to premiere in July as part of the overall Bahamas strategy of promoting the various individual islands of The Bahamas.

And, Mr. Speaker, recognizing the overwhelming impact that these face to face missions have in educating today’s discerning travelling public about The Bahamas, my Ministry will conduct two more missions, in the 2019/20 fiscal period, with as many of our local partners who wish to attend, across Canada and India. Given the tremendous success we are having in the Canadian market and given our

31 awareness of the extravagance of Indian weddings, we feel that these two markets are ripe for expansion. We really want to tie India into the romance market and take full advantage of the recently negotiated visa waiver to ensure that we get some of that business! Mr. Speaker, we began 2019 with the launch in New York of a new, multi-channel creative campaign and the “Flyaway” commercial featuring Bahamian-American rock legend Lenny Kravitz that showcased the authentic spirit of The Bahamas as a destination of adventure and discovery to over fifty tier-1 media organizations from Nassau and the U.S. Our new commercial has hit a “sweet spot” in marketing terms, or in monetary terms, the “jackpot” with the launch of the Ministry’s first global brand campaign since 2013. Its success is echoed in the words of Travel and Leisure, which dubbed it “the best ​ campaign launch ever!”. The new marketing campaign is undergirded by a digital platform which received over 50 million views of online video content in the first quarter of 2019 and has softened the commercial overtones to provide more insight on the authentic and enriching experiences of the Bahamas, as told by Bahamians. We now have an active audience of over 6.8 million digital

32 users, representing a 240% increase over first quarter 2018. And so, Mr. Speaker, while these initiatives have certainly caught international media attention they must continue to translate into heads in beds. More ​ ​ and more people are now interested in experiencing a Bahamas vacation, and by all indications are doing so, but and I emphasize the but, with only a reasonable … ​ level of satisfaction about their experience. Mr. Speaker, we can and must certainly do better in improving the overall visitor experience! Improved Tourism Management and Visitor Experience Mr. Speaker, a ‘reasonable level of visitor satisfaction’ ​ is still sub-optimal in this highly competitive marketplace. Visitor satisfaction is what ultimately determines whether a visitor, choosing a Bahamas vacation, can be converted into a repeat customer. It is very expensive to bring new business to The Bahamas ​ given the high cost of a new customer acquisition, ​ ​ ​ which requires considerable investments in media advertising and tourism promotion.

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And so, Mr. Speaker, our objective must therefore always be to attract repeat customers. If we want to ​ remain competitive, we must attract and maintain repeat business, and this requires a culture of service excellence in visitor facilitation, hosting and experience delivery. Mr. Speaker, the Ministry’s onshore hospitality, education and facilitation services, along with its signature activities and events, are designed to ensure that Bahamians provide professional delivery of services and can curate indigenous experiences that visitors find satisfying and pleasurable. In so doing, the Ministry ensures that from the first experience to the last experience ..the visitor engagement is safe, …… enjoyable and memorable. The Ministry’s signature events, which take place in many of our Family Islands such as Crab Fest in Andros, the Pineapple Festival in Eleuthera, the Cat Island Rake ‘N’ Scrape, the Bahamas Music and Heritage Festival in Exuma, and numerous other smaller events, showcase the cultural authenticity of these destinations and what makes it ‘Better in The Bahamas’.

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These activities, and facilitation of the more lucrative weddings and honeymoons and groups and incentive bookings, is what drives revenue earnings for suppliers, vendors, artisans and other small and medium sized enterprises. Mr. Speaker, The Bahamas has received many awards over the last year for outstanding performance in many categories; amongst others, the Best Caribbean Destination in 2018, the much coveted Megellan Gold Award for our 16 Island Content Marketing, the Adrian Gold Award for Advertising Innovation and the list goes on and on, but one that I believe we should be particularly proud of was the World Travel Award for World’s Leading Wedding Destination in 2018. This speaks to the strides that have been made by our country’s event coordinators in the honeymoon and wedding market, and I challenge anyone who can find a more demanding and service-driven enterprise than the planning of a wedding and honeymoon event, or professionals more able to get them through this maize of planning than a Bahamian wedding planner! Mr. Speaker, unfortunately, we find it still necessary to emphasize that the quality of the visitor experience is not solely a Ministry of Tourism responsibility. Mr.

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Speaker, it is the visitor’s multiple contacts with the taxi driver, the conch vendor, the hotel concierge, the roadside fruit vendor, the hotel housekeeping staff, the front desk staff, the straw vendor, bus driver, the tour guide, the immigration officer, the wedding coordinator, flight attendant, public service worker and so on that establishes their connection with the destination. A bad day for any of these front-line workers has the impact of making someone’s dream vacation a nightmare. This composite of all of the minor contacts and connections the visitor makes with Bahamians in all aspects of life, and their perceptions of the quality of those connections is what really matters. This determines the level of satisfaction with the experience and whether they will return to the destination. And so, Mr. Speaker, the “secret sauce,” if we may call it that, which ultimately delivers repeat business to tourism destinations, is the unwavering adherence to quality and consistency in service standards and professionalism in the service delivery of Bahamians in every sector category.

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Mr. Speaker, tourism has created employment opportunities and a good standard of living for many Bahamians, and the value of economic stability from this sector must never be taken for granted. Our front-line workers are seeing increased revenues and are able to do more for their families because of it; and the impact on our GDP, and the growth we’ve experienced, has been due in no short measure as a result of hard work on the part of all those involved in tourism. Mr. Speaker, to this end, I’d like to commend, and thank, my Tourism team, who travel, sometimes with our industry partners, to the corners of the world looking for new markets and new business; our sales and marketing teams must make convincing pronouncements about the beauty of the country, friendliness of the Bahamian people, the quality of our offering and substantiate reasons why The Bahamas should be the destination of choice; and then, must work with airline partners and others to solve any problems of air accessibility. For this, we would like to thank all of our airline and strategic partners for their valued contributions to our efforts.

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While it may appear glamorous, there is a tremendous amount of data gathering, planning, budgeting, coordination and execution that must be done to the highest international standards by our teams in order to effectively compete in this arena. Our priority for the next fiscal will be to continue our efforts in positioning The Bahamas as a leader on multiple fronts in the Caribbean region and by reinforcing the unique brand reputation we have established in the marketplace. And so, Mr. Speaker, we are unique. Unlike our competitors who promote one island, we are tasked with promoting sixteen (16); therefore, it cannot be over-emphasized that our tourism budgets alone could never be sufficient to influence the travel decisions of prospective visitors. The beauty of our islands, the richness of our cultural offering, the competitive pricing of our product and the pride of place, which our people must demonstrate in their actions, is ultimately what will close the deal and bring visitors coming back to our shores.

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Regulatory Reform & Policy Development Mr. Speaker, retaining product quality and standards of operation will require constant modernization of policy and regulatory frameworks to meet changing visitor needs and market trends such as the emergence of the sharing economy, as well as revenue enhancement. This is certainly an area which needs more attention, not just in the Ministry of Tourism, but throughout government. Many of our policies are outdated, with little change to regulatory regimes after almost 50 years of tourism experience. For example, Mr. Speaker, the Hotels Act which articulates regulatory oversight for the accommodations sector, was established in 1970 with few amendments to the Act since its inception. The Ministry is currently in consultation with the Office of the Attorney General on review of legislative amendments to the tax and fee structure, reporting mechanisms and penalties under the Act. In addition, Mr. Speaker, my Ministry is giving significant focus and attention to a Vacation Home Rental Bill to provide for the proper regulation of vacation rental properties.

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It is anticipated, Mr. Speaker, that this regulatory framework will facilitate development of the model for further expansion of the sharing economy in The Bahamas and provide new avenues for Bahamians interested in getting into the tourism industry. It is the Ministry’s intention, through automation of the accommodations licensing and registration, to bring a higher level of efficiency to these processes, in keeping with the government’s commitment to improve the ease of doing business in The Bahamas. This will also bring more standardization and consistency of enforcement across all of our Family Islands and ensure additional support to Local Government Administrators and District Councils involved in licensing and governance. In addition, Mr. Speaker, you will have noted in the Value Added Tax Amendment Bill, 2019 that it is the intention of the government to commence the collection of VAT on vacation home rentals. Mr. Speaker, I have been talking about this for some time in the local media so it should have come as no surprise that the Government intends to begin the collection of VAT from this revenue source.

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Mr. Speaker, permit me to outline how VAT on vacation home rentals will be charged and collected. If you use, what we refer to in the Bill as, a market place, to facilitate the rental of your vacation home and the collection of rental income, then that market place will be required to charge the guest 12% Value Added Tax on the rental and other fees charged and remit those funds directly to the Inland Revenue Department. So, let us assume you list your vacation home on Airbnb or Home Away an electronic marketplace, every time …… a guest agrees to rent your place, Airbnb or Home Away will collect Value Added Tax on the rental and send that tax revenue directly to Inland Revenue. Conversely, if you decide to use a property manager or a friend of a friend to rent the home for you, then they too, will be required to collect VAT and remit it to Inland Revenue on your behalf. As the owner of the home, you will not be required to fill out any forms, make any filings or pay any VAT since the marketplace will do that on your behalf. Mr. Speaker there has been some talk about why we are charging VAT on vacation home rentals. First and foremost, lord knows we need the tax revenue!

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But more than that, we feel that the foreign visitors who use our vacation homes are also the beneficiaries of our Tourism infrastructure and should contribute something to its maintenance and upkeep. Roads, police, marketing, health care, ports, airlift are all costs that all foreign visitors to hotels contribute towards through the payment of the 12% VAT plus a 10% promotional levy charged on their room rates. Well, the government now feels that those foreign visitors who do NOT use the hotels should start to contribute to the Tourism Infrastructure in some meaningful way given the exponential growth in this market. In addition, a casual glance of other destinations serviced by these AirBnB type marketplaces will show that Americans, from whom we receive 80% of our foreign visitors, are very much used to paying some sort of tax on their vacation home rental. In Miami, for example, all rentals under six months (i.e. short term rentals) must pay the 7% Florida Sales Tax plus a 6% Short Term Transient Rental Tax. Two further points to note on this topic, Mr. Speaker.

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First and foremost, if you do NOT use a marketplace and simple rent your vacation home on your own using, for example, you own homegrown website that only handles your property, then you will not have to charge and collect VAT if you do NOT earn over $100,000. Second, there a transitional period embedded in the legislation for the commencement of VAT on vacation homes. The payment of VAT on all vacation home rentals will not commence until 1 October 2019.

Data Management Mr. Speaker, much of what we do at the Ministry of Tourism is reliant on our knowledge of our customer base and their travel and spending habits and the ability to implement data-driven decision-making based on key findings. This information influences paid digital marketing, social media inputs, website content development and overall digital market share. Data mining and analytics, then, drives our planning, marketing and research efforts.

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Mr. Speaker, during 2018, The Ministry invested a million dollars into a new platform, known as Island Trends, which basically involved the taking of all Immigration cards from 2010 onwards, completed by all arriving passengers, and scanning the responses into a cutting-edge analytics database. The information we have gleaned from this new system has been tremendously helpful in determining where and how much to invest our scarce marketing dollars and where to push for additional airlift to meet growing customer traffic from new markets. Mr. Speaker, in the upcoming fiscal, funding will be allocated for further research to support surveys on indirect and induced expenditure occurring in the industry, which is a supplemental component to the Tourism Satellite Account, the international standard for the measurement of GDP derived from tourism. Technology Development Mr. Speaker, technological development is at the forefront of the trade war between the superpowers and the economic agenda of developed and developing economies around the world.

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The United Nations World Tourism Organization has as a key objective the digitalization of tourism, as this is expected to maximize the potential of the sector in economic growth, job creation and sustainable development. It should therefore come as no surprise, that 5G represents the game-changing evolution of the digital infrastructure on which the global tourism industry operates, and in the coming years, those SMEs that seek to integrate this technology into their business operations will maintain competitiveness and remain relevant in the global marketplace. Therefore, Mr. Speaker, this administration’s mandate and plans for improving digital infrastructure are indeed critical for the future growth of the Bahamas tourism industry and will assist us in providing the necessary support to tourism SMEs in their marketing of local products and services. Mr. Speaker, our mandate is clear. Although the Minister of Finance is projecting a slowdown in the global economy, which will certainly have an impact on our tourism business, the reality is, the growth that we have seen over the last two years will be difficult to sustain at that scale because we are limited by room inventory, development and finances.

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Mr. Speaker, the goal of the Ministry, however, is to maintain current growth levels and meet regional growth forecasts. In addition, working with our industry partners and all tourism stakeholders, we will continue to work assiduously towards ensuring that we create the best visitor experience possible to secure the important business from repeat visitors. We will continue to press on with strategies to improve our competitiveness and make The Bahamas an attractive proposition for vacationers. We will endeavor to further increase efficiency in our operations. And we will continue to create stories for the Family Islands (Abaco, Exuma, Andros and Grand Bahama), that reflect the richness of the product offering and showcase their uniqueness on the world stage, and which we know resonates so strongly with today’s traveller.

Tourism Development Corporation of The Bahamas Ltd

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● Just 9 short months ago, I received approval to launch The Tourism Development Corporation (TDC) whose purpose was to create linkages between our growing Tourism market and our domestic economy with the intention of allowing Tourism to impact the lives of more ordinary Bahamians. Specifically, the TDC has been set up to regulate and foster the growing domestic tourism industry and empower Bahamians as stake-holders in this our most important economic sector, a significant paradigm shift from the past, where Bahamians typically played a more subordinate economic role. ● TDC has entered into a strategic partnership with UB in what is being touted a timely, signature initiative - Community Based Tourism (CBT). Bahamians would recognize People to People as the forerunner to CBT, a dynamic programme that is to be managed and nurtured by TDC while drawing on best practices from elsewhere, like the Far East.

● Economically, money is coming into The Bahamas instead of the bank accounts of second home

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owners overseas. This iteration of Bahamian home-hospitality, especially in the Carmichael area is CBT at its best. Guests are enjoying a cultural exchange in Nassau before going onto the Out Islands; local hosts are preparing meals for guests, providing roundtrip transfers to the airport, provisioning starter groceries for the rental and guests are reciprocating with gifts sent from afar and treating their hosts to final night dinners at their expense. People are being exposed to tourism in a way that was almost impossible before and we are experiencing the distribution of income and the improved quality of life that was always desired. ● Corporately, CBT has spurred tremendous interest and the IDB has rushed to offer an electronic payment solution - the Bank in a Box module offered by Mastercard, designed to make it easier for entrepreneurs, especially those servicing the cruise passenger - to be able to conduct business.

A pilot programme will be rolled out in Q1 August/September 2019 in Bimini in anticipation

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of its transformation into a cruise port by year end and the arrival of Virgin Voyages in March 2020. Given the banks exodus from the Family Islands, this programme is intended to be rolled out in the other islands as well. ● Shore experiences are being revamped and refreshed with the guidance of industry partners like Global Ports Holding Ltd., Virgin Voyages, Royal Caribbean Cruise Lines and Airbnb that are seeking more experiential activities for the 2020 visitor. Bahamians will receive macro-level insights into what's trending and the criteria needed to qualify for onboarding these dynamic Experiences platforms. ● Experiences being sought are high end/luxe experiences; Out Island Experiences; Boutique Hotel Experiences; Spiritual/Wellness Experiences; Social Impact Experiences (involving charities); Adventurous Experiences; University and Even Tech Start Up Experiences; Food Experiences; Ancestry Oriented Experiences; Domestic Market Experiences. ● TDC is facilitating the incorporation of the Bahamas Authentic Shore Experiences Ltd (BASE).

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As the name suggests, tours and activities are intended to be unique, sustainable and compelling to enhance the visitor experience and spur purchases. We are building capacity such that the Cruise lines and tour operators will, overtime, develop a degree of comfort working with BASE and Bahamian entrepreneurs are empowered. ● TDC is intending to launch the Cruise Committee to monitor the HOA commitments and ensure those areas that are reserved for Bahamians are being honoured like entertainment, tours and watersports. It is also intended to serve as an advocate for Bahamian entrepreneurs working in the private island cruise environment. ● TDC will also appoint, manage the flow of information, facilitate discussion and log the feedback through the Tourism Technical Committees of the Bahamas Bureau of Standards and Quality.

Mr. Speaker, I am excited about the purpose and goals of the TDC. So much of the dollar spent by our foreign visitors in The Bahamas ends up going right back out of the country and we need an arm of the Government

50 that is focused exclusively on nurturing and growing the linkages between the lucrative and all important Tourism sector and ordinary Bahamians. In the two short years that I have been in this position as Minister of Tourism, I have been overwhelmed by the multitude of opportunities in the Tourism sector that are going untapped by Bahamians. Mr. Speaker, I challenge my fellow Bahamians especially those that have an interest in …… or an affinity for business .to seriously look at the …… Tourism sector. Yes, more and more Bahamians are getting involved in the Tourism sector by renting their homes but there are so many more opportunities that exist in providing experiences that are not being currently exploited. If you are interested in finding out or taking advantage of these opportunities, I invite you, my fellow Bahamians, to come into the Tourism Development Corporation to flesh out your idea, gain access to those critical decision makers that will help grow your business and give you the push to launch your new business. I must emphasize that we are NOT a funding agency but we will help you prepare your proposal to present to the Small Business Development Corporation (SBDC) touted by the

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Minister of Finance as the new agency charged with funding start ups.

MINISTRY OF AVIATION Mr. Speaker, I now turn to the Aviation portion of my portfolio.

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Mr. Speaker, the Aviation sector, as you know, is a critical component of our economy given the fact that we are country of 700 islands and cays. In most cases, the only way to get around The Bahamas is by air and, of course, the most lucrative component of our tourism sector, the stopover visitor, more often than not, comes by air. Mr. Speaker, the Aviation portion of my portfolio is huge, and basically encompasses nine silos of the government as follows: (i) Airport Authority (AA) – responsible for the management and operation of the 28 Family Island airports and security and fire crash rescue at the Lynden Pindling International Airport (LPIA).

(ii) Nassau Airport Development Company (NAD) – responsible for the day to day management of the Lynden Pindling International Airport (LPIA).

(iii) Bahamas Civil Aviation Authority (BCAA) – responsible for enforcement, safety and oversight in the aviation sector.

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(iv) Bahamas Air Navigation Services Department (BANSD) – responsible for the provision of air traffic control services in those areas in The Bahamas where this service is not provided by the Federal Aviation Administration (FAA) of the United States and the Government of the Republic of Cuba.

(v) Civil Aviation Policy Department (CAPD) – responsible for the researching and establishment of new polices within the area of civil aviation.

(vi) Air Accident Investigation Department (AAID) – responsible for the investigation of and reporting on all air accidents in The Bahamas.

(vii) Air Transport Advisory Board (ATAB) – responsible for the licensing and registration of all Bahamian pilots and airline companies.

(viii)Nassau Flight Services (NFS) – responsible for all ‘below the wing’ services (baggage, ground handling 54

services, fuelling, etc) and ‘above the wing’ services (check in, passenger movement, VIP services, etc.) requested by scheduled and unscheduled carriers at LPIA and San Salvador.

(ix) Bahamasair – responsible for the operation of the nine (9) aircraft of the national flag carrier. In addition to the management and oversight of these nine entities, the Government has identified certain priorities in the aviation sector which are: (1) The construction of new airports in Exuma, North Eleuthera, Long Island and Great Harbour Cay using the Public Private Partnership (PPP) model where possible, (2) The development of a world class Aircraft Registry. (3) The monetization of our sovereign airspace through the introduction of over flight fees.

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(4) Implementation of the findings of the Stantec report as it relates to the management of Family Island airports. (5) Expansion of the footprint of LPIA to facilitate the development of a passenger and cargo hub. (6) Upgrade and replacement of the security and fire crash rescue infrastructure throughout The Bahamas Mr. Speaker, for the past twenty years, the Bahamian people have changed their governments at the polls every five years, and with that change, the Ministry of Aviation has been tossed back and forth between Transport (when the PLP are in power) and Tourism (when the FNM are in power).

One of the disadvantages of this back and forth is that, upon assuming office, I found no technical persons in place at the ministerial level who could support and help drive the vision and policy objectives of the government as it relates to Aviation. I found that all of the aviation entities listed above essentially operated in their own silos without any commonality or

56 overarching unified goal for the aviation sector in The Bahamas and, rather overwhelmingly, much of the management and day to day details of all the entities and projects listed above was falling directly on the Minister and Permanent Secretary with responsibility for Aviation. Mr. Speaker, as a result of this lack of technical support at the ministerial level, I decided to begin the process of setting up a stand alone Department of Aviation whose purpose will be to provide oversight to all the government entities involved in the aviation sector, to adjudicate and resolve issues that develop between these entities, to provide a depository for all matters relating to the aviation sector and to provide the necessary attention and focus to the government’s goals and objectives in this critically important sector. Mr. Speaker, the Government hired Mr. Algernon Cargill to facilitate the creation of this Department of Aviation and, while his specific knowledge about Aviation may be lacking like mine .he brings …… …… many, many years of management expertise and problem solving and I must commend him and his team for bringing the desired level of focus to the

57 policy objectives of the Government in the Aviation sector and driving them forward and onward.

BAHAMAS CIVIL AVIATION AUTHORITY (BCAA) Mr. Speaker, once again, air transport is the lifeblood of The Bahamas. It connects the country’s economic growth and sustainability with tourism, its largest industry, and domestic travel throughout its archipelago of 700 islands and cays, totaling a land area of 5,383 square miles spread over 100,000 square miles. Therefore, the development of safe, secure, and efficient air transport is critical to The Bahamas’ social and economic development.

The Civil Aviation Authority of The Bahamas (the Authority) was established on October 3, 2016, under the Civil Aviation Act 2016 (the Act). The Authority was charged with the responsibility for regulating, monitoring, and promoting the safety, security, economic viability, and reliability of the aviation sector in The Bahamas.

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The Authority also includes an independent entity, the Bahamas Air Navigation Services Division (BANSD), which provides air traffic control services, the Air Accident Investigation Department (AAID), which has responsibility for accident investigations and the Civil Aviation Policy and Economic Unit, which is responsible for policy matters related to aviation. These entities advise the Minister on air transport and civil aviation policy matters with the objective of promoting a sustainable, economical, and efficient civil aviation industry in The Bahamas. The Act also led to operational efficiencies through consolidating then existing entities, such as the Family Island Aerodromes/Airports and Security and Fire Services and transferring them to the Bahamas Family Island Airports Department (BFIAD) under the Airport Authority. Consequently, all Family Island employees became employees of the Airport Authority and were integrated into the airside positions, airport managers, safety management systems, aerodrome operations, quality assurance, and rescue and firefighting services.

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Cognizant of the human impact of the new regulatory framework, the Act also provided for a transition period of one year for former CAD employees to be transferred from the Public Service to the Authority, or a subsidiary company of the Authority. Through October 4, 2017, employees could either accept permanent employment with the Authority or opt to return to the Public Service. By the statutory deadline, of October 4, 2017, over twenty employees opted to ​ ​ return to the Public Service, which resulted in some immediate human resources constraints. The Authority continues to grapple with the challenge of recruiting suitably qualified persons with the requisite specialized and technical skills. However, efforts are being redoubled, and initiatives pursued to augment the technical safety and security oversight team, including through the recruitment of candidates for apprentice positions. Significant progress has been made towards establishing important operational policies and procedures, enhancing the human resource team, focusing on a more customer-oriented regime and developing the corporate image.

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The Authority has also made advances towards achieving a higher level of effectiveness in its overall compliance with international safety standards, exploring funding alternatives to reduce the organization’s reliance on Government subventions, and strengthening ties with strategic partners in the aviation sector. In the area of safety and regulatory oversight, the Authority has worked assiduously over the past year to ensure that The Bahamas met the standards of the Federal Aviation Administration International Aviation Safety Assessment (FAA/IASA) and maintained its current Category 1 status. However, a less than satisfactory result (Effective Implementation score of 32%), from the International Civil Aviation Organization Universal Safety Oversight Audit Program (ICAO USOAP), held October 23 – November 2, 2017, which is intended to assess a States’s Surveillance and Oversight apparatus, highlighted room for improvement. In structuring its corrective action plan, the Authority is taking full advantage of ICAO’s No Country Left Behind (NCLB SAP) initiative which assists Member States in implementing improvements its Surveillance and Oversight capabilities.

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Since its establishment, the Authority has relied primarily on the Government to fund its activities. Nonetheless, the Authority remains committed to identifying additional sources of revenue. One such example is the proposal to monetize the sovereign airspace of The Bahamas. Mr. Speaker, the ​ sovereign airspace of the Bahamas can best be visualized by drawing a line around the islands of the Bahamas and adding 12 nautical miles. Some people tend to confuse the project to monetize the sovereign ​ airspace of The Bahamas with the project to expand of the Bahamian Flight Information Region (FIR). While we hope to achieve both, monetizing the sovereign ​ airspace of The Bahamas is seen as the most achievable in the short term.

Monetizing the sovereign airspace of The Bahamas ​ ​ would involve the implementation of the necessary technology to measure and track each and every aircraft that flies through our airspace. Over 1,000 planes fly through our airspace every day. Almost 90% of them never stop! In addition to tracking these

62 aircraft, the technology would need to generate a bill for the distance travelled through the sovereign airspace of The Bahamas, send that bill electronically to the owner/operator of the aircraft, and then pursue that owner/operator for payment. Mr. Speaker, since the technology to track, bill and, most importantly, collect over flight fees from aircraft flying through our sovereign airspace is not resident in The Bahamas, it must be sourced from overseas. As a result, request for proposals were solicited and companies offering such services that responded to the RFP are being carefully vetted by an evaluation committee chaired by the Chairman of the BCAA and former Governor of the Central Bank, Mrs. Wendy Craigg. I am hoping that by the end of this month, a preferred bidder will have been selected and negotiations can then begin in earnest on the timeline and cost to roll out such a system. These are exciting times, Mr. Speaker, and I am overly optimistic that, one day, in the very near future we will, after 46 years of being an independent nation, be able to enjoy further the benefits of the wonderful geographic location of this country. I always say God has blessed the people of The Bahamas …… 63 with great geography. It is now up to us to take further advantage of it! Mr. Speaker, the use of illegal charters or hacking, remains a vexing problem for the Authority. The beginning of 2018 was marred with the tragic crash of a private aircraft on a flight from San Andros Airport to Nassau’s International Airport, on January 17, which led to the death of all six occupants. The investigation into this crash revealed that the pilot was conducting an illegal charter at the time, as neither he nor the aircraft, which was registered in the United States, were duly licensed by the Bahamas Civil Aviation Authority to conduct commercial aircraft operations within The Bahamas. Therefore, the carriage of the persons on board, which the investigation determined was for hire, was illegal under the Bahamian civil aviation laws. Critically, the investigation also revealed that this aircraft had been operating in The Bahamas without notice to the Authority, as required by general regulations governing civil aviation activities. This most unfortunate accident and the findings of the investigation were a stark reminder that more work

64 must be done to combat the decades-old practice of illegal aircraft charters. Industry stakeholders and other national agencies are engaged in a collaborative effort to enact additional legislation and regulations, impose stricter enforcement actions, increase successful prosecutions of the offending pilots, and implement new initiatives to educate travelers and pilots about the risks of illegal air charters. As a component of the remedial actions, the Authority has moved to end the practice of illegal air charter operations within Bahamian airspace. It has diligently implemented “anti-hacking” initiatives through increased airport surveillance; launched public awareness campaigns to highlight the risks of traveling on illegal aircraft charters; proposed reforms to the civil aviation laws governing private pilots and general aviation operations; and pushed for strict enforcement of civil and criminal proceedings against illegal charter operators. Those involved in this nefarious activity have been encouraged to regularize their affairs through the Authority and become properly licensed pilots and

65 charter operators. In that regard, the Authority has streamlined its certification process for obtaining the single pilot Air Operators Certificate and has hosted several industry meetings to encourage prospective pilots to certify their activities properly. Additionally, the Authority has recently introduced new Regulations, which will require additional screening of all persons gaining access to the secured areas of the General Aviation section. Further all Bahamian Persons holding Foreign issued licenses will be required to have those licenses converted to licenses issued by the Authority for the sole purpose of increased surveillance of the persons involved.

The Authority will increase enforcement activities and will aggressively pursue criminal and or civil penalties against all persons committing any activity that is not in compliance with Regulatory requirements. Those persons who chose to remain unregulated, are engaging in criminal activities. Further, persons

66 facilitating these activities also shares culpability. To reiterate, ● All pilots seeking access to restricted areas of the General Aviation section of LPIA are now required to be in possession of a valid identification badge issued by the Security Department of the Airport Authority. A condition of gaining that badge is that the pilot is properly licensed to operate an aircraft in The Bahamas. ● All Bahamian Persons holding foreign issued licenses issued by other States must now apply to have those licenses converted to Bahamian licenses, thus falling under the full scrutiny of the BCAA. Pilots will be required to show proper levels of training and, regency of experience on type of aircraft being flown.

● All foreign registered aircraft based anywhere in the Bahamas for a period longer than that allowed by the Act/Regulations must be registered with the BCAA, showing proof of ownership and be on an approved maintenance program with a valid airworthiness certificate.

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● All areas engaged in general aviation activities will be subjected to increasing scrutiny and surveillance to interdict and discourage unauthorized flight operations. The Authority seeks to facilitate an environment that promotes a safe, efficient and profitable aviation sector and strives to have an industry with the least possible number of incidents and pilots who are fully regulated, responsible, and willing to abide by the Authority’s rules and regulations. The Authority believes that its mandate, moral and ethical obligation to the flying public to demand the highest level of safety. It is expected that these initiatives from the past year will discourage and eventually eradicate the insidious practice of illegal air charters.

Nassau Airport Development Company Mr. Speaker, in 2018, The Lynden Pindling International Airport (LPIA), which is operated by the Nassau Airport Development Company (NAD), experienced its best year ever serving 3.7 million passengers which represented a 11% increase over

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2017. And, Mr. Speaker, for the first quarter of 2019 year over year passenger growth was up 21%! 21%, Mr. Speaker! Unprecedented! Notwithstanding the significant increase in passengers, Mr. Speaker, the airport has been able to maintain its high customer service scores that are monitored and reported by the Airports Council International through its quarterly Airports Service Quality (ASQ) Survey. NAD began participating in the ASQ survey program in 2011 as a way to benchmark LPIA with other airports in the region and with global airports serving 2-5 million passengers annually. Key performance indicators like waiting time in processing queues, efficiency of check-in staff, cleanliness of restrooms and terminal ​ facilities . among others have shown …… ……… improvements over the last 15 months ..despite the … significant passenger growth, and at the last quarter ending March 2019, LPIA scored 4.36 out of 5, higher than the previous quarter when it scored 4.34 out of 5. The bottom line is this, Mr. Speaker, the busier the airport gets, the better the service becomes .and ……… I have to commend Vernice Walkine, the Managing Director of NAD and Walter Wells, the Chairman of NAD and their entire teams .for a job well! Key to ……

69 these improvements is the relentless focus by NAD on operational measures inclusive of innovation, technology, stakeholder involvement and communications. Mr. Speaker, last quarter, NAD, in partnership with airport stakeholders, developed a new set of Standard Operating Procedures (SOPs) to manage the significant growth in passenger movement from the curbside to the gate and vice versa at LPIA. Efforts are coordinated and focused on using increased manpower, existing technology and effective communication between agencies to improve the overall operations during peak periods. Mr. Speaker, agencies are now given passenger projection charts that detail arrivals and departures traffic in hourly intervals and highlight peaks within each of the three terminals at LPIA. This is a powerful tool when used in conjunction with historical passenger numbers so that planning around staffing and other resources can be done effectively. Mr. Speaker, the use of these new SOPs led to the airport efficiently processing on arrival and departure some 75,000 passengers over the 5-day Easter holiday

70 period, the most ever for the traditionally busy Easter period! Mr. Speaker, NAD is fully capitalizing on leading edge operational investments made in previous years like swing gates and Automated Passport Control (APC) kiosks that make it possible for LPIA to handle the record number of passengers while still offering a region-leading level of service. Mr. Speaker, the airport’s United States Pre-clearance facility is supported by APC technology that has reduced the US Customs and Border Protection (USCBP) processing time for travelers by 80% and I encourage the Member for St. Anne’s and the Minister responsible for Immigration to take note of this development as he grapples with long lines at Bahamas Immigration. The introduction of electronic boarding pass technology has also reduced processing time for passengers significantly. Mr. Speaker, the addition of swing gates .those ……… departure gates that can be used for both US and non US departures .. has expanded NAD’s United States …… gating capacity by 30% without the construction of additional gates to the physical structure of the airport. The efficient use of gates for US and other

71 internationally bound flights has been a significant operational achievement for NAD. Further, the use of video analytics surveillance technology for the swing gate project creates an invisible security barrier that when penetrated activates a silent alarm in USCBP and also causes the cameras to zoom in on the object that would’ve penetrated the surface. The technology supports and enhances security operations. Mr. Speaker, the Airside Vehicle Operating Permits (AVOP): Driving on the airside can be quite a daunting task for first time drivers and so as to ease some of their initial concerns, LPIA was developed in a virtual world with an AVOP Driving Simulator. Drivers can now operate in and around LPIA just like they were doing so in the real world to familiarize themselves with the airside environment and gain confidence in navigating there. While aspects of the program are still under development, NAD recognizes that there are important other uses for the driving simulator such as training of staff to conduct Runway Inspections and

72 familiarization with ATC Communications. Mr. Speaker, the use of technology is exciting! Mr. Speaker, NAD is seeking to reduce its electricity costs by 35% and ensure a stable source of power with the introduction of a Solar Plant to support LPIA’s power needs now and into the future. A successful expression of interest process was undertaken and NAD recently issued a Request For Proposals for solar power and we look forward to the outcome of this strategic initiative, Mr. Speaker. Mr. Speaker, in September of 2018, NAD’s credit rating was reaffirmed by Fitch Ratings and upgraded from BBB- (Negative Outlook) to BBB- (Stable Outlook), a firm indication of the improved financial health of the company and the second upgrade since I became Minister. Mr. Speaker, I have said it before and I will say it again! This FNM government, led by the Member for Killarney, is all about UPGRADES of our credit rating ..whereas the Christie-Davis Hanna …… Martin Administration of the PLP was all about DOWNGRADES I think there were 4 downgrades, ……… Mr. Speaker! But correct me if I am wrong!

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Mr. Speaker, when I became Minister responsible for Aviation ..and discovered that NAD had over $130 …… million in debt upon which it was paying a 13% interest rate I immediately made it one of my key priorities …… to refinance that debt at a much lower interest rate. In addition, given that the interest rate was so high, NAD was not even paying the interest ..it was just adding … it to the principal and essentially paying interest on interest all at the 13% rate. So what started out as a $70 million loan in 2009 had grown to almost $140 million by the end 2018 .and of that total, …… approximately 40% was being held by foreigners who insisted in being repaid in US …… Dollars which added another 2% in conversion costs to the already outrageous interest rate of 13%...... making for a total of 15%. Now, where I come from ..paying … 15% on debt when all I can get is 1% in the bank, someone was getting rich off the Bahamian people and that had to change!

After an enormous amount of hard work by NAD Chairman Walter Wells (a former senior banker at CIBC) and his entire team at NAD, NAD completed the refinancing of that 13% debt .reducing the interest …… 74 rate from 13% down to 7.5%. In addition, Mr. Speaker, remember when I said that 40% of this debt was held by foreigners .well, in the refinancing, we took …… them out and sold the debt entirely to Bahamian entities and individuals saving NAD another 2% in converting the interest payment from Bahamian Dollars to US Dollars. Mr. Speaker, taking out the foreigners means that all of the $9.6 million in annual interest payments on this debt will stay here in The Bahamas to work for Bahamians instead of a portion of it going overseas to work for non-Bahamians. Mr. Speaker, in addition, I delighted to report that reducing the interest rate on that debt from 13% to 7.5% will cause NAD’s interest costs to be lower by approximately $7 million per year and save the company another $600,000 in conversion costs. Also, instead of NAD adding the interest to the principal and causing the debt to grow year after year, NAD is now able to pay the interest IN FULL every quarter and so, the principal has stopped growing! Mr. Speaker, by reducing the interest cost of NAD by approximately $7 million per year ..from $16.8 …… million at 13% down to $9.6 million at 7.5%....which, Mr. Speaker, I think you would agree is a huge

75 savings .NAD is expected to .for the first time in …… …… its history .begin to turn a profit in 2020. Mr. …… Speaker, this is what I am talking about! This Minnis led Administration is all about responsible government, we make sensible decisions and turn what was making a loss into something that is now making a profit. We are so different from them on the other side. All they know about is taking something that is making a loss and turning it into a bigger loss .wasting taxpayer money on bad decisions! …… Exuma! Take note! These are the boring decisions that we are making! But in the meantime, we are making The Bahamas run better, work better for the Bahamian people! Mr. Speaker, with the record passenger numbers of passengers passing through LPIA and the savings on its interest costs, I am very pleased to inform this House that, for the first time since the redevelopment of the Lynden Pindling International Airport, NAD is in a position to perform some essential capital projects. The largest capital budget in the history of the company, some $53.6 million, has recently been approved by the NAD Board of Directors for a total of

76 forty-six (46) capital projects, of which six (6) are major capital projects. Mr. Speaker, the capital program begins now with the repaving of Runway 09/27, the runway that intersects with the main Runway, and the taxiway to get to that runway, known as Taxiway India. Effective 17 June, less than two weeks from now, Runway 09/27, will close and the repaving exercise will begin. While Runway 09/27 is out of service for its rehabilitation, the airport has a solid plan for safe single runway operations on Runway 14/32. As I stated in the press, all non commercial aircraft ..or general aviation, … should try to avoid using the airport during the busiest time of the day which is generally between the hours of 12 noon and 3pm, and the traveling public should allow for additional time if they are making a connecting flight in the US or wherever! This repaving exercise is expected to take three to four months ..ending in October 2019 right in time for … …… the Thanksgiving Rush and the run up to Christmas. Part of this repaving exercise will be the building of New Access Road for Air Traffic Services and the Rehabilitation of another Taxiway (Taxiway

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Hotel) ..but these will not commenced until the … intersecting runway repaving project is completed. Other additional airside projects include: - Extension of Taxiway Kilo, which will reduce congestion on Runway 14/32, especially for small aircraft - Rehabilitation of the severe alligator cracking of the concrete on Aprons 5, 4, 3, 2 and 6, to provide safe parking of large aircraft. - Runway Lighting Upgrades, to replace the older and inefficient lighting to LED lights, for more reliability and cost-efficiency - Concrete Hardstands (2), to replace asphalt at the gates where asphalt rutting has been a challenge; gates will be taken out of service one at a time to minimize disruption in operations, and at a rate of two per year - Two (2) additional Jet Bridges, for which the pre-engineering works will begin shortly, with a view to actual construction of the fixed link for the two bridges to get underway next year; the goal is to minimize disruptions as this construction will affect one existing gate

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Mr. Speaker, this is an ambitious capital agenda, but the team at NAD is organizing itself to meet the challenge of carrying out airside improvements even as the airport continues to operate safely. Suffice it to say, Mr. Speaker, that there will be significant activity in and around LPIA for quite some time, but all to the good, Mr. Speaker, all to the good! Finally, Mr. Speaker, it is the government’s intention to expand the footprint of the airport by making surrounding government owned land available to NAD. NAD’s new Airside Master Plan, with a target completion of August 2019, calls for a future parallel runway, which would require additional surrounding land not now vested under NAD. A request has been made of the government to transfer to the Airport Authority, then to NAD, an additional 1,448 acres, which Cabinet has approved subject to the due diligence of the Office of the Attorney General and the Lands and Surveys Department.

This additional land would ensure the airport has all the land it needs for growth well into the future, long after you and I are gone, Mr. Speaker, inclusive of

79 commercial opportunities such as cargo aprons, etc., and very importantly to prevent or avoid encroachment. AIRPORT AUTHORITY Mr. Speaker, I now turn to the Airport Authority, which is responsible for the management of the country’s 28 Family Island airports and security and fire and crash rescue at LPIA. Mr. Speaker, being the archipelagic nation that we are, managing and maintaining the country’s 28 Family Island airports is horrendously expensive. As you can imagine, 28 Family Island airports require 28 runways to inspect and maintain, 28 terminals to keep up, 28 fire and crash rescue regimes involving at least 15 very expensive fire trucks to staff, replace and maintain, numerous security regimes to staff and maintain, hundreds and hundreds of runway lights to inspect and maintain, bushes to clear, fencing to fix ..and the list … goes on and on and on. And every Family Island MP that sits in this House wants a better airport for their constituents. What makes this portion of my portfolio so vexing is that the needs are great but the funding is not …… 80 great. But, I get it Mr. Speaker! We are, after all, a very small country with a population of just 400,000 so, we can only do what we can afford. Notwithstanding my previous comments, the Government has embarked on an ambitious family island airport redevelopment program. A new $2 million desperately need terminal is planned for the airport in Great Harbour Cay in the Berry Islands. Given the number of foreign visitors that flow through that airport and the increased activity being generated by the redevelopment of nearby Coco Cay, the Government felt that the replacement of the existing terminal building, which is in a deplorable condition, was a priority. The contractor has assured me that he should be breaking ground on this project in the next 30 days.

The airport next up for a completely new terminal and substantial works to the airside is the airport in Georgetown, Exuma. Years and years of planning and design has gone into this airport and the process for selecting a contractor to build the airport is about to

81 get underway. Barring no further delays, we are finally hoping to break ground on this project in the third quarter of this year. Next up is North Eleuthera where the amount of traffic passing through that airport has simply outgrown its current infrastructure. The MP for North Eleuthera is right. Tourism growth has been incredible in his constituency and they need a new airport. We are currently in the preliminary stages of planning that airport although we hope to achieve some savings by using a similar design to the airport planned for Georgetown. However, North Eleuthera will require a completely new runway since the current runway is too close to the proposed terminal building and will have to be turned into a taxiway to a new runway. In addition, North Eleuthera airports is challenged with land ownership issues since the airport sits on commonage land and the administrators of that commonage, I am advised, have recently made moves to lease land, vital for the redevelopment and expansion of the airport, to themselves which could complicate and delay this project moving forward. I advise the people of North Eleuthera to get involved with the commonage and tell these managers of that

82 commonage not to hold the government hostage by insisting on payments to themselves for the land they have leased to themselves. Next up is the redevelopment of the terminal and runway at Deadman’s Cay, Long Island which the government has promised to commence in the 2020/21 Budget cycle. Mr. Speaker, Long Island has waited long and endured many promises and, quite naturally, they are skeptical that we will deliver on our promise of a new airport and runway. Mr. Speaker, the Member of Killarney has stated on a recent visit to Long Island that, next Budget cycle, will be their time ..finally, to get a new airport. When that …… project is completed, this FNM Government will make the Deadman’s Cay Airport a Port of Entry to facilitate direct flights into that island since that Airport is the only Tier 2 airport in The Bahamas that is not presently designated a Port of Entry airport. Finally, Mr. Speaker, the Board of the Airport Authority is moving out of the Western Air terminal at the San Andros airport into brand new trailers, which have been recently installed, to mitigate the outrageous costs that it was incurring to rent space in the Western terminal at the San Andros airport. It would have been

83 the previous administration and I guess the …… previous Minister, the Member for Engleston can speak to this when she is ready that authorized the …… move from the then dilapidated trailers into the Western Air terminal. While I don’t fault the previous Minister for the move ..the trailers had been allowed … to deteriorate into mold infested hellholes .the …… only problem that I have with the move was that it came at an enormous expense. When I took office and learned that the Airport Authority was paying $60 a square foot to rent space in a building in Andros at a staggering cost of $205,200 a year, I ……… said HELL NO! This lease was brought to my attention when it came up for renewal in February 2018 and the landlord requested an increase in the rent to $84 a square foot! Once again, Mr. Speaker, I had to say HELL NO!

To give it some perspective, Mr. Speaker, the Ministry of Tourism, I am advised and Exuma and confirm this, rents space in the British American Financial Building on George Street, in the heart of the downtown area of our capital city, and only pays $25 per square foot. Yet, the Airport Authority was ordered on May 4

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2017 ..note the date Mr. Speaker by the … ……… Christie Davis Hanna Martin Administration to enter into a lease (which, by the way was never executed since no one seems to have a copy of it) retroactive to March 2015 to rent 3,063 square feet in the Western Air Terminal for $60 a square foot costing the Airport Authority $205,200 a year inclusive of VAT or $17,100 per month in rent. I am advised that two years worth of rent or $395,127 was advanced to the Airport Authority from The Treasury in May 2017 and the rent was paid Western Air. Mr. Speaker, over the four year life of this arrangement, the Airport Authority incurred rent totaling almost $800,000 for this terminal in San Andros. What make this so egregious, Mr. Speaker, is that the project to install new trailers, which the current Board, under the Chairmanship of Mr. JM Pinder, has just completed, I am advised, will cost approximately $150,000 so, do the math Mr. Speaker, we will pay for these trailers in eight and half short months. Mr. Speaker, the payment of rent at $60 per square foot is now behind us and I must say that I have been quite frustrated that it has taken as long as it has. Mr. Speaker, I am not going to opine on this

85 transaction other than to say that it was BAD deal ..yet, another PLP BAD deal ..which we …… …… have corrected and NO, Mr. Speaker, we are going to thank the PLP for that! The Member for Exuma talked at length yesterday about special interests well, I …… want him talk dat! In addition, he objected to the Government paying $12 per square foot for the new Post Office yet this example shows how willing and eager the PLP, his party, were willing to pay $60 per square foot for a building in Andros. I am just delighted that in my capacity of Minister of Aviation, I have saved the hardworking taxpayers of this country another $200,000. Mr. Speaker, the Stantec Report, completed in 2014, revealed that $160 million has to be spent on ​ improving our Family Island airports to carry out critical upgrades. Five years later that amount is probably closer to $200 million. The Stantec Report also realized that the Bahamian taxpayer cannot afford to pay for all of these upgrades and suggested that we enter into PPPs (Public Private Partnerships) to help mitigate the costs of these upgrades. In a number of airports, the report suggested that we use private sector operators to

86 better manage the operations and the Airport Authority has been exploring such options. In addition, Mr. Speaker, NAD charges $48 for every passenger that departs from LPIA and for those of you who are wary that such a high passenger facility charge may dampen visitor arrivals, may I remind you that this PFC is very much in line with competing airports and that our passenger count has actually been increasing and, Mr. Speaker, you can see for yourself how wonderful that airport looks and ranks in the Caribbean. Mr. Speaker, the Airport Authority charges absolutely nothing for anyone to use its airports and so, we have what we have. As we upgrade our Family Island airports, a similar model that is used at NAD must be explored to ensure that we are able to maintain these substantial investments once they are made.

In addition, Mr. Speaker, during the upcoming Fiscal Period, the Airport Authority will be looking to upgrade it baggage screening equipment at LPIA and replacing a number of its fire trucks, some of which date back to 1972 ..long before many of the members of this …… House were even born. Mr. Speaker, the baggage screening equipment at LPIA is obsolete and

87 inadequate and has been the reason for flight delays due to frequent equipment failure causing additional handling of the bags .something that causes the US …… Border Protection Agents to often request that, once the baggage is loaded onto the plane, it is all taken off the plane and rescreened causing inevitable delays. Not only do we need more baggage screening machines, due to the increased passenger loads at LPIA, but we also need machines that our local technicians can service and for which we can find parts. The current equipment requires the Airport Authority to fly in technicians .thats the only deal …… that the equipment supplier will give the Authority .and, given the age of the equipment, the …… sourcing of parts has become a major problem.

The fire trucks are in a similar state. I want everyone to understand that you cannot operate an airport that services scheduled commercial aircraft without adequate fire fighting equipment. If you have fire equipment that is not working, the Bahamas Civil Aviation Authority has to inform the flying public of that fact and scheduled aircraft will immediately stop coming to that airport. As a result, Mr. Speaker, a

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substantial investment is needed in this current Fiscal into the inventory of fire trucks to ensure that our growing tourism arrivals are not interrupted by flight cancellations caused by fire trucks that are not working.

NASSAU FLIGHT SERVICES Mr. Speaker, I now turn to Nassau Flight Services. As I would have previously mentioned, NFS is responsible for all ‘below the wing’ services (baggage, ground handling services, fuelling, etc) and ‘above the wing’ services (check in, passenger movement, VIP services, etc.) requested by scheduled and unscheduled carriers at LPIA, Exuma and San Salvador.

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The Government is interested in privatizing this company and ideally selling it to a group of up and coming Bahamian entrepreneurs. The Government does NOT want to sell this company to foreigners .nor does it …… want to sell this company to any of the long established traditional business operators here in The Bahamas! This is a great chance for a group of Bahamian entrepreneurs who have had some business success thus far .wanting to expand and grow to …… the next level. I just want to say up front that the Government of The Bahamas has made NO DECISION YET to sell this company. We have prepared and issued an RFP and, based upon the responses received, an evaluation committee will make a recommendation and the Government of The Bahamas will determine if it wishes to accept that recommendation and proceed with the sale. Mr. Speaker, as mentioned, NFS is an airport ground handling company operating at the Lynden Pindling International (LPIA), San Salvador, and the Exuma International Airports. Originally, the company was named “Nassau Air Dispatch” and was started by an Englishman named Harold Woodman in 1957 when

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Nassau International Airport was first opened. Subsequently, the company was acquired by Aircraft Services International, an American Ground Handling Company in the 1970s and The Bahamas Government acquired the operations in October 1979 and renamed the company Nassau Flight Services Ltd. (NFS) and began formal operation in February 1980. Since that period to now, profits from this company have turned into losses and the losses have grown significantly since 2012, when the Member of Engleston was the Minister, primarily because payroll and related costs have been allowed to grow unchecked and now exceed 97% of the company’s annual sales. Yes, Mr. Speaker, for every dollar that comes into Nassau Flight Services 97 cents goes to pay the staff. Each year, the Government provides this company with $1.8 to $2 million in subsidies which barely assists in the covering of the other costs of this company. As a result, the company’s liabilities are growing and its fixed assets, starved of cash, are deteriorating. Essentially this company has gone bankrupt and is being propped up by Government subsidies. There is no money to innovate and refresh and NFS will die a

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slow death unless it receives fresh capital and new ideas and is allowed to reboot. Mr. Speaker, it should be no secret to Bahamians that I support the sale of this company. I have taken this position, not only because NFS has received just under $9 million in subsidies from the Bahamian taxpayer over the past 5 years, but because I believe and …… this government believes ..in growing and creating … opportunities for up and coming Bahamian entrepreneurs. NFS is the right size ..not too big …… and not too small, has the right cash flow potential, and if run properly, can create an enormous opportunity for a mid-size Bahamian company.

Mr. Speaker, NFS generates revenues of approximately $7-8 million per year and it incurred accumulated losses of just under $10 million over the past five years. A review of NFS’s Financial Statements for the period 2014 – 2018 confirms these losses and shows declining gross income and increased expenses, especially payroll costs. Mr. Speaker, the time for tough decisions is upon us since, with these

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deteriorating financial results, we cannot allow the status quo to remain. On Monday 20th May 2019 a Request for Proposal (RFP) for ​ either the outright purchase and/or franchise acquisition of NFS was published. All qualified companies will have the option to submit a Purchase Proposal and/or a Franchise Proposal. Given the sensitive nature of NFS operations and its contribution to the quality of our tourism product, the Franchise Option was strongly recommended to be included so that, in the event a suitably qualified and experienced Bahamian company does not emerge as a buyer, the divestment can continue by way of a Franchise Arrangement ..that will remove the financial ……… responsibility from the Government but still allow for Government quality control over the new NFS operators. It should be noted at this juncture that, prior to the publication of the RFP, advisory meetings were held with the Appointed Board of NFS, their Executive Management Team, all line staff and their respective union (the Airport Airline & Allied Workers Union) to ensure that the RFP process is managed efficiently and respectfully. I know that a number of the staff have

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expressed their concern about the uncertainty of the process and I get that, Mr. Speaker, I get that. But I want all the workers to know that, in the event of a sale, they will all be well taken care by this government and assured of preferential consideration by the new owners. Mr. Speaker, from what I have been advised, there is considerable interest in this RFP and I am encouraged that so many Bahamians are stepping up with bright and innovative ideas to take Nassau Flight Services to the next level. Stay tuned, Mr. Speaker, stay tuned.

BAHAMASAIR Mr. Speaker, under the Chairmanship of former Cabinet Minister Tommy Turnquest, the financial performance of Bahamasair continued to improve over the past fiscal year ..although the national flag ……… carrier continues to suffer from a lack of scale. With only nine planes, Bahamasair experiences enormous operational challenges when one of its nine planes

94 suffers a mechanical and is taken out of service. We will all remember those scenes on social media when one of Bahamasair’s jet went out of service and the airline was challenged to get customers stranded in South Florida back home. While we all love our Bahamasair ..many of us consider the national flag …… carrier as a symbol of nationhood ..it is important …… to note and understand its limitations. When American Airlines, for example, with 800 planes takes one plane out of service, it is left with 799 planes and can accommodate its customers fairly quickly with a replacement itinerary. Bahamasair, with 9 planes ..when one is taken out of service, it is left …… with 8, and, while a replacement itinerary is inevitably found, it is typically following an extraordinary delay. Mr. Speaker, passenger counts at Bahamasair continue to grow with 945,000 passengers using the airline in 2019 up from 853,000 in 2018. The airline is projecting that Bahamasair passenger count will exceed the one million mark in 2020, yet another record, and settle at 1.1 million by year end. In addition, the airline predicts that its annual net loss will decrease from $24 million in 2018 down to $21.9 million in 2019 down to $16.9 million in 2020. However, despite these increased

95 passenger counts, Bahamasair still continues to average around 60% load factor annually. Most airlines, in order to break even, must operate a load factor closer to 80% so Bahamasair would have to do something seismic to increase passenger loads by one third to get to that breakeven point. And competition remains very stiff, Mr. Speaker. US carriers, especially Silver Airways, are now making more direct flights into Nassau and other Family Island destinations. This increasing competition will continue to impact Bahamasair’s Florida and domestic routes, as fewer tourists will transit to and through Nassau to their final Family Island destinations. Note further that Bahamasair currently competes with legacy carriers on its Florida routes. American Airlines uses a faster more modern 70-seat Embraer jet aircraft and operates seven (7) daily flights on the Miami- Nassau route whereas Bahamasair operates only three (3) daily jet flights on that same route. Jet Blue operates three (3) daily flights on the Fort Lauderdale to Nassau route using Embraer 100-seater jets and occasionally upgrades to its 140-seater Airbus -319 jets. Southwest Airlines has also added additional seat capacity to this route to

96 compete further with Bahamasair’s three (3) daily flights into Fort Lauderdale from Nassau. Jet Blue also competes with Bahamasair with its once daily flight from Orlando to Nassau. While it may make sense to redeploy some of it aircraft to other routes where there is less competition, all travelers flying into South Florida benefit from lower prices that airlines are forced to charge to remain competitive with Bahamasair. And this is the benefit of Bahamasair, albeit at taxpayer expense. The additional load that it puts on the routes to Miami and Fort Lauderdale help keep the fares affordable for both Bahamians and our foreign visitors that connect through South Florida.

Mr. Speaker, on February 14, 2019, Valentines Day, Bahamasair took delivery of its ninth jet, a 138 seat Boeing 737-700, at a cost of $11.4 million, paid for, in full, from the proceeds generated by the sale of the old Dash-8 aircraft. This aircraft seeks to improve the reliability and on time performance of Bahamasair (which actually reached 76% last month); allow Bahamasair to take further advantage of its peak periods by putting on additional flights; and to allow for the airline to fly greater distances if it were to

97 pursue nonstop direct services from destinations, identified by the Ministry of Tourism, where the demand exists and that type of nonstop direct service does not exist .such as Austin Texas, New Orleans …… Louisiana and Cleveland Ohio ..to name but a few. … Mr. Speaker, in July 2019, Bahamasair plans to introduce additional check-in alternatives using kiosk at all major airports locally and in Florida. This automated self-check-in alternative for a passenger and their bags will speed up the check-in process and hopefully lead to lower staff costs. In January 2020, Bahamasair plans to implement a new generation digital Passenger Service System (“PSS”) to assist with flight reservation and customer check-in, customer service and improved communication with all customers. The new Passenger Service System will save the Airline up to $2 million annually in transaction costs; free up existing human capital to be redeployed to better serve the airline’s customers; enhance communication with the Airline’s customers, allowing the Airline to push out, via customers’ mobile devices, service bulletins to all customers before, during and after their flights; and Provide REAL TIME business intelligence to assist the Airline in making real time

98 decisions with respect to managing passenger loads based on forward booking. Mr. Speaker, Bahamasair is also preparing to launch a totally re-engineered website geared to drive a majority of all purchases through the internet, which should further reduce costs. Important to note you can save more when you book online. In addition, the airline has recently launched its new bundling/tour platform which will allow customers to bundle, airfare, hotel and car into one attractive price. According to Bahamasair, the new revenue that this platform will generate could exceed well over $1 million for the 2020 budget year. Bahamasair, since the start of 2019, has also created an expanded Customer Care Unit to deal with the re-scheduling of passengers in a more thoughtful way due to operational changes or external factors. This unit, when coupled with the new initiatives of the Passenger Service System, should further improve the overall customer experience with the National Flag Carrier. Mr. Speaker, The greatest challenge to Bahamasair meeting its financial targets is the rising cost of fuel.

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The company spent $11.8 million on fuel in 2017 and $18 million on fuel in 2019. As tensions rise between the United States and China and Iran, this will negatively impact Bahamasair’s fuel costs as oil prices have recently risen to $85 a barrel when the experts were predicting that oil prices would in the low $70s for most of 2019. Mr. Speaker, on April 25, 2016, Bahamasair borrowed $120 million (mostly in US Dollars) at 8.3% to purchase the 5 new ATR aircraft, buy some parts, and pay off some old loans. The dream was that these new aircraft would reduce maintenance costs so much so that Bahamasair would be able to generate sufficient additional cash flow to service these loans. Needless to say, that was another one of those PLP dreams that never materialized and now that these loans have to be paid off over the next seven years no more extensions on principal repayments …… allowed .you will see a $9 million increase in the …… Budget allocation for Bahamasair going from $13.4 million this year to $22.4 million for next year. This $9 million increase will be used to make principal repayments of $6 million plus help mitigate some of

100 the annual interest costs which will total approximately $9.5 million for this year and next year. Finally, Bahamasair plans to spend almost $12 million on capital projects in the 2019/20 Budget year. Almost 80% or $9.3 million of that total will be spent on heavy maintenance and engine overhauls but $1 million is planned to facilitate the move of the company’s headquarters from its current location which is a 50 year old building still reeling from damages inflicted when Hurricane Matthew struck in October 2016 to a building complex on Blake Road, formerly used by Doctor’s Hospital.

CONCLUSION Mr. Speaker, what a great year this has been. Tourism, the engine of our economy, continues to perform exceptionally well. While Exuma and the PLP want to take credit for the success that I am enjoying as Minsiter of Tourism, I say to them ..sit small you … …… had your time and this is our time! This MInnis led Administration is clearly, clearly far better managers of our economy and that is why there is so much

101 optimism and interest in The Bahamas. Yes! There may not be anymore Bahamars in the pipeline this …… economy can only absorb a project of that size once every ten or so years! But this Free National Government is nurturing and shepherding our important Tourism sector to ensure that it continues to enjoy the success that it has and impacts as many Bahamians as it is doing. The proof is in the pudding, Mr. Speaker. The tourism numbers, throughout the length and breadth of this country speak for themselves. As a result, Mr. Speaker, Freetown is delighted to support this Budget.

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