In June 2015 Davies Associates Ltd., (DAL) the Freeport based development advisory and project Management Company announced that it had commissioned a study into the economic development of Grand Bahama Island (GBI).
Andrew Davies, president of DAL said:
“Our investment in the study coincided with the government’s investigation of the Hawksbill Creek Agreement (HCA) and in May we presented some preliminary findings to the committee. We were encouraged by the positive approach taken by the committee in trying to find a way to stimulate the GBI economy.
Our presentation proposed four major initiatives. Development of a hub airport, reducing GBPA’s area of influence to the original 50k acres of the HCA, formation of a GBI investment bank and establishing a GBI private equity fund.
We feel the time is now ripe to open these recommendations from the DAL Report to public consideration beginning with the development of the airport. We intend to release other conclusions over the next few months.”
The geographical advantage of GBI is obvious. 159m people live within a 1000 mile radius, 2½ hours flying time from Freeport and 535m people live within a 2000 mile radius.
This an enormous market with an estimated GDP of US$ 4 trillion within 1000 miles.
GBI is located advantageously and has good port facilities but it has poor air links to the major economic centers and this is a significant negative factor that discourages investment.
Andrew Davies said,
“Investors do not want the inconvenience of having to fly themselves or their customers to GBI via Nassau, Fort Lauderdale or Miami. Freeport cannot be credible as a logistics hub while it remains a secondary destination for passenger traffic.
Based on our research we conclude that the existing airport should be developed into a hub facility for passenger and freight traffic serving a region of 1000 miles to 2000 miles radius of Freeport.”
Freeport airport is an excellent but a grossly underused asset that must be made central to the development of the island.
Other small economies that have pursued an ambition to grow larger have tended to establish a hub airport and a national airline as a primary initiative.
A hub is distinct from a ‘point to point’ facility in which the majority of passengers disembark and enter the state. Instead around 70% remain in transit to another destination.
The virtue of a hub facility extends beyond the additional landing fees, servicing, fueling and flight maintenance benefits by providing a significant increase in hinterland connectivity. The viability of transcontinental scheduled flights is increased as they can attract passenger traffic that wants to transit to a secondary destination that the airline does not serve with direct flights.
A cursory examination of the hub airports located within the Freeport range reveals that they are all to the north of Freeport. Atlanta, Dallas FW, Charlotte, Houston and Miami accounted in 2014 for 287m passenger excursions. Most of these had the USA as their origin or destination but a significant proportion transited from or to destinations to the south of the USA and closer to Freeport.
These established hubs suffer from two impediments. Firstly they are approaching the limits of efficient passenger transit which should take no longer than one hour. Secondly there are few landing or take-off slots available to new entrants.
A new hub airport in Freeport would increase the available slots but also relieve traffic congestion at the existing hubs.
The investment required to reconfigure Freeport airport is not insubstantial but the economics are attractive. A new terminal would be required with air bridges. This would be developed in two phases to minimize the initial capital investment.
Hutchinson Whampoa, which owns the current facility, would be invited to discuss the development as a public private partnership (PPP) with the existing assets being vested in the development and the balance financed by the sale of a 35 year operating lease to manage passenger traffic with Hutchinson retaining the freight franchise.
The model should be a scaled down version of the airports at Doha, Qatar; Dubai and UAE.
Alternatively the Government of the Bahamas may prefer to acquire the airport and its ancillary facilities in order to finance its development as a public private partnership.
The attractions of this remodeled facility are;
i. That the increased traffic will provide economic benefits in landing fees, servicing, fuelling and flight maintenance.
ii. More routes will attract more tourist business to the island and strengthen its case for becoming a cruise embarkation point with the ancillary benefits this brings in hotel accommodation etc.
iii. The inward investment proposition is enhanced considerable by expanded connectivity.
The Gulf States used investment in aviation as the cutting edge of their engagement with developed economies. Using Singapore and the Gulf States as exemplars also raises the desirability of forming a GBI based branded airline. This may be accomplish by relocating and expanding Bahamasair.
The formation of a new or enlarged airline is major and expensive investment but, in a growing aviation market, it is feasible in partnership with an established international operator that has assets and wants to increase its landing slots.
Andrew Davies concluded;
“ This would be a major project but one that is feasible and builds on an existing but underutilized facility that GBI’s investment competitors cannot match. Moreover it will stimulate the GBI economy without, as a precursory step, needing to resolve the difficulties associated with the HCA and GBPA.”
For more information please contact Andrew Davies on (242) 727 1466.
Davies Associates Ltd (DAL) is a Bahamian development advisory and project Management Company based in Freeport.DAL has worked extensively throughout the region and has acquired considerable knowledge of investment strategies and structures.