Overview. NAD assumed management responsibility for the Lynden Pindling International Airport on the first of April 2007, and has just completed its first full year of operation. NAD is a Bahamian company with a 30-year airport lease, currently managed by a Canadian company, Vancouver Airport Services (YVRAS). YVRAS won a competition to manage the airport in 2006. YVRAS and NAD have fulfilled all first year contractual obligations.
NAD is tasked with operating the airport on a commercial basis while providing opportunities for business and investment to Bahamians. In the past fifteen months NAD has completed two financings, one for $67 million and one for $80 million, which enabled the Airport Authority to repay a $50 million loan and established a solid financial basis for the airport. NAD has also paid over $500,000 in rent and has spent over $24 million BSD in The Bahamas in the past 15 months. NAD has accomplished this by increasing non-aeronautical revenue at the airport and through the implementation of the Passenger Facility Charge last July. This has eliminated the need for government subsidies, which totaled over $45 million in the past seven years.
Phase 1. One of NAD’s major priorities has been to bring the existing facilities up to a much higher standard in its first two years. Dozens of projects have been completed, including the following:
The installation of a $2 million dollar baggage system in the US departure terminal, which has eased passenger baggage problems by taking checked luggage away prior to the initial security screening. Very shortly, when the Airport Authority implements certain other steps, the upstairs screening point can be eliminated, which will significantly improve the customer experience. The US terminal has been painted, carpet replaced and the Public Address system has been upgraded at a cost of $41,000.
Almost $2 million has been spent on five new and refurbished washrooms in the various terminals, and four more are underway as of today. These have made a tremendous difference in customer satisfaction, with ratings going up a full 25%, from 3.1 to 3.9 out of 5. Speaking of which, NAD has instituted twice yearly customer satisfaction surveys and a customer comment card program in order to track satisfaction levels and react appropriately.
Flight Information Displays were added in the terminals, which provide airline arrivals and departure information to travelers and others. The NAD website has been operational for six months, where passengers and the public can also view the arrivals and departure information, in addition to operational information like parking and job openings. Last week, new counters in the arrivals baggage hall opened to both make it easier for passengers to reclaim their luggage and to remove bags off the floor.
Parking lot improvements include the addition of 200 parking stalls, the development of the overflow lot, which includes bus service, short term parking, new collection booths and a realignment of the curb, which has greatly improved vehicle flow in front of the international arrivals area.
For six months now NAD has had six retail kiosks operating in the US departures lounge and they have been a great success, providing a great retail opportunity for Bahamian entrepreneurs while presenting a last minute shopping opportunity for tourists. Six additional, slightly smaller carts will be rolled out shortly.
Following a lengthy and complex negotiation with the existing exclusive food and beverage operator, many more opportunities will be available for the passengers within the next few months. Two new coffee bars will be in place shortly, as well as several new franchise food outlets in the US and domestic terminals.
General repairs and maintenance projects have included everything from $300,000 roof repairs to prevent leaks to thousands of dollars on new paint, carpets, plants, garbage bins and signs, both inside and outside the terminals. The covered walkways for both International and Domestic passengers have been refurbished and repainted. Many improvements have been made that are not visible to the traveling public: $86,000 has been spent to bring the fire alarm system in the US terminal up to code, $60,000 has been spent on up to date aviation charts that were 3 years out of date, and $570,000 has been spent to buy new maintenance equipment, from tractors and grass cutting gear to vehicles.
The Airside Maintenance team has cleared back trees and brush that were a safety issue for the air traffic controllers, as well as performing a general cleanup airside, with ditch rehabilitation and grass cutting. Over 2,500 feet of fence line was replaced and brush was cut back from the entire perimeter.
A four-year, very progressive collective agreement was recently signed with the BPSU, which includes a new pension plan and disability insurance, as well as performance based pay.
NAD has promoted eight people, in a company of 145 staff, including 3 directors. When the terminal redevelopment is complete, 3 of the 5 executives will be Bahamian, so training is a vital part of NAD’s yearly business plan, and ten staff have already been to other YVR Airport Services airports this past year for airport instruction and orientation. In addition 3,200 documented hours of staff training has been accomplished in the past year.
Phase II. A primary goal of NAD is of course the terminal redevelopment project. In 2006 YVRAS conducted a Terminal Review Study to determine the rationale for new terminals. The terminals will be required in order to meet the expected organic growth of tourism in The Bahamas, to bring the terminals up to an acceptable international standard and because of the rising cost of maintenance of the old infrastructure and associated equipment. The study also determined the most logical site for the new terminals. As part of the Project Management Agreement, NAD developed a Project Definition Report for the new terminals, which set the budget at $405 million. This report was delivered to the Government of The Bahamas on 17 September 2007.
In April 2008, Stantec, a leading airport design firm, was awarded a $20 million contract as the Prime Consultant for designing the new terminals. At this point, after four months of detailed work and many weeks of consultation with stakeholders, the design is at the 50% design development stage. 100% design will be complete in August. Site preparation work can begin in September, but financing is required prior to November in order to meet the current schedule for ordering $15 million in structural steel. The US Terminal is scheduled to open in the third quarter of 2010.
Operating Deficit. While NAD is currently a viable financial entity, this is due to the PFC revenues. NAD has an operating deficit, which must be eliminated within one year of the terminal redevelopment project’s completion. Currently, the deficit has been reduced from about $6 million to $4.5 million per year.
Late Payments. There are several customers of NAD that are in serious arrears and NAD may have to take action in order to collect.
Obsolete Equipment. NAD struggles with old and outdated equipment such as air conditioning and the baggage carousels. NAD has spent several hundred thousand dollars and hundreds of hours attempting to keep the air conditioning and the baggage carousels operating. However, they continue to be unreliable and extremely expensive to maintain (some parts must be manufactured in Europe). A new baggage carousel has been ordered at a cost of almost $1 million, which will be installed this fall, and is due to open by Thanksgiving. However, the age of the facilities and equipment are an ongoing problem, not easy to correct as they age further.
Airline Schedules and Capacity. During peak periods the capacity of the terminals is insufficient to prevent long lineups at check-in, security and at baggage claim. Other than opening larger facilities, schedule adjustments and line control are the only methods available to alleviate these persistent problems.