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Airport fees to soar

Norman Manley International Airport (NMIA) passenger fees are recommended to jump by 80 per cent.

Prior to this latest report released this month on the JCAA’s website, the fee charges were reportedly estimated at 100 per cent with an effective date of January 2015. The fees are now more precisely known with an April 2015 effective date.

“Although the increase in rates appears significant, it should be noted that the airport operators have not had a full economic review in 12 years, as the review period was modified by agreements between the Airports Authority of Jamaica and the airport operators and approved by the Government,” stated the JCAA in a mailed correspondence with the Jamaica Observer.

The fee hike aims to make the airports attractive to potential investors vying to acquire stakes in both international airports.

“Current and potential investors are mostly concerned about whether they can recover operating costs and a reasonable return on their investment, as provided for by the Airports (Economic Regulation) Act, 2002. Therefore, investors will be relying on the fairness of the regulatory system to produce the outcomes of the Act,” the JCAA told Caribbean Business Report.

Overall, the JCAA recommends an aggregate increase of 70 per cent at SIA, with airport charges remaining largely unchanged for aircraft. However, passenger service charges of international commercial flights are proposed to increase by “121.18 per cent”. These increases would result in the fees for embarking passengers on international commercial flights increasing from US$8.50 (J$960) to US$18.80 (J$2,120). While passenger fees on visiting non-commercial flights would increase from US$5.52 to US$15.82, passenger fees on domestic flights, at US$5.52, would remain unchanged.

The NMIA aggregate increase of 55 per cent in charges sees landing and parking fees for aircraft increasing 10 per cent; a 46 per cent rise in security charges; and 80 per cent rise in passenger service charges. These increases would result in the fees for embarking passengers on international commercial flights increasing from US$8.50 (J$960) to US$15.31 (J$1,730).

While passenger fees on visiting non-commercial flights would increase from US$5.52 to US$9.94, passenger fees on domestic flights, at US$5.52, would remain unchanged.

“As the industry’s regulator, a balanced approach was adopted to ensure the economic sustainability of the airports’ operations, while ensuring the reasonable interests of airport users, including the passengers. This enabled the JCAA to agree, with the airport operators, to a lower level of increase than proposed, so as not to adversely affect the decision of passengers re travel to Jamaica,” the JCAA said in its e-mailed correspondence to Caribbean Business Report.

In September, the International Air Transport Association (IATA) reportedly urged Government to avoid a fee increase. But the Government defended the pending hike, arguing that it would serve to increase investor attractiveness.

The Government expects to divest the NMIA in 2015. Last week, the NMIA Public-Private Partnership published an invitation seeking to shortlist private sector entities with proven experience in the aviation sector to operate, finance, develop and maintain the airport for 25 years.

While SIA, operated by MBJ Airports Ltd, has already been divested, its main shareholder earlier announced plans to sell its stake.

“The main shareholder of MBJ Airports Limited (MBJ), Abertis, some time ago took the decision to divest airport assets, and therefore its 74.5 per cent stake in MBJ is for sale,” the JCAA said in its economic review of the SIA dated November 2014.




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