But officials at the Freeport hotel have indicated that they can no longer afford to subsidize the airline, a decision that some fear could end up hurting the property, which employs over 1,200 Bahamian.
This new challenge to Freeport’s tourism product comes as officials in the Ministry of Tourism and at the Grand Bahama Port Authority work to bring stability to the island’s airlift figures that are down 6 percent for the second quarter of 2003 compared the last year.
Between 1992 and 2000, Laker Air brought in over two million guests to Freeport for lodging at the Royal Oasis Resort, with tens of thousands more being brought to the island since then.
As of July, Laker Air held approximately 34 percent of the airlift market share for Grand Bahama.
But a staggering $30 million in operational losses has prompted the Driftwood Group to end its arrangement with Laker, giving rise to speculation regarding the airline’s future viability in Freeport, according to Minister of Tourism Obie Wilchcombe.
Mary Mainot, Laker’s deputy managing director, told the Bahama Journal that, “Ninety-nine percent of our business comes through Grand Bahama Vacations. We received 60 days notice from the resort in November, so we will not be operating for them after that.”
Laker’s chartered jet service is operated through the resort’s tour company, Grand Bahama Vacations.
Although the lion’s share of Laker’s business will be affected after January 2004, Ms. Mainot insists that this does not mean the airline will go out of business.
“At this time, Laker Air has no intensions of closing down its doors or just stopping,” she said. “We simply will not be flying for Grand Bahama Vacations. However, we will be looking at other ways to keep our company viable.
She also said there are no plans to terminate staff.
“About seventy percent (approximately 50 employees) of our staff are Bahamian, but at this point we are not letting any of our staff go,” Ms. Mainot said. “We are not making any changes to our company at this point. We are not furloughing, terminating or laying-off any of our employees.”
Based on 2nd quarter Ministry of Tourism statistics, scheduled airlines such as Continental Connection, American Eagle and Air Tran brought in approximately 66 percent of guests to Grand Bahama this year.
Chartered flights such as Laker and Bahamas TransAir brought in 34 percent, a figure almost entirely dominated by Laker.
Mr. Wilchcome told the Journal that government officials have been working with Driftwood on finding a new model to replace Laker once its contract with Royal Oasis has ended.
But several challenges exist.
Of the eight routes serviced by Laker, only one (Fort Lauderdale) is serviced on a smaller scale by the scheduled airlines.
But Fort Lauderdale is Freeport’s most popular airline hub, providing 40 percent of the island’s guests.
This essentially means that the government would have to work to secure new routes via other air carriers to preserve the strength of the Fort Lauderdale hub, an initiative Mr. Wilchcombe said is already in progress.
According to the Tourism Minister, plans to increase Bahamasair’s role in the international market also exist.
But he acknowledged that the delicate financial situation at Bahamasair would have to factor heavily into those plans.
Bahamasair, as a scheduled airline, currently provides twice daily Dash-8 service to Miami from Freeport. This service was re-instituted last year after being discontinued because it was not profitable.
Just over 33 percent of scheduled flights into Freeport depart from Miami. Bahamasair only provides about a fifth of that, with its passengers being mostly Bahamian.
“We must find a way to increase Bahamasair’s role in the international market,” Mr. Wilchcombe said. “We learned after September 11 that we cannot solely rely on foreign means to sustain us.”
Driftwood’s decision to end its service with Laker has become part of a series of recent events that have spoken of the financial woes faced by the company headed by David Buddymeyer.
Public Relations Director for Royal Oasis Donald Glass told the Journal that the resort had been reviewing its finances and its ability to finance its charter service via Laker Air.
He said that Laker Air has been a major contributor to the overall occupancy rates at the resort.
Laker’s late night flights from the U.S east coast have also been key to keeping the resort’s casino viable.
“We can be okay once we secure a new arrangement with another airline, though I cannot say when that will be,” Mr. Glass said.
According to one resort official, Royal Oasis has been on a “disastrous” financial spiral since the Driftwood Group assumed ownership of the resort.
The official speculates that the after January, the future of Grand Bahama Vacations and its staff will be “up in the air.”
But Mr. Wilchcombe says that Driftwood should be given some credit.
“Though the resort’s employees through the union voice their concerns, we have to understand that Driftwood has incurred enormous financial losses over the years but has still been able to hold Grand Bahama’s tourism product together,” he said.
“Had it not been for Laker, Grand Bahama would have suffered even more severely, and I believe that Laker will still play some role in the Grand Bahama tourism product, but we are now working to fill the void to be left for Grand Bahama Vacations and Royal Oasis so that things in Freeport can continue to run smoothly,” Mr. Wilchcombe said.
The future sustainability of the Royal Oasis Resort is once again being called into question, now that the resort has terminated the service contract of Laker Air, the airline company that brought in a “significant amount” of the resort’s visitors.
The service contract, set to expire in January of 2004, brings an end to an over 10 year long venture between the resort and the airline company.
Sources within the resort say that this latest turn of events, is a “disastrous” part of a downward financial spiral taking place since the Driftwood Group of Companies assumed ownership of the property.
Before being sold to the Driftwood Group of Companies, the Royal Oasis Resort was owned by Princess Hotels.After major airlines began to pull out of Grand Bahama in the early 80’s, executives of Princess Hotels began to charter jet service to the island, since the resort could not survive on airlift brought in by only commuter aircraft.
Over a period of several years, airlines such as Air Florida, Braniff and Carnival were chartered into Freeport, bringing in visitors solely for the resort.
By Sharon Williams, The Bahama Journal
