Govt.: Landing fees discounts not unusual in industry -Opposition demands American Airlines contract be released

Mar 06, 2019 News

Government has defended a decision to grant American Airlines discounts on airport landing fees.
Yesterday, the Ministry of Public Infrastructure (MPI) said that the discount is not unusual and is consistent with a practice of assisting airlines now coming.
The ministry was responding to an article headlined ‘Govt. grants American Airlines 90% concession on landing fees’, carried in the Kaieteur News edition on Sunday.
“The discount on landing fees offered to airlines is not unusual and is done as a measure to help offset the initial startup expense for new air services into a destination. A cursory check of the industry will reveal that this is a very common and well accepted practice adopted by airports worldwide.”
In fact, the ministry said, many airports go as far as providing ‘Revenue Guarantees’ to airlines so they can fly to their destination.

Juan Edghill

AA came here last November, with flights to and from Miami, Florida, targeting the oil executives who have been coming.
“The discounts offered to new carriers are progressively reduced and are usually for the first year or two of operations. Similar concessions were also offered to other new entrants into the Georgetown market. They included Dynamic Airways and COPA Airlines.”
The ministry said that since its commencement of flight operations in November 2018, American Airlines has added an additional 15,000 seats to the Guyana market and provided direct and indirect employment opportunities for over 100 Guyanese.
“The additional airlift has also added competition on the route and offers passengers an advantage of selecting their choice of carrier. Over the past few years, the Government of Guyana has worked assiduously to attract new carriers and will continue to do so, and ensure that air travel is accessible and affordable for Guyanese, visitors and businesses alike.”
There have been questions about the fairness for the discounts especially as other airlines are required to pay them.
According to officials over the weekend, the airport waived landing and other fees for AA flights to Timehri.
Instead of paying the required US$425 every time there is a landing, AA instead was told to pay US$42.
The discount would have come at a time when the Cheddi Jagan International Airport has told operators that there will soon be an increase in security and other fees.
This meant that passengers would have to pay more on their tickets.

There is nothing unusual in American Airlines being granted a discount on landing fees, Government said yesterday.

Yesterday, Opposition parliamentarian charged with oversight of the aviation industry, Juan Edghill, said that the recent disclosures have made it clear that Guyana needs a known aviation policy.
“As I sit here today that is not known. We are still developing our market, so we need to bring in carriers. We need to bring in people.”
According to the former Junior Finance Minister, he is concerned about the lack of transparency.
“The ministry must tell the nation by way of a release of the agreement, what are the terms and conditions that led to this 90 percent concession on landing fees and other things for American Airlines.”
He pointed out that it must be made known how the discounts will improve airfares and ultimately benefit Guyana.
“We need to know if the same thing applied to other airlines that operate in Guyana. If so, why is there such a need for a concession to operate in Guyana? We need AA. I am not chasing them away. They have the hub, the spread, they have the reach. And it is good for Guyana. But you don’t want to bring in an American Airlines that kills the traditional airlines that have been serving Guyana.”
Edghill said he is fearful that prices for the Miami trips could go up as AA is targeting the “high-end” passengers.
“They are…the carrier that is moving ExxonMobil workers and it is ExxonMobil which is paying for those tickets. Eventually, the people of Guyana will be paying for those tickets as it will eventually become part of cost oil.”
The Opposition official said that Guyana needs to be careful that it is not encouraging a situation that helps inflate prices for the benefit of a sub-contractor for ExxonMobil, as ultimately Guyana pays.
“What we would like to know, is if the agreement with American Airlines entails not going for a Jet Blue or Skywest or a return of Delta to ensure that there is competition.”
He pointed out that the AA has an advantage to raise its prices or lower them, because of the concessions.
“So we have to safeguard the market. We have to safeguard Guyana’s interest in terms of how we benefit. We have an airport to pay for.”
He pointed out that it is a fact now that airlines have to increase its fares to charge for the use of the airport.
“Of course, you know we are not happy with what we got…a renovated airport instead of a new one. Any concession in order to attract the kind of airline must be across the board and must be well thought out.
And my call is a call for transparency, a call to make the contract known and for the ministry. Why was it necessary for AA and was it across the board?”
He said that if everything is above board, the Government should be bringing out the conditions…not wait until it is found out.