Skyport asks for $15m to cover cash lost to Covid-19
The transport minister said today the Government had little space to bargain with airport operator Skyport after it announced it would hand over $15 million to the firm to cover lost revenue.
The cash is to cover the cost of the loss of business over the summer – the normal peak period – caused by the Covid-19 pandemic.
Mr Scott said: “There is not much wiggle room in the agreement, but we are trying to wiggle in the little bit that we do have.
“The airport authority provides oversight to make sure Skyport is held to every letter, every dot and semicolon in the project agreement. If there are any options, they are being explored.”
News of the payout came a month after $5.7 million was handed over to Skyport for losses from April 1 to June 30 – the height of the pandemic crisis.
But Skyport said the revenue losses “far exceed” the payouts.
Mr Scott said the International Air Transport Association, the global trade association for airline companies, predicted that commercial air travel would not recover to pre-pandemic levels for another four years.
He added it was “too early to say” how much the Government might be asked to pay out to Skyport in January to cover further lost income.
The Government announced that the bill would be covered by a grant to the Bermuda Airport Authority.
Mr Scott said the payout, based on projected passenger revenues, restricted “the Government’s ability to do more for our people in a time that the Government is asking for a shared sacrifice”.
He added: “We’re not happy with it. We believe it was a bad deal with the beginning. But we’re committed to making sure Bermuda gets the best of a bad deal.”
The agreement for a new airport terminal was struck by previous One Bermuda Alliance Government with the Canadian Commercial Corporation and Aecon, CCC's contractor.
Skyport has to cover the design, finance and construction of the new terminal, as well as its operation and maintenance over 30 years, under the public private partnership deal.
The deal was opposed by the Progressive Labour Party and pressure groups such as the People’s Campaign.
But the OBA defended it as a necessary move to replace the ageing terminal building without incurring additional debt.
A spokeswoman for Skyport said yesterday: “The payment is in relation to the 3rd quarter of 2020, where most of the impact due to Covid and the airport summer shutdown is felt.”
She said that the minimum revenue guarantee baseline had been set “to ensure that in the case of dramatic revenue declines or shock events, the airport has the ability to continue to operate and to service its external debt”.
The onset of the Covid-19 pandemic meant a shutdown of the airport to commercial travel in late March.
Tourist numbers have been slashed since the pandemic, despite a resumption of flights on a limited basis and the island’s low incidence of the disease.
The Skyport spokeswoman said: “Revenue losses will far exceed any amounts paid under the minimum revenue guarantee and under no circumstances can minimum revenue guarantee funds be paid to the shareholder, Aecon.”
It was revealed in July that the airport authority’s payments were being deposited in a New York bank account.
All the airport’s normal operating revenues are placed in accounts held by the lenders who financed the project.
The revenues are directed first towards the cost of airport operations and maintenance, then to repayment of the debt for the construction of the new terminal.
Additional funds generated are used to make a return on investment.
If airport revenues go over the agreed target, the Government gets 50 per cent of the excess.
The Skyport spokeswoman said: “It is also important to highlight that throughout the course of the pandemic and shutdown, Aecon has continued its investments into Bermuda’s new terminal at full pace, and that both Aecon and Skyport maintained their full staff complements in construction and airport operations, as well as their ongoing social investments in the community.”