L.F. Wade International
Airport Redevelopment
David Burt, JP, MP – Shadow Minister of Finance
Lawrence Scott, JP, MP – Shadow Minister of Transport
History of the
L.F. Wade International Airport
The airfield was built between 1941
and 1943 by levelling Long Bird Island
and several smaller islands, and
filling in the waterways between
them and St. David's Island
The field originally had four runways,
but only Runway 12 / 30 the longest
is still in use
One of the others, Runway 1 / 19
which is jutting into Castle Harbour,
has been blocked by munitions
bunkers that were built at the
harbour end
The third one Runway 8 / 26 is now a
taxi way
Kindley Airfield
In 1970, the field was transferred
to the United States Navy, which
operated it as US Naval Air Station,
Bermuda until 1995 when the US
Navy terminated its 99-year lease
and the field was transferred to
the Bermuda Government, which
now operates the airport as part of
the Ministry of Tourism & Transport
The US Navy was not required to
meet international civil air
standards, despite the operation of
civil airlines to the base
L.F. Wade International Airport
The Bermuda Government,
however, was required to meet
these standards very quickly on
assuming control, and at some
expense
This involved changes to the
airfield lighting, erecting new
fences, levelling anything over a
certain height and within a certain
distance of the runway (including
the former base commander's
residence, and the hill it stood on),
and other changes
What is an Airport Authority?
An airport authority is an independent entity
charged with the operation and oversight of an
airport or group of airports. These authorities are
often governed by a group of airport
commissioners, who are appointed to lead the
authority by a government official.
Progressive Labour Party‟s Vision
The Department of Airport Operations (DAO) should be
transformed, for the purpose of creating an Airport
Authority. This would provide the framework and
infrastructure which would result in the removal of the
expenditures associated with the above mentioned
government department from government‟s financial
books, and placed under a Quango called the Bermuda
Airport Authority
Progressive Labour Party‟s Vision
The PLP vision ensures the
current staff remain
employed directly by the
Airport Authority. The
creation of an Aviation
Quango provides the
ability for the Airport
Authority to seek
independent financing for
a new airport
Progressive Labour Party‟s Vision
This new airport would not only bring
Bermuda up to the 21st century within the
aviation industry, the construction of such
would create additional jobs, helping
strengthen our economy
The airport would be a major component of
an infrastructure strategy, that includes
the causeway. The strategy will be aligned
with a tourism strategy that seeks to
increase airlift from our key markets, and
introduce new opportunities in Latin
America and the Caribbean
Increased airlift will increase the revenues
required to service the project loan, which
will reduce the need to increase fees and
taxes at the airport
International Airport Development
Projects
Grand Bahama International
Airport, Freeport
Public Private Partnership
Hawksbill Agreement
Sign away their most lucrative
asset for 50 years
Scheduled to reclaim operational
control in 2015
Predicted to extend the PPP for
another 50 years
Canadian Commercial Corporation and the
Cayman International Airport Development
Owen Robert International
Airport, Grand Cayman
CCC submitted proposal
UK Government expressed concern
on lack of tendering process
One year later CCC is making same
proposal to the Dunkley
Administration
If the FCO had concerns with CCC‟s
deal in Grand Cayman why would
the OBA assume that they would
not have an issue with it in
Bermuda?
Canadian Commercial Corporation and
the Quito Airport
Quito Airport, Ecuador
Canadian Commercial
Corporation‟s only airport
development
Ecuadorian government signed
concessionary agreement for 35
years
Airport currently
controlled/operated by 100%
foreign owned entity
Ecuadorian government has little
to no say in regards to airport
The OBA Plan
Privatisation of L.F. Wade International Airport
The OBA‟s plan will see the privatisation of the LF Wade International Airport
This plan will give operational control of our terminal to a Canadian company
Similar to Quito Ecuador, the OBA will enter into a “Concessionary
Agreement” with the company the CCC chooses
We would no longer have Operational Control over this country‟s most
lucrative asset for approximately the next 30-35 years
Loss of Operational Control introduces uncertainty for the 43 Persons
currently employed by Department of Airport Operations
Q: What is a Concessionary Agreement
A: Privatisation
The OBA stated that CCC will enter into a “Concessionary agreement with the
Bermuda Airport Authority” - this grants CCC access to the revenues from the
Airport
The University of Westminster:
Transfer of operations to a private concessionaire is privatisation
Private company/consortium has concession to operate all or some assets for fixed
period (usually 20-30 years) - at end of concession, in theory, airport is handed back to
government
Library of Economics and Liberty
Another major form of privatisation is the granting of a long-term franchise or
concession under which the private sector finances, builds, and operates a major
infrastructure project
From Cayman - “The proposal would have involved the Canadian firm financing
and building expansions to the airport and runway in exchange for a 30- to 40-year
operating concession and the right to collect „aeronautical and non-aeronautical‟
revenues.”
How Much Money?
Right now the Airport collects $25.2 million in Revenues
Revenues ($25.2 million)
Airport: $10.7 million
Departure Tax: $14.5 million
Expenses ($20.56 million)
Annual Surplus ($4.67 million)
OBA will need more revenue to give to CCC
Solar Farm at the Finger
Revenue from Airspace Control
Given current revenue, $8 million of additional surplus must
be found to finance the $200 million airport project
How Much Money? (Continued)
Total amount of Revenue that CCC stands to collect is in excess of $1 billion
Right now the Airport Collects $25.2 million in Revenues
30 Year Lease
30 x $25.2 million= $756 million over 30 Years
If we take into account inflation at 2%
30 x $25.2 million + 2% inflation = $1.022 BILLION
Remember we are looking at more revenue. Lets Assume $6 million extra is
needed (extra $2 million in surplus comes from lower maintenance & energy)
$25.2 million + $6 million = $31.2 million
30 Year Lease
30 x $31.2 million = $936 million over 30 Years
If we take into account inflation at 2%
30 x $31.2 million + 2% inflation = $1.265 BILLION
Lack of Transparency
With over $1 billion of revenue at stake we must get the best deal
The OBA refuses to adhere to the principles of Good Governance and put the
project out to tender
The UK Government, in its letter of entrustment, stated “The project for the
redevelopment of the airport must meet value for money tests in accordance with
best practice set out in Her Majesty's Treasury's Green Book”
HMT‟s Green Book specifies 4 different procedures to ensure value for money:
Open, restricted, competitive dialogue, or negotiated procedure
The most restricted of these 4 options, the negotiated procedure, requires the OBA to receive
proposals from a minimum of three entities
The OBA is now in London fighting the UK Government to get their way
World Bank: “The award of concessions and contracts – and hence the process of
privatisation – is a major source of corruption”
Why does the OBA not want the Airport to go out to tender and get the best deal?
What the PLP Believes
That we should not privatise the L.F. Wade International Airport
That the profits generated by a new airport should belong to the People of
Bermuda and NOT a Canadian company
That we can build a new airport and maintain control of the airport
That we must not forget about the causeway
That a project this size must go out to tender
That we must get the best deal that takes into account the airport and the
causeway - if that takes extra time it is better than getting a bad deal for 30
years
We must consider the long term view, and not just short term thinking that
can result in long term consequences for our children
Different Visions for the Future
OBA Plan
Select Canadian Commercial
Corporation through sole sourced,
untendered bidding process
Privatises our Airport, one of
Bermuda‟s most lucrative assets,
for 30 -35 years
Does not allow for the building of a
new causeway
Sees over $1 billon of future
Government revenue go to a
Canadian company without a open
and transparent bidding process
PLP‟s Vision
Promotes a competitive, open and
transparent bidding process
Provides negotiating power for future
causeway construction and or additional
air terminal upgrades
Uses the creation of the Airport Authority
as a vehicle to allow Bermudians to take
advantage of the future projected
revenues generated by the airport
Allows for Bermudians to maintain
operational and managerial control over
our new airport for the foreseeable future
Conclusion
The OBA said they would put their privatisation agenda on hold and now are
planning to privatise one of Bermuda‟s most valuable assets for at least 30
years
The OBA refuse to examine other options for the financing of our airport and
will not have a competitive tender process to ensure Bermuda gets the best
deal
The UK Government has told Bermuda that they must follow best practice,
but the OBA is fighting Government House as they want to sole source CCC
and ignore Good Governance by bypassing the tender process
We cannot allow our airport to be privatised – and we certainly must not
allow the OBA to go through with this deal without an open, competitive and
transparent tender process
