Dear Editor,
Over the past months we have seen on the printed local and social media debates, comments, opinions and partial information on 3 major topics: Financing of the airport, U.S. Pre-clearance and lately the potential privatization of the Ports operation.
SHTA as the largest representative of private businesses on-island has seen how our members have reinvented themselves, dug deep into their pockets, reinvested on the island since [Hurricane – Ed.] Irma without any governmental financial support or without seeing any economic stimulus plans, tax alleviation (like our French and BES Islands counterparts), or direct assistance to them.
Most businesses, when planning to make substantial investments, borrow money or make other financial decisions, take the time to analyze how these decisions will affect the financial results of their operations. If I borrow funds how much will it cost me, can I repay the debt, would I have to increase my prices? What options of financing do I have available based on my credit rating and capacity to pay? In other words, businesses must evaluate all aspects of a transaction before they enter into one and before they decide if it is a good approach or not.
Government officials and Government-owned companies are not exempt from going through the same evaluation process. Therefore, government officials, MPs, Ministers and others should base their opinions on the social, environmental and financial consequences of major decisions like financing of the airport, U.S. Pre-clearance and the potential privatization of the Ports operations.
Government officials have an obligation towards the taxpayers of making sure they objectively evaluate what is best for the interest of the country. Once they have evaluated the pros/cons of each transaction they should be transparent about how they reach their conclusion and their decision to support a project/approach or not.
On the topic of the financing of the airport the evaluation strictly from a financial aspect should be quite simple. Can we get a financing package that includes a major grant component, low interest refinancing that will trump this deal? Or are the non-financial conditions, e.g. having a Dutch imposed CFO, more oversight from the outside sources and less control, more important than the financial consequences?
On the topic of U.S. Pre-clearance, SHTA without having access to any of the financial information or consequences of this decision can only evaluate the potential pros/cons of such idea as follows:
Pros:
* Ease of travel for passengers departing St. Maarten en route to the U.S.
* Connection time with flights in the U.S. would be shorter.
* Improvement to airport facility.
* Economic impact. Approximately 25 U.S. CBP will be stationed in SXM. They will require housing and other living necessities, contributing to the economy.
* Increased transit passenger traffic from neighboring islands.
* Potential increase of more flights to SXM from the U.S. in non-international airports?
Cons:
* At this point getting the airport back to pre-Irma levels should be the priority.
* No information has been made public to determine the cost of such facility. What would the capital investment required be to make this a reality? An ROI and cost/benefit analysis must be done before a decision is made on this topic.
* Would the already high fees paid by travelers within their tickets be increased even more? The higher the airfare to/from SXM imposed on travelers that are price sensitive will force them to choose less expensive destinations in the Caribbean; e.g. Aruba, Bahamas, Dominican Republic, etc.
* Since approximately 70 per cent of the traffic to PJIA is from the U.S., does this mean that 70 per cent of the airport has to be assigned to pre-clearance?
* How would this affect the duty-free and other businesses already established? Or the services to those not traveling to the U.S.?
When it comes to financing of the airport debt and U.S. Pre-clearance even without all the information there is something that we can ascertain, higher landing/departure fees that make the price of the airline tickets to SXM more expensive will be a deterring factor for future visitors to the island.
On the other hand, the ease of pre-clearance, although nice to have, we seriously doubt would be a major decision for a potential tourist to the island. How many U.S. travelers before traveling to a destination use the departure process as decision-making factor? On the other hand, cheap airfare is proven to be a major decision-swinging point.
In relation to the decision to lease out the operations of the Port, again the information is limited or outdated. What is the present financial situation of the Port? How would this transaction benefit the coffers of Government and affect every single resident? Would leasing out the facilities result in lease payments to the island to what level? Would the cost of goods incoming to the island increase based on new tariff’s imposed? What will happen with the Simpson Bay Lagoon Authority which is also an entity of the Port?
In other words, at the end of the story is this a good financial decision for the taxpayer in the short and long term or what other considerations are affecting this decision-making process?
Unfortunately, we can conclude that the general public does not have enough information and has not been provided any financial data or analysis by any of the parties involved to justify their positions in favor or against these transactions.
Therefore, by means of this release, we request the officials in charge to put country before self, provide transparency, act with integrity and evaluate and approach all transactions with an objective financial evaluation process, making as much data public as possible.
St. Maarten Hospitality and Trade Association (SHTA)
