Air travel and the treasury

Feb 02, 2012 Editorial

Just before he demitted office, President Bharrat Jagdeo announced a project to expand the Cheddi Jagan International Airport. This expansion project would see the lengthening of the runway to accommodate any aircraft, and the reconstruction of the terminal building at a cost of some US$138M.
Indeed, some would contend that the terminal is good enough having compared it to what was before the massive rehabilitation programme over recent years. But these days with just about every country recognizing that the airport offers the first impression that one would ever get of a country, there is a drive to make that first impression lasting.
For example, the United States completely rehabilitated the John F. Kennedy International Airport and added new features for greater passenger comfort. In the region, Trinidad and Tobago spent millions of dollars on its airport project to the extent that some people had to be prosecuted for inflated costs. The end result is an airport that is the envy of many.
Barbados, Jamaica, Grenada and even countries with small airports ensure that they appear to the first time visitor as places of interest. Nearly all of the countries have longer runways than Guyana. Of course, they therefore accommodate much larger aircraft. The length of the runway at the Cheddi Jagan International Airport limits the size of aircraft that could land.  President Jagdeo’s plan was to lengthen the runway.
As he said when he introduced the plan to the nation, albeit by way of an announcement out of Jamaica, the Chinese are granting soft loans to Guyana and that Guyana could actually afford to pursue its development.
Usually, projects should actually be conducted in a manner that the end result would make repayment relatively easy. When Guyana constructed the Demerara Harbour Bridge, the authorities devised a toll system that caused the bridge to aid in the recovery of the investment. Today, more than thirty years later the toll aids in the maintenance of the bridge. In the case of the Berbice Bridge, the toll is intended to help the investors recover their investment.
A cursory look at operations at the Cheddi Jagan International Airport, one recognizes that the airport is in an excellent position to recover any money spent on its rehabilitation. Every departing passenger must pay $4,000. A check with the airlines reveals that somewhere between six hundred and a thousand people leave the airport daily for various destinations.
That would translate into a daily collection of $4 million or US$20,000. In one year, exit taxes would account for a collection of some US$6 million. This would more than adequately repay any loan from any source. But the airport is more than exit taxes. There are landing fees and other charges.
There was a time when Guyana actually used these departure taxes as a source of revenue. The local airline operating out of a foreign country actually charged a departure tax on people heading to Guyana. This was highly unusual because the country in which the tax originates should determine what taxes are collected. In the end the United States Government mounted a serious objection but until then Guyana collected a lot of money. Guyanese were made to pay to leave Guyana and to return to Guyana.
It turned out that the money collected helped fund the operation of the airline and so eased the dependence on the public treasury. What is interesting is that there is a lot of money in the aircraft industry. The administration recognizes that if larger aircraft are to land in Guyana then the financial returns would be even greater. There would be more by the way of fuel use, people departure and other services.
But there is more to the airport expansion project. It offers greater job opportunities for locals and foreigners alike. In the case of Guyana’s airport expansion project, there would be a change in the landscape. The project entails filling ravines at one end of the runway using tons of granite, cement and other building material. The treasury would collect tax dollars from all involved in the project. Further, any airport project is bound to attract international attention. Guyana stands to benefit in every way. What is unfortunate is the manner in which the project was announced. It was a secret and the announcement left a bitter taste in many mouths given the perceived level of corruption in the administration.