Bahamasair Suing Shell
02/02/2004
Bahamasair's board plans to sue Shell Bahamas Limited, claiming that the oil company has been unfairly charging the airline for use of its pipeline needed for refueling planes at the Nassau International Airport.
The Journal has learnt that the airline's attorney, Damian Gomez, recently presented a writ to commence the action against Shell, but the board was not pleased and asked him to strengthen the document.
An airline official said that should the board be successful in its actions, "the fuel bill would go down considerably."
The airline continues to pay Shell for fuel as well as for use of the pipeline or hydrant system that provides the fuel.
An earlier Journal report that revealed details of the dispute points out that the development of the hydrant was initiated by the former government in an attempt to reduce congestion on the ramp, caused by all the service vehicles around an aircraft at any given time.
This development reportedly was supposed to offer multiple fuel pits at each gate with an extension around the Family Island pier having small fuel carts at each gate eliminating the need for huge fuel trucks maneuvering around the aircraft.
The fee was introduced by the members of the consortium Esso, Shell and Texaco in 1995 after the redevelopment of the hydrant system at Nassau International Airport. Initially it was referred to as a hydrant fee, intended to recover the investment of $2.8 million spent to develop the system.
But Bahamasair officials say that they should not have to pay this refueling charge because Shell has already recovered the investment. They claim that the airline has been charged wrongfully to the tune of at least $1 million.
The airline official said, "It's important that we do anything we can to cut costs." He claimed that the fee actually amounts to about $600,000 a year and Bahamasair should not continue to pay it.
But a Shell source pointed out that the gas company has to continue to pay maintenance charges for the airport facility.
"Bahamasair fails to understand that Shell has to make a profit," he said. The board will undoubtedly face strong opposition from Shell as it proceeds with its action.
The board also reportedly wants fuel prices to be reduced, but the airline source said the main action at hand involved recouping the money Bahamasair paid to Shell that it should not have paid.
In an earlier interview with the Journal, Shell's attorney, Campbell Cleare, said that Shell would probably have been willing to reduce the cost per gallon of its gasoline to the airline by one or two cents. But he said at the time that Bahamasair was demanding as much as a 10 cents per gallon reduction, which would result in a loss to Shell of over $1 million per year.
Mr. Clear told the Bahama Journal then that, "This is not price gouging. The prices are reasonable. Shell deserves to make a reasonable profit. There's absolutely no other carrier that's complaining. Bahamasair is trying to squeeze Shell into an unfair position."
Bahamasair officials declined to go on the record late last week regarding their planned action before the courts.
The board has been taking a number of measures geared at saving the cash-strapped flag carrier millions of dollars. The battle against Shell is seen as one avenue for helping to trim expenditure and ease Bahamasair's burden on the taxpayers' purse.
