Bermuda takes on Cayman's airport deal

Cayman officials will get the chance to see if the island missed a golden opportunity or dodged a bullet after the United Kingdom vetoed plans for a $200 million partnership with a Canadian government company to redevelop Owen Roberts International Airport. 

The Bermuda government announced last week that it was entering into an agreement with the same firm, the Canadian Commercial Corp., to develop its airport in a public private-partnership similar to one that was on the table for Cayman in the early part of 2013. 

The deal collapsed in Cayman after the U.K. expressed concerns about a lack of open tendering for the development, according to a statement from Cline Glidden, the tourism minister at the time. 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.” 

Concerns were expressed about a loss of direct government revenue, loss of control over a key strategic asset for the country and potential loss of jobs at the airport. On the plus side, the deal would have led to an extensive redevelopment and expansion of the airport with no up-front cost to the cash-strapped public sector. 

Cayman Islands officials have since opted for a more modest redevelopment of the terminal to be financed through existing Cayman Islands Airports Authority revenues, following an analysis of the options by PwC. An outline business case, produced in July, recommended $120 million investment in the islands’ three airports over the next two decades, beginning with the expansion of the severely overcrowded terminal at Owen Roberts International Airport.  

Meanwhile, the Canadian Commercial Corp. appears to have taken a version of the deal mooted for Cayman to authorities in Bermuda. 

Officials last month signed an agreement with the company “to pave the way for the re-development of the Bermuda airport” through “various sources of financing.” Bermuda’s Finance Minister Bob Richards told the media in the territory that the development would be financed through “future revenue streams from the new airport itself.” 

He suggested it could play a crucial role in the renaissance of the Bermuda economy which, like Cayman’s, has large public sector debt and difficulty financing large capital projects through annual revenues. It is not clear what input, if any, the Foreign and Commonwealth Office will have in determining whether the Bermuda proposal goes ahead. 

According to Mr. Glidden, who headed the Ministry of Tourism in the Cayman Islands when the deal fell through in March, 2013, the FCO’s economic adviser had indicated that Cayman’s government needed to follow a competitive tendering process. 

Bermuda-Airport

Under a new partnership agreement between the Bermuda government and the Canadian Commercial Corp., the LF Wade International Airport is due to be redeveloped. – PHOTO: THE ROYAL GAZETTE, BERMUDA
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5 COMMENTS

  1. A golden opportunity? I would rather say a dodged bullet. No one offers you anything for nothing in return, and in this instance I see the Islands standing to loose more than it would gain over such a proposal. We do not necessarily have to follow the crowd around the block you know, in saying this to mean, If Bermuda wanted to take on the deal then that does not mean Cayman had to. From day one we have never gotten a silver spoon to run with, and I believe we have made some good decisions paddling on our own that worked out to our benefit. What is very important is that deals as such, should always be told to the public for input. The head of the house, yes can make decisions by himself, but if it effects the family without their knowledge, he will be the one sleeping outside.

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  2. It is important to understand that the Canadian Commercial Corporation (CCC) is the Canadian Government. They ares not / not a private sector entity. The agreement would have been between two governments, in this case Canada and the Cayman Islands. Find it puzzling that the UK would not allow an agreement between two governments especially when the Canadian Government was prepared to give their financial / quality of work government guarantees and also pay money up front to the Cayman Civil Aviation Authorities.
    Public / Private Partnerships are the way new airports are built around the world and the Caribbean today. Bermuda found the right method to build a new airport without taking on new massive public debt. Well done Bermuda.

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  3. Twyla, I think you may be reading into the wrong way. It may very well be that Caymans loss was Bermudas Gain. One good thing I could see about this is that the airport would been run by proven pro’s and Cayman would have ended up with a state of the art Airport without having to shell out a 100 million dollars that could be put towards other infrastructure projects. I am still waiting to see how the CIAA finances all the upgrades when they needed bailouts to stay in business.

    And the fact that UK is OK with Bermuda getting the deal but not Cayman kind of makes me wonder what their motives actually are..

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  4. Michael, that is exactly what I was concerned about; that the UK is OK with Bermuda getting the deal but not Cayman.
    This thing with UK and Cayman, I just do not know how much longer the stress can continue. I truly respect our Mother Country, but she making many things difficult for the Island, and on top of that is causing the relationship between the Brits. and Caymanians to be broken down beyond retrieve. Not good considering that it is one of our bloodlines. I I do not know what can make things change for the better. After reading the report I felt we stood to loose more than we would gain; however I am no expert in this and there would be persons who would know more than I know about the deal and hopefully they will comment without prejudice..

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  5. Caution has gotten this country only so far! No one has the Cxxxxxhas to make a decision. So on we go for the next 20 years treating our tourists like cattle and watching Mount Trashmore overtake the island. Typical Champagne on a Beer budget with absolutely nothing getting done… ever!!

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