The government has allocated $20 million to Bahamasair in the upcoming fiscal year, Deputy Prime Minister Philip Brave Davis said yesterday.

"Bahamasair holdings continues to suffer from high labor costs and an aging fleet, escalating fuel costs and a commitment to unprofitable domestic [routes]," Davis said during his contribution to debate of the 2013/2014 budget in the House of Assembly.

"As with each budget for a number of years, this year, $20 million is budgeted to support Bahamasair's operations.

"The circumstance has been further compounded by competition by smaller local private carriers providing services to domestic routes and ongoing downward pressure on airfares in the Florida market due to competition by low fare international carriers."

 Bahamasair continues to be a drain on the public purse. For years the government has been providing the national flag carrier millions of dollars in subventions.

During the 2012/2013 budget, Bahamasair requested $28 million in subvention funding but only $18.6 million was approved.

 However, during the mid-year budget in March, Bahamasair received an additional $11.2 million.

At the time, Davis explained that the additional funding was needed to cover a shortfall of $5.5 million from the previous year's budget, a shortfall of $3.9 million for operations in the current fiscal year, along with personal emolument increases resulting from the recent grant of increments to Bahamasair's employees in accordance with the terms of agreements with the relevant unions.

Yesterday, Davis said the government is working to cut back on the money it allocates to Bahamasair.

 "The board and management of Bahamasair are presently reviewing adjustments to the business model as a means of providing options which will result in providing greater service to the people," Davis said.

 "As a substantial cost savings of the existing expensive approach, it is anticipated that Bahamasair, in very short order, will craft the new business model that will be for the benefit of all."

 Davis also revealed that the government agreed to purchase a 120-seat aircraft to improve services and efficiency and to fill the gap that came after some of the international carriers scaled back their services between Florida and The Bahamas.

 Water and Sewerage Corporation (WSC) will also receive a $20 million subvention, Davis said. Like Bahamasair, WSC has been a consistent drain on the treasury.

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