A couple months ago myriad questions swirled around the post-Hurricane Irma reconstruction efforts at Princess Juliana International Airport (SXM) in St Maarten. The local authorities have a plan but it depends on insurance funding and, while some roof repair work recently started the insurance claims process remains mired in bureaucracy. The airport and the island at large both depend heavily on a strong recovery of the tourism sector to right the economy and, despite glimmers of hope on that front, the overall outlook remains hazy at best.
Major operators Maho Group (Sonesta Maho Beach Resort, Sonesta Ocean Point) and Sunwing Group (Great Bay Beach Hotel) recently applied to the government for development loans to help in their reconstruction efforts. The combined $55 million they are seeking from the Dutch Recovery Fund would be used to rebuild their properties to withstand a future storm of similar strength. Maho Group is seeking a far smaller sum, only $12 million, and recently released architectural renderings of what the rebuilt properties will look like.
The building today is stripped bare to the core structure and the company says the rebuilding work is underway. But funding from the government is not yet delivered and my never be. It is also unclear just how large an insurance settlement Maho Group received; given the loan request it is likely not sufficient for the full development costs. Alas, the Dutch Recovery Fund is limited and is expected to be administered by the World Bank which may skew some of the funding choices. Typically a World Bank managed recovery would be less likely to distribute fund to a commercial venture like the hotel groups.
Even were the funding to come through the Sonesta hotels will not be open for the 2018-2019 season; there is simply too much work yet to be done. Getting to an opening in 2019 is possible, assuming the funding comes through and no storms interfere with construction efforts this summer.
The reduced tourism demand also means fewer flights and routes for the island. A review of schedule data and airport operations suggests that hometown carrier Winair is operating fewer than half the flights it did a year ago, prior to Irma. Winair still maintains the critical connections to the smaller, neighboring islands but with fewer visitors demand is down significantly.
Similarly, prior to the storm there was significant optimism for new routes and carriers connecting in to Sint Maarten. Among those frequently rumored is Southwest Airlines. Alas, with demand so low it now appears unlikely that route will launch in 2018. Even 2019 seems aggressively optimistic given the slow recovery pace seen so far.
Perhaps the best news of the airport reconstruction work is that it could be used to facilitate the US Immigration & Customs Preclearance efforts. PJIA very much wants to be in that small collection of countries with such an offering, helping to cement its position as a regional hub and gateway to the USA. And with a near total rebuild of the airport coming the adjustments to deliver such facilities could be cheaper now than after the airport is repaired. Uncertainty around the insurance claim could impair that work, however, as the total available fund for the reconstruction is likely to be lower than what PJIA’s insurance policy lists.
Getting the facility in place is more than just a construction project. With the government focused on the general island recovery efforts it will be difficult to also add this project to the mix. And with the lower passenger count it is unclear that the US would commit to staffing such a facility at this time.
The 2018 Caribavia Aviation Conference, to be held in Nassau, Bahamas on 12-14 June, is a great place to learn more about the Caribbean aviation market, including stories such as this one. I will be chairing a couple of the sessions at the event. If you’re involved in Aviation in the Caribbean this is a must-do event.
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