Taxpayers will have to pay out $2.75 million after Government announced the details of its deal to waive Bermuda Aviation Services' (BAS) exclusive rights to offer private jet services at LF Wade International Airport, The Royal Gazette has learned.

A Government spokeswoman said BAS would be repaid $750,000 for funds invested in the pavement of apron 2 and would receive $2 million in compensation for loss of revenue for the exclusive fixed based operation – all of which will come as an added burden on public finances during tight economic times.

Having lost its second appeal, Government was ordered by Supreme Court to pay more than $202,569.16 in damages for contravening BAS's rights, which ran until 2014, by giving rival operator Sovereign Flight Support permission to provide a private jet service, as exclusively reported by The Royal Gazette last month.

The previous court-ordered payout was for loss of business to BAS from Sovereign serving aircraft that should have landed at BAS' private jet facility, including an additional amount incurred while Sovereign was still operating for three months after the ruling was made, as revealed by court documents and reported in this paper, which first broke the story.

But Premier Ewart Brown, against whom BAS and its subsidiary Aircraft Services filed a writ in his capacity as Minister of Transport, said last week that the costly exercise, which has been an ongoing legal battle for the past two-and-half years at significant cost to the taxpayer, could encourage competition and lead to a higher quality of service at the airport.

The news came on the same day that Ken Joaquin, group president of BAS, announced the company's interim financial report to September 30, 2009, in which he alluded to the damages settlement.

"To our shareholders, fiscal 2010 has been challenging," he said. "The economic environment has remained inhospitable to local business as Bermuda feels the burden of economic hardship.

"BAS has not been unscathed and this has been clearly highlighted by a near $3 million or ten percent contraction in our revenues. Notwithstanding, BAS has generated operating earnings of just over $2 million and net earnings for the six-month period of $1.98 million.

"The net earnings have been buoyed, in part, by recognition of the damages settlement of $202,000 owed to BAS from the Bermuda Government. Whilst, expectedly down from last year, our half-year results are solid given the status of the local economy and they speak to management's keen focus on cost containment and efficiency in these difficult times."

Turning to the separate parts of the operation, Mr. Joaquin said ASB Ltd. had performed "modestly" as the aircraft handling operation continued to struggle in the current economic climate, with earnings down 80 percent from last year as a result of a decline in commercial aircraft traffic and new competition in that area.

However, he said both BAS-Serco and Weir Ltd. have exceeded last year's results and budgetary expectations and continued to perform well in this harsh financial climate.

Otis Bermuda Ltd., meanwhile, despite preserving its revenue, had seen a 43 percent decline in profit as management made a conscious decision to invest in the quality of its elevator maintenance programme and improve the state of its clients' equipment.

IBC Ltd., although down from last year, as its revenue base has mirrored falling consumer spending habits, performed commendably, according to Mr. Joaquin, having exceeded management's expectations.

He added that CCS Ltd. had produced much stronger results than last year with earnings up more than 20 percent from last year despite revenue falling by ten percent.

"The next half of the year will be equally challenging, if not more so, for the local economy," he said. "Management intends to remain vigilant and look for efficiencies and opportunities to strengthen BAS. "