Affordable flights for Saba and Statia could cost the Netherlands millions per year
THE BOTTOM – Making air connections between Saba, Sint Eustatius and Sint Maarten more affordable could cost the Dutch government millions annually. Depending on the chosen policy, estimated costs range from approximately $1.75 million to $8.75 million per year. This emerges from a new update by SEO Economic Research, conducted on behalf of the Ministry of Infrastructure and Water Management.
The research focuses specifically on the routes between Saba and Sint Maarten and between Sint Eustatius and Sint Maarten. According to SEO, conditions on these connections still justify government intervention. These are thin routes with relatively few travellers, while a good connection to Sint Maarten is essential for residents of both islands.
For the update, more recent market data were used and various ways in which the government could make accessibility more affordable were examined.
Ticket prices continue to rise
Although the number of flights and available seat capacity in 2024 returned to pre-pandemic levels, ticket prices have continued to rise. SEO estimates the increase at around five to ten percent.
The number of passengers carried also increased, but the load factor remained around 70 percent. At the same time, operating costs have risen sharply, driven in part by higher wages and fuel costs and by the greater number of flight movements. The researchers also note that there are virtually no economies of scale to be achieved on these routes.
Winair is currently the only airline operating scheduled services on both routes, flying Twin Otters. Although these aircraft theoretically accommodate nineteen passengers, Winair offers sixteen seats in practice.
Up to approximately $245 subsidy per return ticket
A comparison with other thin aviation routes shows that current prices per kilometre flown on the Saba and Sint Eustatius connections are relatively high.
To bring costs for travellers to a comparable level, Saba would require a subsidy of approximately $140 to $235 per return ticket. For Sint Eustatius, the figure is approximately $115 to $245 per return ticket. The report itself calculates these amounts in euros; the dollar figures are converted.
Subsidising residents only saves millions
SEO has modelled six different scenarios, looking at varying subsidy amounts, whether only residents or all travellers would receive support, and a possible cap on the number of subsidised tickets.
If only residents of Saba and Sint Eustatius receive a subsidy, annual costs would amount to approximately $2.3 to $4.3 million.
If the scheme is further limited to a maximum of three subsidised tickets per person per year, costs would fall by a further approximately $585,000 to $1.17 million per year. According to SEO, the vast majority of the target group would not be disadvantaged, as long as the cap is no lower than the number of trips most residents make annually.
Targeted support for residents is therefore considerably cheaper than a scheme open to all travellers. A general subsidy without restrictions leads to a stronger increase in demand, which in turn raises the bill for the government.
Subsidising tickets alone carries risks
SEO warns that directly subsidising flight tickets does not automatically mean that the full benefit reaches the traveller. Lower passenger costs may increase demand, prompting an airline to raise prices and absorb part of the subsidy.
Furthermore, a direct ticket subsidy gives the government no ability to impose conditions on, for example, flight frequency or schedules.
A public service obligation, better known as a PSO, does offer that option. It allows the government to set requirements on minimum flight frequency, timetables and ticket prices. A combination of a PSO and targeted support for residents is also among the possibilities.
SEO does not express a preference for any specific scheme. The calculations do make clear that targeted support for residents is cheaper than subsidising all travellers. Depending on the choices ultimately made, the Netherlands would need to allocate approximately $1.75 million to $8.75 million per year to make accessibility more affordable.
