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HomeNewsArchivesCAPE AIR OBJECTS TO PORT FEES BREAK FOR FERRY

CAPE AIR OBJECTS TO PORT FEES BREAK FOR FERRY

July 18, 2001 – The V.I. Port Authority board told Cape Air on Wednesday that it doesn't see a fast ferry service as direct competition to the airline.
Tourism Commissioner Pamela Richards, who by virtue of that position also chairs the VIPA board, said she wished both the airline and the ferry well and believes they can co-exist.
"The boat has a different passenger load. They cater mainly to families who can't afford to fly, while the airlines cater to businessmen," she said, adding that the board would study the matter further.
"Quite frankly, we're concerned," Cape Air's director of communication, Michelle T. Haynes, told the board about the reduction in port fees it recently granted Boston Harbor Cruises, the fast ferry service that operated between St. Thomas and St. Croix for a trial run in April.
Cape Air will lose passenger traffic if and when the ferry begins seasonal service in the fall, Haynes said. "Although port fees in the U.S.V.I. are higher than any other destination we serve — including double the fees of Logan International Airport in Boston — we have never requested … any type of port fee reduction," she said. "As we continue to pay those fees, and our direct inter-island competition receives a price break, we are, in fact, subsidizing our competition."
She said the airline welcomes competition "but on an even playing field."
Cape Air employs 50 Virgin islanders in high season, she said, and flies them to Hyannis, Mass., for training. And the airline recently completed a large maintenance hangar on St. Croix.
Haynes said Cape Air has invested more than $1 million locally in the four years that it has been operating year-round, regularly scheduled air service in the territory. "Now, when it appears we are finally going to get a return on our investment, the competition receives a considerable government benefit," she said.
After her presentation, from which the news media were excluded, Haynes said of the board: "They don't believe water and air are competitive. We didn't really get a lot of encouragement."
However, after making the trip from Hyannis to St. Thomas just for the board presentation, Haynes was still smiling as she left the Port Authority building, bouncing her suitcase down the stairs. "We really love the V.I., and we don't close our doors. We're here year-round," she said.
At its June meeting, the board addressed a letter from Maurice Kurg, Seaborne Airlines president, expressing concerns about unfair competition similar to those put forth by Cape Air, but with a twist. Kurg wrote that if VIPA should obtain federal or local funding for a high-speed ferry, "Seaborne hereby makes formal application to operate and manage this program."
Gordon Finch, VIPA executive director, said Wednesday that the Port Authority will "consider the impact on the community between air and water types of service." Meanwhile, he said, there will be good news for air carriers a few years from now: When VIPA meets its bond obligations around 2005, airport fees will decrease dramatically.
The board approved Finch's proposal to hire Triad Associates, without seeking bids first, to research federal funding possibilities for high-speed, inter-island ferry service. He said the action was needed to "get it moving now" and what was involved was a "personal services" contract that doesn't require bidding.
The feasibility study would cost about $60,000, he said, adding, "We invested $50,000 for the Sinbad festival and didn't get a dime back."
The board also approved spending $4 million for a bulkhead in Crown Bay that Tropical Shipping will build and finance interest-free for the Port Authority, Finch stressed. VIPA will repay the loan from fees collected by U.S. Customs which eventually, indirectly, reach the authority, he said. "We pay Tropical up front," Finch said, "and they pay Customs, and then we reimburse Tropical."
Finch said he has tried to get Customs to step aside so VIPA can collect the fees directly but, under an agreement between the V.I. and federal governments, that can't be done.
Board member Kent Bernier, the governor's economic adviser, expressed interest in the getting the procedure simplified. "We want to get our books clean for federal funds and grants," he said. Finch said he had taken the matter before the previous two governors with no success but hadn't approached the Turnbull administration. He said if the administration could change the financial structure, he would be "pleasantly surprised."
Finch said the bulkhead project will create a half acre of new land that the Port Authority will lease to Tropical. "In two to three years, the $4 million will be repaid by waiving Customs fees, rent and wharfage," he said.
In other action, the board approved:
– A contract with the V.I. government, the West Indian Co. and the member lines of the Florida Caribbean Cruise Association and the Caribbean Cruise Association. The agreement is intended to minimize instability in cruise ship scheduling and passenger traffic to the territory. The agreement was authorized in the 2001 Omnibus Act and approved by the 23rd Legislature.
– An expenditure of about $668,000 in continuing construction costs for the Henry E. Rohlsen Airport extension and terminal expansion on St. Croix. The project's final cost is estimated at $60 million.
– An expenditure of $446,100 to Bioimpact for transplanting coral from Turner Bay on St. John in preparation for the Enighed Bay marine port construction project.
– A contract with Royal Caribbean and Carnival Cruise lines for an expanded Crown Bay dock and a new shopping center. The project is pegged at $31 million. Finch urged the board to allow him to set up a meeting with cruise line officials to expedite the project. A tentative date of Aug. 3 was set.
Board members at the meeting in addition to Richards and Bernier were Dean Plaskett, Planning and Natural Resources commissioner; Leslie Milliner, businessman; and Wayne Callwood, Public Works commissioner. Attorney General Iver Stridiron was absent.

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