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HomeNewsArchivesSECURITY'S OK BUT REVENUES AREN'T, VIPA TOLD

SECURITY'S OK BUT REVENUES AREN'T, VIPA TOLD

Mar. 19, 2003 – In the likely event of a U.S. war with Iraq, airport and marine security in the territory is in good hands, Darlin Brin, Port Authority executive director, told his board at its monthly meeting on Wednesday.
Brin said he was constrained from detailing the security procedures in place. What he did say was: "We are working hand in hand with Homeland Security, the U.S. Coast Guard and local law-enforcement agencies."
He also commented to the board on recent announcements from American Airlines and American Eagle and American Airlines of plans to curtail or eliminate service. American announced Monday that as of May 1, it will discontinue American Eagle flights between St. Thomas and St. Croix. (See "American Eagle axing St. Thomas-St. Croix links".)
Minette Velez, American spokeswoman in San Juan, said the increased V.I. airport landing and passenger fees imposed by the Port Authority effective Feb. 1 were a factor in the decision. So, too, she said, was the airline's ongoing review of its overall operations due to financial difficulties.
VIPA has been receiving a lot of untoward media attention over the 25 percent increase in landing fees, Attorney General Iver Stridiron, a Port Authority board member, said Wednesday. "Let's put on the record what our take on it is," he said.
Brin agreed the fees were a factor — but not the only factor. He said American Airlines' pullout is based "largely on financial difficulties the company was experiencing long before."
He continued: "All the major carriers on the U.S. mainland are experiencing significant losses into the billions of dollars, and have been since 2001." Since the terrorist attacks of Sept. 11, 2001, he said, the airline industry has received "$15 billion from the federal government in grants and cash money."
But unlike the aviation industry, Brin said, VIPA has borne significant cost increases since Sept. 11 — including for beefed-up security personnel and equipment at airports — without passing the costs on to its industry partners and tenants. No federal funds similar to what was offered the airlines have been available to assist airports to alleviate costs, he said.
Brin noted that VIPA has taken various steps to cut costs, including a 10 percent rollback in salaries for 63 non-union management employees, including himself, for the balance of Fiscal Year 2003. (See "VIPA board stays firm on airport fee hikes".)
Audit shows aviation and marine drops
In another matter, PricewaterhouseCoopers delivered a report on its 2002 Port Authority audit to the board. In the unqualified audit, Roberto E. Santa Maria, a partner in the company's advisory services, said for Fiscal Year 2002, VIPA suffered an increase of $5.8 million in its operating losses because of lower revenues in both the Aviation and Marine Divisions plus increased operating expenses.
For FY 2002, Santa Maria said, VIPA's total revenues decreased by 6 percent, or $2.2 million, from FY 2001. He said there was a drop of 6 percent, or $1.1 million, in the Aviation Division revenues, and a drop of 7 percent, also $1.1 million, in the Marine Division.
The PricewaterhouseCoopers report said the Aviation Division decrease was mainly due to a decrease of $1.3 million in "user fees and dues" at the territory's two airports because of reduced traffic of both aircraft and passengers. The respective drops were of $822,000 at Cyril E. King Airport and $469,000 at Henry E. Rohlsen Airport, it said.
As for the Marine Division, the audit report said revenues were down about $1.1 million from FY 2001 — which had seen the acute drop-off of cruise ship activity in the days and weeks immediately following Sept. 11.
The division's "unfavorable fluctuation in revenues" for FY 2002 "was mainly due to the lower activity experienced at St. Thomas," the report said, citing decreases of $567,000 in user fees and dues and of $641,000 in wharfage fees.
"During the last five years, the revenues of the Marine Division showed steady growth, while in 2002 the fluctuation was approximately 7 percent to the downside," the report stated.
Responding to questioning by Stridiron, Santa Maria suggested the authority be "extremely selective" for the time being in approving new initiatives. "My recommendation," he said, "is to look extremely carefully at projects." He added: "The expanding should be put on hold for a while, and the authority should analyze, at least in the short term, any returns VIPA would realize."
Board members Kent Bernier, Leslie Milliner, Robert O 'Connor Jr., Dean Plaskett, Pamela Richards, the chair, and Stridiron all were present.

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