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VIPA TRIES INCENTIVE, EYES FUNDING FOR AIR SERVICE

June 19, 2003 – The Port Authority governing board has taken the first actions aimed at wooing air traffic to the territory since it raised airport landing and passenger fees on Feb. 1.
At its Wednesday meeting on St. Thomas, the board voted to waive the fees altogether for a second stop in the territory made by any flight coming from outside the territory through next May 31.
And it authorized its executive director to seek federal funding available to local communities with air service problems such as high fares and low traffic.
The procedure of flying from the mainland into St. Thomas, then on to St. Croix before returning to the States – or vice versa – is known in the industry as "wrap service."
Such wraps were common in the territory's overnight tourism heyday of the '80s when Pan Am, Eastern, American and Delta had multiple daily flights to the Virgin Islands. At present, the only airline providing such service is U.S. Airways, which has flights six days a week out of Philadelphia that land first on St. Thomas and then continue to St. Croix before heading back north. But USAir announced last month that it will discontinue that service as of Sept. 5.
The VIPA board's decision in January to raise landing and passenger fees by 25 percent on Feb. 1 at Cyril E. King Airport on St. Thomas and Henry E. Rohlsen Airport on St. Croix prompted outcries from all of the major airlines serving the territory – American, Continental, Delta, United and USAir.
American subsequently announced it was discontinuing ground operations, first at the St. Croix airport and then at the St. Thomas facility, contracting the work our to its subsidiary American Eagle. Meantime, American Eagle announced it was discontinuing commuter service between the two islands. Seaborne Airlines has expanded its inter-island flights, adding Frederiksted service on St. Croix, but the seaplanes do not utilize the territory's airports.
Airline and local hospitality industry officials have said that the major carriers' cutbacks in service locally are not totally due to the airport fee increases. Most of the nation's major airlines have been struggling to stay in business and reducing services in order to reduce costs since the Sept. 1, 2001, terrorist attacks. Additionally, representatives of the airlines serving the territory, like those of the cruise lines, have pointed to lack of passenger demand for service to St. Croix.
For years, VIPA has waived seaport fees for cruise ships calling at both St. Thomas and St. Croix; however, the ploy has not proven effective for St. Croix. Last year, three of the four cruise lines then calling at St. Croix took the island off their itineraries, citing two reasons: crime concerns and lack of passenger demand.
The same week in May that USAir announced its service reductions, a consulting firm contracted by the University of the Virgin Islands at the behest of the 24th Legislature reported on the findings of its $75,000 study on how to increase the territory's volume of air visitors. (See "Study: Value of air services to V.I. unrecognized".)
The Washington, D.C., consulting firm of Edwards and Kelcey found three problems in need of being addressed:
– Lack of understanding in the local community of the importance of quality air services to the V.I. economy.
– Lack of a comprehensive air services marketing strategy fundamental to increasing air arrivals to the territory.
– Lack of a clear local mandate for the creation and management of an ongoing air services marketing and development program.
Edwards and Kelcey proposed short-term, six-month and three-year action plans. The short-term proposal included seeking federal assistance for a Small Community Air Service Development Pilot Program and developing incentives for airlines to operate in the territory. In its actions on Wednesday, the VIPA board followed the consultant's recommendations in both instances.
According to a VIPA release issued after Wednesday's meeting, "the board anticipates that the waiving of the second landing fee that is paid by airlines that offer wrap service will serve to defer some of the costs incurred by the airlines and further encourage air service to the territory – particularly St. Croix."
The board authorized Darlan Brin, Port Authority executive director, to apply to the Federal Aviation Administration for a $500,000 grant from the Small Community Air Service Development Pilot Program. "VIPA must submit the application to the FAA by June 30," the release stated, and the authority will "match the federal funds in order to offer incentives to airlines for the express purpose of attracting and increasing air traffic to the territory."
In other business, the board approved VIPA sponsorship of St. John's July Fourth Festival and of St. Croix's Crucian Festival, each to the tune of $10,000. This is the third year that the Port Authority has contributed to all three of the territory's carnival celebrations, the release stated.

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