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HomeNewsArchivesVIPA Board Considers Plan to Transform Rohlsen Airport Into Cargo Hub

VIPA Board Considers Plan to Transform Rohlsen Airport Into Cargo Hub

Aug. 23, 2006 — After a three-hour committee meeting early Wednesday morning, V.I. Port Authority board members pushed through an aggressive agenda packed with lease agreements, business presentations and two executive sessions in which the board approved various union contracts, case settlements and personnel issues.
During one of the executive sessions, the board also voted to postpone the implementation of a ferry schedule for vessels operating between St. Thomas and the British Virgin Islands.
According to VIPA Board Chairman Robert O'Connor, the new schedule — which was supposed to have gone into effect Sunday — was designed to give Coast Guard and Immigration officials enough time to conduct security checks between arrivals.
O'Connor said the new schedule generated concerns for Caribbean Maritime Inc. (CMI), which offers service between the territory and BVI. After the meeting O'Connor explained that these concerns led CMI to file a lawsuit against VIPA, along with two other local ferry companies.
However, O'Connor said that the company recently asked for the opportunity to discuss the issue with the VIPA board, prompting board members Wednesday to postpone the implementation of the new schedule for the next three months.
Issues relating to Island Lynx, another local ferry company, also came up during Wednesday's meeting, as Robert Siebengartner, one of the company's principals, asked board members to reduce per-passenger fees from $2.85 (for a one-way trip between St. Thomas and St. Croix) to 25 cents.
"When traveling to St. John, the fee is 25 cents each way," he explained. "The $2.85 per-passenger fee for rides between St. Thomas and St. Croix is too high." Siebengartner added that Island Lynx's costs have greatly increased over the past few months, forcing the company to come to VIPA for relief.
He said if VIPA does not lower the fee, then Island Lynx would have to raise ticket rates for passengers traveling between St. Thomas and St. Croix. "We provide an invaluable service to the people of the Virgin Islands, so I think this request is justified," Siebengartner said.
He added that the current per-passenger and dockage fees would impact the company's ability to bring in another vessel to carry freight–primarily vehicles–between the two islands. "When we first came to you with our proposal to provide service down here, we had talked about carrying both passengers and cargo," Siebengartner said, adding that the port's fees, coupled with the rising cost of gasoline, have prevented the company from making that goal a reality.
Siebengartner's presentation did not receive much support from board members, who said that the port and per-passenger fees are needed to keep VIPA solvent. According to board member James Rodgers, chair of the board's finance committee, the authority is currently "in the red" with regards to its finances.
"Our costs have gone up tremendously," Rodgers said. "And if we don't have a per-passenger charge, there will be no money left for operations."
According to Judith James, VIPA's director of administration and finance, the authority is (as of the end of June), generating about $30.1 million in total revenues and spending approximately $34.2 million for operating expenses–leaving a net loss of $4.1 million.
O'Connor later said the board would consider Island Lynx's proposal and get a decision to Siebengartner about a rate reduction at a later date.
Board members were more optimistic about recommendations presented by Ken Bukauskas, associate director of Leigh Fisher Associates, a company hired by VIPA to conduct a feasibility study on the possibility of transforming the Henry E. Rohlsen Airport on St. Croix into a cargo hub, or a base of operations for freight carriers moving cargo within Caribbean or worldwide locales.
Bukauskas said St. Croix's airport already had the infrastructure to support such an endeavor, including an extensive runway, "wonderful" ramp space for cargo jets and a nearby oil refinery that can offer discounted fuel prices to cargo carriers. He also said St. Croix is ideally situated, and can serve as a mid-point for cargo being shipped between Europe and the U.S.
These factors could essentially "put a nail" in large cargo hubs in Miami and Puerto Rico, whose costs are becoming more unattractive to freight carriers worried about expenses, he said. "These costs are causing the carriers to search for new points of business," Bukauskas explained. "St. Croix could be one of those ideal points."
He recommended that St. Croix cater primarily to integrated carriers, such as FedEx or UPS, which have the ability to operate in an "isolated" environment. Bukauskas also offered board members the option of turning the airport into a trans-shipment hub, where freight could be shipped to the territory and stored until it can be shipped to another location.
If VIPA decides to explore the possibility of becoming a player in the trans-shipment industry, the cargo facility at Rohlsen would have to be expanded, Bukauskas added. Otherwise, the airport's transformation into a cargo hub would be "fairly inexpensive."
"Most of what you need is already there," he said, adding that becoming a part of the Caribbean or international cargo market could bring more economic development opportunities for St. Croix — including the revitalization of an ailing manufacturing industry.
Board members were impressed by Bukauskas' presentation, and said they would look into pursuing the idea. "This is good news for the V.I., and good news for St. Croix," Rodgers said.
In other news, board members ratified lease agreements between VIPA and Knight Communications, Deliver It Inc., UPS, Concessions International, DHL, and Air Center Helicopters Inc.
The board also ratified a resolution that prevents the Legislature from authorizing franchise agreements for local taxi companies seeking to operate within port facilities, such as the airport. According to Brin, VIPA would like the Legislature to instead give the Port Authority the power to regulate such agreements.
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