June 2, 2008 — New strategies to counteract flight cutbacks by American Airlines were announced Monday morning at a Government House press conference.
The airline plans to "restructure American and American Eagle operations at San Juan, Puerto Rico, beginning in September," according to a statement issued by American Airlines last week. "This round of reductions will affect American and American Eagle flights originating from San Juan to the United States and various islands in the Caribbean."
Action needs to be taken before then, Gov. John deJongh Jr. said Monday.
"We cannot wait until September," he said. "We have to be proactive now."
The governor announced the formation of a public-private committee that will include members from both island's chambers of commerce and hotel associations, along with the Department of Tourism, V.I. Port Authority and Office of Management and Budget, to explore options to counter reduced airlift to the territory.
The committee will look beyond the short term, deJongh said.
"Given the current issues affecting the airline industry, including the severe strain of rising fuel costs, we have a responsibility as a territory to get ahead of the issue and proactively address the potential impact to our economy this fall and beyond," he said. Every $1 rise in the cost of a barrel of fuel costs the airlines $75 million, he said.
Offering a bit of perspective on the situation, deJongh said American carries 53 percent of the flights to the Caribbean, but the Caribbean constitutes only 6 percent of its total operation.
"We believe there are opportunities to sustain airlift in the short term," said Tourism Commissioner Beverly Nicholson-Doty. "Our new summer strategies already in place will stay, and we are working closely with our partners with the goal of enhancing service and exploring new and existing gateways."
The Tourism Department is looking at bargain airlines as well as local carriers to augment the seats the territory will lose this fall, she said.
"It's a combination of strategies," Nicholson-Doty said. "We've already met with Spirit and JetBlue, Iberia, British Airways and Continental. We meet almost monthly with American. We will explore the possibility of attracting other carriers."
On the brighter side, Nicholson-Doty noted the USVI Hotel & Tourism Association is holding its 15th Annual Destination Symposium on Tuesday, which will present an unparalleled opportunity to meet with other Caribbean stakeholders.
Noting that the territory is not facing the airline challenges alone, Nicholson-Doty said the symposium is an opportunity to meet with other Caribbean travel partners, such as the Caribbean Hotel Association and the Caribbean Tourism Organization.
The Department of Tourism's marketing team will make presentations at the symposium, including its off-island contractors. Those tour operators bring in $15 million business annually to the territory, Nicholson-Doty said.
Aside from critical airlift issues, American also announced last month that, beginning June 15, it will charge $15 for a first bag and $25 for a second bag each way, which is expected to impact the territory's rum sales significantly. (See "Checked Bag Charge May Dry Up Rum Sales, Hit V.I. Economy.")
Delegate Donna M. Christensen wrote last week to Peter J. Dolara, American Airlines senior vice president, asking for an exemption for the duty-free liquor boxes from the second bag charge, according to a news release from her office.
Nicholson-Doty said she is not holding out hope the airlines will respond favorably. She has already approached them on the issue.
One of the first casualties of the new policies is the cancellation of next month's Celebrity Golf Classic, sponsored over the past three years by the Foundation for the University of the Virgin Islands. Joseph Boschulte, UVI spokesman, said "limited airlift" to the territory presented the biggest challenge in getting the classic off the ground, Boschulte said.
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