Feb. 26, 2003 – The airline representatives in attendance at Wednesday's Port Authority board meeting did not come away with good news. The board held fast on its 25 percent increase in airport landing and passenger fees instituted on Feb. l.
Some of the carrier personnel had expressed optimism while waiting an hour and 45 minutes for the scheduled 10 a.m. meeting to begin as board members apparently huddled privately outside the board room. When the session convened, no explanation for the delay was given.
Any hope of retreat on the fee increases was quickly dashed as Cornell Williams, newly appointed VIPA deputy executive director, gave a PowerPoint presentation of the Port Authority's current financial condition. He reported that the agency's overall financial picture has not changed significantly since January. VIPA still is facing a $2 million deficit even with the fee increases, a situation it announced in January, he said.
Darlan Brin, VIPA executive director, sought and received board approval for a 10 percent rollback in salaries for 63 non-union management employees, including himself, for the balance of Fiscal Year 2003. He said the move would save about $700,000. The rollbacks will take effect immediately, he said.
Brin also received approval to continue studying cost-saving measures and to continue a dialogue with the airlines on the fee increases.
Explaining further cost-cutting measures to the board, Brin said the authority would save $1 million by spending only available federal funds on the Red Hook Marine Terminal project for the rest of the current fiscal year, delaying the expenditure of Port Authority funds on the project until the start of until FY 2004.
Without the revenues from the airport fee increases, VIPA could be in technical default with its bondholders, VIPA attorney Donald Mills said in response to questioning by Attorney General Iver Stridiron, a VIPA board member.
"If we retreat [from the increase], are we exposing ourselves to being called on the bonds?" Stridiron asked. Mills explained that if the bonds were to be called, that would mean $8 million that the authority — and, by extension, the airlines — could be liable for because of the signatory agreement VIPA has with the four major carriers in the territory.
The agreement provides for airport fees to be raised when VIPA has a shortfall in its Aviation Division and lowered when the division has a surplus.
Mills reiterated what he has said in previous meetings: "We have to make sure our rates are sufficient to generate revenue, so we have to raise the rates under our agreement."
The airlines did receive one concession. Board chair Pamela Richards got approval from her colleagues to set a one-year moratorium on the higher landing fees for airlines new to the territory or expanding their service locally. The move does not apply to the increases in passenger fees, she said.
Richards, who is Tourism commissioner and by virtue of that office chairs the VIPA board, said she finds it frustrating to compete with 32 other destinations in seeking to encourage more airlift to the territory when she has no incentives to offer.
She said she would be going to Germany in March to meet with representatives of new charter airlines and would like to have the moratorium offer to put on the table.
She also said that passenger fees from anticipated new traffic into the territory would offset the one-year loss of the landing fees.
The airline representatives present — Robert de Lugo, Delta Air Lines station manager; Calvin Presley, USAirways St. Thomas manager; and Joseph Hoffman, Continental Airlines airport business manager — did not appear to be impressed with Richards' proposal. They filed out of the room after learning there would be no change for them in the increased airport fees. One of the group commented: "At least they could have apologized for making us wait for an hour and 40 minutes to tell us no good news. It shows no respect."
Richards also made another proposal, which she called a "two for one." It would allow airlines to pay only one landing fee for flights from the States that land on St. Thomas then continue on to St. Croix before returning to the mainland.
The idea is one in place in the territory for cruise ships as an incentive to visit St. Croix. Those calling at both St. Thomas and St. Croix are exempt from port fees on St. Croix.
Mills urged the board to hold off on idea for airports until he checked with the Federal Aviation Administration on the legality of such a move. "They can be very strict about these things, and we don't want to run afoul," he said.
Stridiron said the proposal "raised many, many questions" and urged more study on the issue.
All VIPA board members attended the meeting: Kent Bernier, assistant to the governor for economic affairs, Public Works Commissioner Wayne Callwood, Leslie Milliner, Robert O'Connor Jr., Planning and Natural Resources Commissioner Dean Plaskett, Richards and Stridiron.
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