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HomeNewsArchivesU.S. AIRWAYS CUTBACK IS LATEST ECONOMIC BLOW

U.S. AIRWAYS CUTBACK IS LATEST ECONOMIC BLOW

May 29, 2003 – Another economic blow to the territory, and primarily to St. Croix, came about this week with word that U.S. Airways intends to pull almost all of its flights to that island and cut many to St. Thomas at summer's end.
The airline will end its "wrap service" to the territory on Sept. 5, a spokeswoman said, which means that daily flights from Philadelphia to St. Thomas and St. Croix will cease. U.S. Airways spokeswoman Amy Kudwa said planes currently fly six days a week from Pennsylvania to St. Thomas and on to St. Croix before returning to Philadelphia.
With the change, flights to St. Thomas from Philadelphia will be only on Saturday until Oct. 26, when the tourist season begins to resume, Kudwa said. She said the Saturday flight from Charlotte, North Carolina, to St. Croix would continue, as will a daily round-trip flight from Charlotte to St. Thomas. "We will maintain those flights throughout the off-peak season and into the fall," she said.
The cause of the pullout is multifaceted, Kudwa said, pointing to economic problems being faced by other airlines as well. "We're not operating in a vacuum. There are lots of difficulties in the airline industry," she said, and the level of service USAir now provides is "no longer economically viable."
She said the cutback also can be attributed in part to "typical seasonal" schedule adjustments.
Some members of the local business community have pointed to the Port Authority's decision to raise airport landing and passenger fees by 25 percent last February as the impetus for an apparent airline exodus on St. Croix. In the wake of the VIPA fee hikes, American Eagle announced it was stopping commuter service between St. Thomas and St. Croix, and American Airlines announced it was discontinuing ground operations at both airports.
"I think we'll lose further flights," Frank Fox, St. Croix Chamber of Commerce president, said on Thursday. "What we've got here is proof positive that you can't raise taxes and raise taxes and raise taxes and get more money. The increase in landing fees means less money for the Port Authority, more flights lost and more passengers lost."
Fox added, though, that U.S. Airways' move probably is not based solely on the fee increases. "Everything is cumulative," he said, pointing to the entire airline industry's financial woes. But he added of the fees, "that is something we can control — how much it costs for someone to come and park a plane here."
He also said a lack of passenger demand for St. Croix is probably part of the reason for the bad news. Kudwa would not comment on that issue. "I'm not going to elaborate on that," she said. "It's proprietary information, and we don't break that out market by market." She also would not comment on how much money U.S. Airways stands to save by reducing its service in the territory.
The company has not made any announcement about its employees on St. Croix, she said, but personnel will continue to maintain service at the airport counter.
Chamber vice president and business owner Ed Buckley concurred that low passenger demand for St. Croix is a big problem, noting that fares to the territory are not prohibitively high compared to flights within the United States.
He said island hoteliers are reporting occupancy rates averaging 50 percent for last tourist season. "When the average in other parts of the Caribbean are 75 percent, I find it unbelievable," he said, "especially since we're a U.S. territory and this was during a wartime situation."
Buckley, who owns St. Croix Ultimate Bluewater Adventures, said much of his scuba-diving business promotions are in the northeastern United States, where there's easy access to U.S. Airways' flights. The cutback in service "is certainly going to hurt," he said.
Buckley served on the selection committee that hired a consultant to explore ways to increase airlift to the territory. The University of the Virgin Islands commissioned the $75,000 study, which was funded by an appropriation of the 24th Legislature. The consultant's draft proposal was unveiled on Thursday at UVI on St. Croix after having been presented Tuesday on the St. Thomas campus.
The plan provides a timeline for improving the airline situation in the territory, historical data about the industry and comments about the current state of the industry, Buckley said.
Meanwhile, a proposal on the drawing board that would put an airline hub on St. Croix is moving ahead again after being slowed by investor reluctance to commit funds during tax season and the war in Iraq, according to Bruce Morgan Casner, Sun Airways chair.
"We continue to be aggressively involved in putting a finance package together," Casner said. He said the increase in landing fees would not have "an appreciable effect on Sun Airways and its investors. It would simply be a part of our overhead."

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