Jan 30, 2003 – Major airlines reacted swiftly, tersely and in no uncertain terms Thursday to the Port Authority's announcement on Wednesday that it will increase airport landing and passenger fees by 25 percent starting Saturday.
American Airlines and Delta Air Lines both said they will cut service almost immediately.
Also Thursday, the executive director of the St. Thomas-St. John Hotel and Tourism Association said the result will be fewer flights, fewer tourists, fewer tourist dollars and more unemployment. And she noted that the Port Authority board made its decision without any input from the local hospitality industry.
Philip T. Olivieri, American regional managing director, wrote to VIPA's executive director, Darlan Brin, having learned of the VIPA board's unanimous approval of raising the rates:
"This news is very disturbing and comes at a time when air service to the USVI is needed, and airlines are incurring an economic crisis as never before experienced in the industry.
"If these increases go into effect as planned, pleased by advised that American will reduce our scheduled operation at the earliest opportunity.
"We are open to discussion on this matter, and look forward to continue to address tourism development in the Virgin Islands."
Peggy Estes of the Delta Air Lines corporate communications office in Atlanta e-mailed the Source on Thursday afternoon, strongly backing up information released by Delta locally Wednesday. She said:
"Delta's statement in response to the increased rates at STT: Delta is extremely serious about service reductions to St. Thomas, and we plan to take action soon."
Steve Houlder, Delta regional manager for properties, had written to Brin on Wednesday saying that "Delta is evaluating a service reduction starting in February due to the proposed increase in rates and charges."
However, one airline indicated it has no immediate plans to change its service as a result of the fee hikes. On Thursday night, Continental Airlines' manager for public relations, Rahsaan Johnson, said in an e-mail to the Source from the carrier's Houston, Texas:
"Aside from our regular spring reductions to Florida and the Caribbean in which we reduce our schedule to St. Thomas by four flights each week, we're not planning any schedule changes there."
USAirways and United Airlines had not returned calls by 10 p.m. Thursday.
The American Airlines letter was released to the media and hand-delivered to Brin Thursday afternoon, according to his office. Brin was not available for comment at that time. His secretary said he was in a meeting at Government House.
Calls on Thursday to Tourism Commissioner Pamela Richards, who by virtue of her position also chairs the VIPA board, were directed to Brin.
Beverly Nicholson, executive director of the St. Thomas-St. John Hotel and Tourism Association, minced no words Thursday afternoon. "This most certainly will have a negative impact on our economy, and we are seeing negative repercussions in reduced airline flights," she said. "We are very concerned. It will impact not only the hotel industry, but all tourism industries from taxis to restaurants to retail stores."
And, she continued, "with fewer tourism dollars flowing through the economy, we will see higher unemployment."
Citing comments made by Finance Commissioner Bernice Turnbull on Tuesday at a Senate Finance Committee hearing, Nicholson said: "We heard her speak about layoffs at Hovensa, the largest employer in the territory, and how it would affect withholding taxes.
"This is moving quickly through the pipeline. We are talking about day after tomorrow."
The hospitality industry association is not only upset about the airport fee increases, Nicholson said, but is also "concerned it was done without anyone having some input.'' She stressed that the authority's decision "affects the not only the hotel product, but the territory's tourism as a whole."
Nicholson provided some sobering statistics she put together on Wednesday after hearing President Bush's State of the Union address on Tuesday night.
"I very quickly went back to our 1991 records during Desert Storm, the Gulf War," she said. "We had an immediate 20 percent drop in hotel bookings. After listening to President Bush the other night, it's not if we go to war, but when."
Nicholson said she does not understand the Port Authority's strategy in the face of the impact it will have on the territory's overall tourism product and overall revenues, "to say nothing of other variables, including the economy being at a 10-year low."
"We understand and appreciate the Port Authority's need to balance its budget," she said. "However, in this current economic climate, one has to look at every possible way to cut expenses."
She said the association president, David Yamada, general manager of the Renaissance Grand Beach Resort, is off-island at a retreat and not available for comment this week.
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