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Topic: Subsidized Flights Debated
Username: Yanksn4
Posted 2005-02-14 01:24:12 and read 1344 times.

http://www.forbes.com/feeds/ap/2005/02/13/ap1822846.html

Subsidized Virgin Islands Flights Debated

The government in this U.S. territory is coming under criticism for agreeing to subsidize American Eagle flights between two islands, with senators asking how the cash-strapped administration will pay for the initiative.

Lt. Gov. Vargrave Richards signed the deal with American Eagle in November, agreeing the government would buy up to 42 unsold seats per flight between St. Thomas and St. Croix, according to a copy of the contract obtained by The Associated Press.

Roundtrip tickets cost about $75, and the deal could cost the government $1.3 million before the contract expires May 1. The flights started in December.

The Senate passed a motion Friday demanding that Richards explain how the administration will pay for the subsidies while grappling with a $1 billion debt, which has made it difficult for the government to pay promised raises to its employees and fund projects in recent years.

"We want to know where this money came from because we didn't appropriate any money for these flights in the budget," said Senate Majority Leader Celestino A. White.

Richards said the flight would boost tourism in St. Croix, the largest and poorest of the Caribbean territory's three islands. He said financing for the subsidies would come from a special fund for island development.

Although the U.S. Virgin Islands received almost 2 million cruise ship passengers last year, few ships landed in St. Croix. Most ships arrive in the capital of Charlotte Amalie in St. Thomas. Passengers frequently take 20-minute ferries to tiny St. John, but rarely bother to check out St. Croix, which has pristine beaches and coral reefs but lies about 20 miles from St. Thomas.

Richards also said the flight would encourage business and government travel to St. Croix. He claimed the deal with American Eagle is necessary because demand supersedes available flights.

But officials from another airline, Hynannis, Mass.-based Cape Air, said its seven daily flights from St. Thomas to St. Croix average about 55 percent of capacity. Cape Air spokeswoman Michelle Haynes said the subsidies for American Eagle seemed unfair.

"We're not looking for any kind of subsidy, but don't tilt the playing field," she said. "I'm puzzled."

Officials at American Eagle, part of Fort Worth, Texas-based AMR Corp., have declined requests for comment.

Shared risk contracts are common in the Caribbean, where governments often try to discourage airlines from pulling out during the non-peak seasons, said Robert Mann, the president of R.W. Mann and Company, Inc., a Port Washington, N.Y.-based airline consulting firm.

Topic: RE: Subsidized Flights Debated
Username: DeltaGuy
Posted 2005-02-14 02:25:07 and read 1316 times.

agreeing the government would buy up to 42 unsold seats per flight

Since this is AA Eagle, wouldn't 42 seats be more seats than they have on their ERJ's, and 2/3 of what's on their CRJ's? If so...looks like the government owns alot of seats!

DeltaGuy

Topic: RE: Subsidized Flights Debated
Username: SprxUSA
Posted 2005-02-14 02:42:21 and read 1294 times.

But these are ATR flights, with I think 70 seats. I believe they are the -72s.

I say some of the $$ should come from the hotels and assorted other businesses expected to revel in the additional tourists these flights are allegedly going to bring in.

Topic: RE: Subsidized Flights Debated
Username: DAL767400ER
Posted 2005-02-14 10:56:29 and read 1225 times.

According to their schedules AA has 3 daily AT7s on this route, so they offer some 210 seats, so it's not that many seats, but still a waste of money. It's also understandable that Cape Air is more than unhappy with this.


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