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Aviation Division Bringing Down VIPA’s Bottom Line

According to V.I. Port Authority financials, lagging payments from local airlines are bringing down the agency’s bottom line, with officials reporting Wednesday that the aviation division accounts for $4.3 million in operating losses for the nine-month period ending June 30.

For this same period, VIPA’s overall operating loss is $294,000, with the deficit from the aviation division offset by $3.5 million in profits from the marine division. These figures are measured on an accrual basis, meaning that income is counted when a sale occurs, while expenses are counted when goods and services are received.

From a cash basis, however, VIPA has realized a $12.9 million operating gain, VIPA’s Chief Financial Officer Donna Frett-Gregory said during the board’s monthly meeting Wednesday on St. Thomas. In this category, aviation division figures are still in the negative by $67,000 while the marine division realized a $446,000 uptick in revenues. These figures are based on cash actually received, according to Frett-Gregory.

Port Authority financial officers said Wednesday that in terms of accounts receivables for the aviation division, $1.2 million of the overall outstanding total of $5.3 million is from accounts that are more than 30 days old, while nearly $300,000 is between 31 and 90 days old. Officials said payments have been received from Jet Blue, American Airlines St. Croix, and U.S. Airways that are not reflected in the total, but negotiations are still ongoing with Seaborne Airlines, which has continued to be on a payment plan.

Frett-Gregory said a 12-month plan was previously proposed for Seaborne and, while that has now been cut to eight months, the airline is still incurring current charges. Officials said they were able to confirm, however, that a $75,000 from Seaborne is “in the mail.”

The discussion about Seaborne became a sore spot for Attorney General Claude Walker, a member of the VIPA board, who said he was still waiting for the airline to construct an enclosed building to replace the outside tents at the terminal in Christiansted.

While VIPA staff said that Seaborne had beautified and upgraded the tent area but had not submitted plans for a building upgrade, Walker said the airline had the obligation to “build suitable facilities on St. Croix” to keep passengers out of the heat and rain.

To boost aviation efforts, VIPA’s assistant director, David Mapp, recommended that the port enter into a new three-year agreement with Sixel Consulting for marketing and other related services associated with bringing in new or expanded air service to the territory.

According to Mapp, Sixel has brought new air service to St. Croix from the mainland, which will start in the fall, and possibly a new airline, which will be seen in the spring.

Tourism Commissioner Beverly Nicholson-Doty, also a member of the VIPA board, confirmed Wednesday that the company has been “critical” to the stability of the territory’s airline industry but added that any contract should have a “clearly defined scope of work and outline what the expectations are.”

A report on outstanding receivables from VIPA tenants turned to a separate discussion about the St. Thomas Dialysis Center, located in Crown Bay, which still owes almost $690,000 in rent. Crown Bay Center general manager Ava Penn said that a $50,000 check has been received but was not factored into Wednesday’s report, but Walker said he was still concerned that the center had recently recalled a $100,000 check only to give back $50,000.

Port Authority officials also discussed increasing the existing water tour operator passenger pickup fee, from $2.50 to $5 per passenger for those tour operators that don’t have contracts or arrangements with local cruise lines. The fee was supposed to go into effect last year, but was pushed back until 2016, according to VIPA staff.

Carlton Dowe, VIPA executive director, explained that the increased fees would allow for the repair and maintenance of bulkheads used by boats; improved boat loading areas in and around the Crown Bay dock; and the hiring of permanent security for the dock area.

The Port Authority has tried to meet with both sides – the tour operators and the cruise lines – and Dowe explained that cruise operator Royal Caribbean had suggested that the $5 be imposed on independent operators. Tour operators said they were opposed, across the board, to the increase but board members Wednesday said the authority is in need of revenue and has a responsibility to maintain its facilities, which could be covered by the fee.

The board voted to approve the two-tier fee: $2.50 for those operators with cruise line contracts and up to $5 for those without contracts. The fee goes into effect on Oct. 1.

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