PROPOSAL FOR FUNDING TO IMPROVE DIRECT AIR SERVICES TO THE 

MAINLAND AT HENRY E. ROHLSEN AIRPORT,

ST. CROIX, U.S. VIRGIN ISLANDS

UNDER THE SMALL COMMUNITY

AIR SERVICE DEVELOPMENT PROGRAM

DOCKET 

DOT-OST-2012-0069

Application on Behalf of

THE PEOPLE OF ST. CROIX, U.S. VIRGIN ISLANDS

Submitted By:

VIRGIN ISLANDS PORT AUTHORITY (LEGAL SPONSOR)

DUNS NUMBER: 618540900

EINS NUMBER 66-0384470

P.O. Box 301707

St. Thomas, U.S. Virgin Islands 00803

Phone: 340-774-1629

Fax: 340-774-0025

E-mail: DcMills@viport.com

And

U.S. VIRGIN ISLANDS DEPARTMENT OF TOURISM

ST. CROIX HOTEL AND TOURISM ASSOCIATION

ST. CROIX CHAMBER OF COMMERCE

VIRGIN ISLANDS HOTEL & TOURISM ASSOCIATION

THE GOVERNORS TASK FORCE ON AIR SERVICE

June 11, 2012
June 11. 2012

The Honorable Ray LaHood

Secretary of Transportation

United States Department of Transportation

1200 New Jersey Avenue SE

Washington, DC 20590

Dear Secretary LaHood:

The Virgin Islands Port Authority (VIPA), on behalf of the people of the Virgin Islands and the Island of St. Croix, 

respectfully submits this application to participate in the 2012 Small Community Air Service Development Program. 

This proposal meets the requirements of the program as set forth by the Department of Transportation (USDOT) 

because St. Croix has:

1. Insufficient air service to sustain and grow both the tourism-based economy of the Island, which accounts 

for 70 % of its GDP, and the sizeable resident industry on the island (Hess Oil, major rum distilleries and 

the University of the Virgin Islands) all of which suffer from poor access to the mainland. For 2008 only 

56.8% of the island’s hotel capacity was utilized on an annual basis and for YTD 2012 it has 41.6%.

Hovensa (Hess Oil), the 4th largest oil refinery in the world, lacks direct air access to key cities, e.g., 

Houston, New York, and Washington. 

2. Higher airfares than the two U.S. possession airports in the Caribbean (St. Thomas and San Juan) and other 

competing airports in the region. 

Through helping St. Croix continue its air service initiatives, an award through this program will enable St. Croix to 

diversify its economy, stimulate America’s tourism industry, and assist U.S. flag carriers in developing profitable 

and low-risk opportunities in a time of retrenchment and economic distress.

Continuing changes in airline strategies have increased the need for better nonstop services between St. Croix and 

the United States mainland. They have also created new opportunities that could help St. Croix restore its declining 

traffic, promote the island to U.S. and foreign tourists and develop its unique industrial assets. 

In 2007, the USDOT awarded a Small Community Air Service Development Program grant to St. Croix through the 

VIPA. This grant was used to develop a comprehensive strategic air service marketing plan for St. Croix (STX). In 

awarding the grant, the DOT recognized the unique challenges faced by a small island community in obtaining 

scheduled mainland airline services. By all measures, the $150,000 grant awarded to the VIPA in 2007 has been 

highly successful. Although the funds received were modest (the original request was for $660,000), the investment 

supported the development of a strategic marketing plan and allowed some limited carrier marketing. 

Implementation of the short-term recommendations of that plan has already resulted in a substantive increase in both 

U.S. mainland and inter-island flights. In short, the ROI “return on investment” of the 2007 grant has been 

extremely positive, easily exceeding the investment of the initial grant. 

That being said, however, significant opportunities were identified in the marketing plan which were unable to be 

acted upon due to the limited funds received in that initial grant. In moving forward, a 2012 grant of $300,000 is 

requested to address those opportunities that will not only ensure continuity but cement recent service improvements 

and support continuing progress. The objectives of the requested funds are to:

1. Secure non-stop services to a number of new mainland destinations;

2. Introduce a low-fare airline to STX to mitigate the fare disadvantage that exists; and

3. Develop an effective risk sharing/incentive program to support and promote new air services.

The rationale and plan for implementing these objectives are explained in detail in the attached application.

Thank you for the opportunity to pursue a project of such importance to St. Croix and USVI. There are few airports 

where air service improvements will have as broad a benefit for all segments of the community and its economy.

For the St. Croix Air Service Development Consortium, thank you for your consideration of this application.

Mr. Don C. Mills

Interim Executive Director

Virgin Islands Port Authority
PROPOSAL FOR FUNDING TO IMPROVE DIRECT AIR SERVICES TO THE MAINLAND

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Table of Contents

I. Executive Summary 1

II. Organizations Involved in this Application 4

III. St. Croix and Its Need for Scheduled Air Service 4

A. Background - St. Croix and the U.S. Virgin Islands

B. St. Croix’s Need for Air Services

IV. St. Croix Air Services 6

A. History of Air Services

B. Current Services

C. Traffic Volumes and Trends

D. Fares

E. Air Service Concerns

V. SCASDP Selection Criteria 12

A. The Proposal Addresses High Air Fares

B. A Proportion of the Cost is Provided by Local Non-Airport Sources

C. There is an Existing Established Public/Private Partnership

D. The Grant Will Provide Material Benefits to a Broad Segment 

of the Traveling Public

E. The Funds Will be Used in a Timely Manner

VI. Proposed Actions 13

A. Project Schedule and Exit Strategy

B. Proposed Budget

C. Relationship to 2007 SCASDP Award

D. Performance Measures

E. Financial Controls

F. Return on Investment

VII. Previous Steps to Improve/Increase Air Service 

and Tourism to St. Croix 15

VIII. Other Program Details 16

Appendix A. Application for Federal Domestic Assistance (SF-424)

Appendix B. Small Community Air Service Development Program 

Summary Information

Appendix C. Letters of Support
PROPOSAL FOR FUNDING TO IMPROVE DIRECT AIR SERVICES TO THE MAINLAND

AT HENRY E. ROHLSEN AIRPORT, ST. CROIX, U.S. VIRGIN ISLANDS

VIRGIN ISLANDS PORT AUTHORITY │1

I. Executive Summary

Appendix A includes a completed Form SF-424 “Application for Federal Domestic Assistance”. Appendix B 

provides the data required in support of all applications under the SCASDP program.

A. Organizations Involved in this Application

There are several organizations that have joined forces to prepare and support this Small Community Air 

Service Development Grant application for St. Croix (STX). These parties include:

 Virgin Islands Port Authority (VIPA) – This organization owns and operates the Henry E. Rohlsen 

Airport on St. Croix;

 U.S. Virgin Islands Department of Tourism – The organization charged with increasing the number 

of visitors or improving their experience in the U.S. Virgin Islands (USVI) by the Government of the 

U.S. Virgin Islands;

 The St. Croix Hotel and Tourism Association – A private organization dedicated to the increasing 

the number of visitors and bettering the quality of life on St. Croix;

 The St. Croix Chamber of Commerce – Working in furthering development of the island;

 The Governor’s Task Force on Air Service – Established by Governor de Jongh in 2007 to support 

improved air services to St. Croix; and

 The U.S. Virgin Islands Hotel and Tourism Association – The organization representing the 

interests of all three of the Virgin Islands and developing the tourism base.

These organizations collectively are referred to as the “Consortium” in the remainder of this application.

B. The Application Calls for the Pursuit of New Routes, Low-fare Service and the 

Development of a Comprehensive Risk-Sharing Program to Support New Air Services to 

St. Croix

Objectives of Application

1) Establish non-stop service to new mainland cities

a) Pursue new non-stop services to several markets, including St. Croix’s number 1 market – New

York City, as well as Houston, Washington and others

b) Potential air carriers – jetBlue Airways, American Airlines, Delta Air Lines, United Airlines , 

Spirit and US Airways

2) Introduce low-fare service to STX to mitigate fare disparity with St. Thomas

a) Potential air carriers – jetBlue

b) Target markets – New York (jetBlue) and Spirit (Ft. Lauderdale)

3) Develop a long term competitive Risk-Sharing Program to support and promote new services – amount 

to be determined

Justification of Grant Request

With tourism as its major industry, accounting for over 70% of the St. Croix’s GDP, and air access 

essential to its economy, the Consortium has been actively involved in the recruitment of air service and 

generously aggressive in offering marketing support to airlines. In 2003, it funded a study whose objective 

was to increase air arrivals to the islands. In 2007, the USVI applied for and was awarded a SCASDP grant 

to develop a Strategic Marketing Plan for St. Croix. The plan, completed in 2008, recommended a number 

of initiatives which would help grow the air service market for STX. Also in 2008, a Governors’ Task 

Force on Air Service (a public/private partnership) was later established and is still functioning. The initial 

focus was on the incumbent airlines and the expansion of their then-current services. The results of this 

effort have been outstanding, but they also demonstrate the need for further development of the potential 

that exists in this market.

The 2008 Strategic Marketing Study recommended three major action items:

1. Recruit New Nonstop Service to New Destinations

Of the potential new nonstop destinations, New York is the largest market (even larger than the

markets of the two currently served mainland airports). The U.S. Virgin Islands Bureau of Economic 

Research report for April 2012 – Hotel Guests by Area of Origin – shows that the New York region 

contributes 45% of the total visitors to the USVI. Of the 270,202 visitors to the USVI through April, 
PROPOSAL FOR FUNDING TO IMPROVE DIRECT AIR SERVICES TO THE MAINLAND

AT HENRY E. ROHLSEN AIRPORT, ST. CROIX, U.S. VIRGIN ISLANDS

VIRGIN ISLANDS PORT AUTHORITY │2

123,029 came from the New York market. While the report does not break this down by island, the St. 

Croix Hotel & Tourism Association president stated that New York region (NY, NJ, PA and CT) was 

the largest market for members of his organization but that it has steadily declined since the loss of any 

direct service several years ago. There were two potential new carriers for STX-NYC which were 

identified in the study – United (EWR) and JetBlue (JFK). Incumbents Delta and American are also 

prime candidates that currently serve STX from Atlanta and Miami respectively, but not from New 

York – yet both serve New York from St. Thomas (STT). Requested SCASDP funds would be 

combined with funds from the public-private Consortium and used to prepare and put forward effective

presentations to selected carriers designed to persuade appropriate carrier officials to inaugurate 

identified services in a timely manner.

2. Seek Low-Fare Carrier Service to the Mainland

Two of the significant U.S. low-fare carriers have recently expanded into the Caribbean and Latin 

American region. Either of these two carriers could have a beneficial impact on STX with service via 

one of their major hubs, while not competing directly with any of the incumbent carriers. These would 

include jetBlue to JFK or Spirit to Ft. Lauderdale. New services should also help to bring STX fares in 

line with other Caribbean airports, stimulate more destination visitors to St. Croix and lower fares for 

the local market. As above, a combination of SCASDP and Consortium funds would be used to prepare 

and present carrier presentations designed to persuade appropriate carrier officials to inaugurate 

low-fare services in a timely manner.

3. Develop a Comprehensive Risk-Sharing/Incentive Program

In conducting the study of the STX market and identifying possible deficiencies that impact air service 

growth in the STX market, the lack of an effective risk-sharing/incentive program – competitive with 

other Caribbean and mainland markets was identified as a key stumbling block. Thus, developing a 

sustainable, risk-sharing/incentive program for STX is imperative to obtain new air service and to 

realize the potential that exists for the island. Here, SCASDP funds would be combined with 

Consortium funds- but would be used only for developing the risk-sharing/incentive program with the 

carriers. The actual funds supporting the risk-sharing/incentive program will come entirely from the 

public-private Consortium.

The requested funding from the 2012 SCASDP program will ensure the achievement of these objectives 

and result in significant economic benefit to the community, including local businesses, industries, and the 

social infrastructure of the island. The request of the DOT in the SCASDP grant application is for 

$300,000. Other sections of this proposal detail the public and private non-airport support, which is set at a 

minimum level of $100,000 in actual cash contributions. Based on our experience with the 2007 grant, we 

expect to raise a greater share of local funds than we have identified here.

Special Note

At present, only 41.68% of the hotel capacity on St. Croix has been utilized through April of 2012 and just 

56.8% for calendar year 2008. Additional air service is essential to realize a greater percentage of hotel 

occupancy. In addition, three new resort developments of more than 400 rooms each are currently in the 

planning stages. These developments on St. Croix will greatly enhance the quality and quantity of the 

island’s accommodations and will undoubtedly raise the attractiveness of St. Croix as a vacation/leisure 

destination and will further support the added air service.

C. This Application Addresses All Criteria as Established by the DOT

 St. Croix has high air fares in comparison with other airports in the region;

 The island lacks sufficient air service to satisfy current demand;

 A significant proportion of the proposed project’s cost will be provided by local non-airport sources;

 St. Croix’s effort is well supported by an effective public/private partnership that has operated for three

years;

 The project provides significant material benefits to a broad segment of the traveling public, especially 

the island’s primary industry, tourism, as well as the St. Croix’s largest single employer, the Hovensa 

oil refinery, 4th largest in the world;

 Project funds will be used in a timely manner (a carefully defined, two-year effort); and

 The project will be subject to a clear and strict exit strategy in the event that improved carrier services 

are not inaugurated as expected within the two-year period of the grant.
PROPOSAL FOR FUNDING TO IMPROVE DIRECT AIR SERVICES TO THE MAINLAND

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D. This Proposal Addresses Each of the Key Issues Inhibiting Traffic Growth

 Declining total traffic and static mainland traffic at the Henry E. Rohlsen International Airport on St. 

Croix;

 Difficulties in developing St. Croix’s tourism industry. It remains underdeveloped, both in relation to 

that of St. Thomas/St. John and to the Caribbean in general with just under a 57% hotel occupancy rate 

in 2008;

 The limited potential of St. Thomas and San Juan to serve as gateways to St. Croix for mainland 

traffic. Specific problems include the limited capacity of the nine-seat aircraft that link St. Croix to St. 

Thomas; the fall 2008 service reductions by American Airlines at its San Juan hub; circuitous and 

time-consuming routings that often require two en-route changes of aircraft; the lack of carrier 

competition; and the lack of service from a low-fare carrier;

 A growing pattern of low-season (months of June – September) service cutbacks on St. Croixmainland air services;

 High fares, making St. Croix less competitive as a tourist destination;

 A diminished ability, as a result of service cutbacks, to promote St. Croix as a destination for European 

tourists; and

 The need to expand air services dramatically to serve the new large resort developments currently 

expected to be open to travelers and tourists beginning in late 2013.

E. St. Croix has Successfully Demonstrated that it Can Obtain Tangible Results from the 

SCASDP Program with Significant ROI and Related Economic Spinoff

The return on investment from the limited funding of the 2007 Grant was extremely positive. It provided 

the seed money for a focused marketing effort in the short term. However, several additional short- and 

long - term opportunities identified in the marketing plan were unable to be addressed due to limited 

funding. Likewise, recommended building blocks for longer-term success could not be addressed.

Despite these issues, as well as the continually changing dynamics of the airline industry and the economy 

in which it operates, the additional services provided at St. Croix in response to the initial carrier 

presentations, made possible using the results of the 2007 grant, have encouraged us to request new funding 

under the SCASDP program to complete the new opportunities identified earlier.

The 2007 grant resulted in the following improvements at St. Croix:

 Under a “before and after” view of the SCASDP grant and the ensuing work, in 2007 St. Croix had 

1,320 nonstop seats per week to the U.S. mainland. By 2012, it had 1,680 seats, for a gain of 27.3%;

This is impressive even before considering the steep economic decline over the 2007-2012 periods.

 Restoration of daily frequencies on American Airlines’ St. Croix-Miami route. In the fall of 2008, 

American cut back frequencies to 5 per week and daily service is now restored;

 Delta Air Lines boosted nonstop services to Atlanta from 2 per week in August 2008 to 5 per week in 

August 2012, with daily services scheduled to begin in late 2012; and

 Restoration of frequencies by American Airlines to San Juan. In September 2008, the airline reduced 

frequencies from eight flights per day to a three flights per day, but has now restored that number back 

to eight trips daily. However, all American Eagle service to St. Croix will end in 2013 under 

American’s closure of its San Juan Hub.

These achievements demonstrate the power of the SCASDP program and the benefits of a carefully 

planned and executed locally based initiative. This application calls for an altogether new initiative to 

secure additional nonstop flights to the U.S. mainland. Please note, however, that the work-scope described

in this application does not in any sense or degree detail a duplication or continuation of the work 

accomplished under the earlier SCASDP grant.
PROPOSAL FOR FUNDING TO IMPROVE DIRECT AIR SERVICES TO THE MAINLAND

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VIRGIN ISLANDS PORT AUTHORITY │4

II. Organizations Involved In This Application

The organizations directly involved in this application are:

Virgin Islands Port 

Authority

The public-body sponsor 

of the project

Mr. Don C. Mills

Interim Executive Director

P.O. Box 301707

St. Thomas, VI 00803-1707

Tel (340) 774-1629

Fax (340) 774-0025

Virgin Islands 

Department of Tourism

Ms. Beverly Nicholson-Doty

Commissioner

P.O. Box 6400

St. Thomas, VI 00804

Tel (340) 774-8784

St. Croix Hotel and 

Tourism Association

Ms. Julie Printy

President

P.O. Box 24238

Christiansted, VI 00824

Tel (800) 524-2026

St. Croix Chamber of 

Commerce

Mr. Stuart Logan

President and Chair

3009 Orange Grove

Christiansted, VI, 00820

Tel (340) 773-1435

U.S. Virgin Islands

Hotel & Tourism 

Association

Ms. Lisa Hamilton

President

4002 Raphune Hill, Ste 304

St. Thomas, USVI 00802

Tel (340) 774-6835

Governors Task Force 

on Air Service

Ms. Beverly Nicholson-Doty

Commissioner

P.O. Box 6400

St. Thomas, VI 00804

Tel (340) 774-8784

III. St. Croix and Its Need for Scheduled Air Service

A. Background – St. Croix and the U.S. Virgin Islands

The U.S. Virgin Islands lie about 80 miles south-east of Puerto Rico. Miami International, the nearest

major airport on the U.S. mainland, is 1,100 miles to the northwest. They are part of the Leeward Islands 

chain, itself part of a series of islands stretching nearly 900 miles from Puerto Rico to South America.

The U.S. Virgin Islands consists of three large islands, St. Croix, St. Thomas and St. John, and several 

smaller islands. While St. John is two miles east of St. Thomas across a narrow strait, a 40-mile expanse of 

open water separates St. Croix from the other islands.

With an area of 84 square miles, St. Croix is the largest and most populous of the U.S. Virgin Islands. The 

over 50 mile coastline includes several excellent natural harbors, many outstanding beaches, and from dry, 

almost desert areas in the east to rain forests and mangrove swamps in the west. Some of the best scuba 

diving in the world lies off the north shore. Very few parts of the United States have such geographical 

diversity in such a small area.

Since their discovery in 1493 by Christopher Columbus, the islands have been governed by Spain, Britain, 

the Knights of Malta, the Netherlands, France, and Denmark-Norway. The extensive and varied history of 

the islands accounts partly for their popularity among European vacationers. In 1917, security fears 

prompted the United States to purchase the Islands from Denmark, for a price of $25 million. All island 

residents received U.S. citizenship in 1927. The islands are now an organized, unincorporated territory of 

the United States.

The island has countless well preserved remnants of sugar plantations. The boardwalk at Christiansted is a 

leading part of the attractions that also include a well-preserved fort, a museum, docks for recreational 

craft, and a labyrinth of narrow streets, shops and restaurants. The town’s European history is well in 

evidence by its architecture.

A Unique and Important Industrial Base

St. Croix has a large indigenous industrial base, unlike other Caribbean and leisure destinations and some 

major vacation market U.S. cities such as Las Vegas and Orlando. The Hovensa oil refinery (a subsidiary 

of Hess Oil Corporation), the third largest in the United States, processes 495,000 barrels of crude oil daily.

It employs about 8,000 people, including contractors. Many of these contractors “shuttle” between St. 
PROPOSAL FOR FUNDING TO IMPROVE DIRECT AIR SERVICES TO THE MAINLAND

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Croix and the mainland during their term of work on the island. The Hovensa complex also includes a ship 

maintenance operation. While travel to Houston is important to Hovensa, travel to the headquarters of the 

Hess Oil Corporation in New York is more important. Besides the famous Cruzan Rum Distillery on St. 

Croix, a second large rum distillery is under construction by Diageo, a large British-owned distillery 

famous for many quality brands such as Tanqueray, Johnny Walker and Capt. Morgan rum, which will be 

produced on St. Croix. These growing businesses have made St. Croix a significant generator of outbound 

travel. Nearly 40% (37.7% for four quarters ending first qtr. 2012) of the St. Croix’s passengers initiate 

their air travel from STX; nearly double the percentage of most of the islands in the region and even higher 

than some major mainland cities. Any air service deficiencies hinder existing industries and could impede 

the further development of local industry.

Figure III-1 compares St. Croix to the other U.S. Virgin Islands along several dimensions.

Figure III-1. Comparative Statistics for the U.S. Virgin Islands

St. Croix St. Thomas St. John St. Thomas/St. John

Area (Square Miles) 84 31 20 51

Population 2007 Est. 55,293 53,160 4,359 57,519

Population Density/sq. mi 658 1,715 218 1,128

Construction ($000), 2008 Annual $89,530 $183,083

Unemployment Rate, Jan-Jun 2012 8.4% 6.1%

Hotel Rooms and Condos 1,172 3,811

Hotel Room Occupancy Rate, 2010-2011 45.8%-45.1%(-0.7) 52.9% (-4.9%)

European Visitors % Total, for the year 2007 3.0% 1.7%

Cruise ship Visitors, Jan-Jul 2012 38,502 948,937 948,937

Airport Enplaned Traffic-2011 204,440 637,740 637,740

Initiated Air Passenger trips from base 37.7% 19.5%

The statistics of Figure III-1 show that St. Croix, despite its larger size and population, remains underdeveloped as a tourist destination. Unlike St. Thomas, one of the world’s premier cruise ship destinations, 

St. Croix captures only a miniscule share (4.06%) of the cruise market, although this has recently begun to 

change as three cruise lines are now stopping at St. Croix. These additional visitors will help to develop the 

infrastructure for shopping, dining and other tourism-related businesses. The proportionately large presence 

of European visitors reflects the European roots and ambience of St. Croix. These visitors typically make 

relatively long stays and arrive during the low season for mainland tourists. They contribute both to the 

prosperity of St. Croix and to a healthier economy for the United States.

Other measures of the economic health of St. Croix, such as the unemployment rate, the hotel occupancy

rate, and the total amount of construction lag significantly behind those of St. Thomas/St. John. These gaps 

suggest important issues of personal income and disparities in wealth for the island’s residents, and point 

directly to the need for further efforts to develop St. Croix.

B. St. Croix’s Need for Air Services

The lower percentage of hotel occupancy, volumes of airport traffic and air visitor arrivals testify to the 

unrealized potential of St. Croix. Through an integrated program of air service development, hotel/resort 

expansion, ecotourism and promotion, St. Croix will build on its strengths. The incentives described in this 

proposal are a critical part of an economic development program for St. Croix. The economic contraction 

of 2008-2012 and the accompanying changes in personal income and travel patterns make this project 

especially timely.
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As an island 1,100 miles from access to the U.S. mainland, St. Croix has a strong need for high quality air 

services. Unlike competing resorts on the mainland, it cannot view surface transportation as a substitute for 

air access. Further, the significant amount of industry on the island and the much higher than average 

percentage of air trips initiated from St. Croix, point toward the need for more air service.

The island has a particularly pressing need for services to several new destinations on the U.S. mainland; in 

particular, New York. An enroute stop at San Juan or St. Thomas adds greatly to the time and effort in 

reaching St. Croix. In many instances, passengers must transit both a hub on the mainland and a Caribbean 

airport to reach St. Croix. The additional travel time, complications, and expense harms St. Croix’s ability 

to grow in an intensely competitive market.

No other Caribbean island has a counterpart to the Hovensa petroleum refinery. Industrial activity on other

islands is typically very limited and usually just meets the immediate needs of the local market. The 

previously mentioned companies and other businesses that make St. Croix home also need air services to 

access suppliers and markets. In addition, the island’s strong educational, political, cultural and business 

ties to the mainland contribute to the relatively large base of outgoing traffic. These passengers have 

distinct needs for scheduled services, particularly for high frequency, year-round flights. They are not 

necessarily served well by schedules designed for inbound tourists.

IV. St. Croix Air Services

A. History of Air Services

St. Croix has a lengthy history of scheduled air services dating back to 1948. In the 1980s aircraft such as 

the 727, A-300 and DC-10 flew many routes between the mainland and the Caribbean. These aircraft had 

more demanding runway requirements than the higher powered aircraft of today. Lower fuel prices 

encouraged many airlines to offer triangular routings, originating in the U.S. mainland, flying to one 

Caribbean island, flying a short hop to the second, and returning to the mainland.

For the Virgin Islands, a typical pattern emerged of a flight operating from the mainland nonstop to St. 

Thomas, continuing to St. Croix, and returning to the mainland. The short runway and obstacles at St. 

Thomas imposed payload and range limits that could be overcome by a stop in St. Croix. This pattern gave 

St. Croix an abundant supply of capacity and St. Croix did not have to support every flight with its own 

traffic. Traffic could grow incrementally, through small increases in the number of St. Croix passengers 

over the very large base in capacity.

In the 1990s airfield improvements at St. Thomas and high performance aircraft allowed nonstop flights

from St. Thomas to the U.S. mainland. Growing fuel prices and the cost penalties of the short St. ThomasSt. Croix leg penalized the traditional services. Increasingly, airlines split their Virgin Island’s services.

Each island received stand-alone nonstop flights to the mainland. However, each island received only the 

capacity that its own local market could support. The smaller St. Croix market saw a progressive loss of 

capacity, and restoring its traffic and tourism industry has proven difficult. Tourism is constrained by the 

lack of air services, while air services cannot grow unless tourism expands. Breaking this vicious circle is 

the goal of this initiative.

The DOT’s T-100 report illustrates the dramatic changes facing St. Croix. In 1990, over 3,200 nonstop 

flights offered 510,000 seats between St. Croix and the U.S. mainland. By 2007, fewer than 142,000 seats 

were available on 960 flights. Figure IV-1 illustrates recent capacity trends. Until 2003, two airlines, US 

Airways and American, offered year-round services. US Airways then scaled down, and presently operates 

only a limited service during the peak winter period. Delta Air Lines initiated services in 2005. While the 

carrier offers extensive connections through its Atlanta hub, its capacity fluctuates throughout the year. As 

the largest and longest established airline at St. Croix, American Airlines is of critical importance. Until 

2004, it offered year-round daily services. After 2004, it reduced off-season flights, and frequencies and 

capacities now vary throughout the year.
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Figure IV-1. St. Croix-Mainland Seats by Carrier

Source: United States of Transportation Report 28DS

This history has led to limited services to the mainland, an increasing reliance on connections through St. 

Thomas and San Juan, and limited competition. St. Croix’s relatively small volumes lead to a selfperpetuating series of problems, in which the tourism industry cannot grow without better air services, and 

vice versa. Thus the challenge is to find a way to allow one element to grow incrementally and 

independently of another. This application describes the approach to accomplish that objective.

B. Current Services

Three airlines, American, Delta and US Airways, operate direct flights to the U.S. mainland. Only 

American and Delta operate year-round flights. Cape Air flies to Puerto Rico and St. Thomas. Its code 

sharing relationship with Continental allows one-stop service to the Newark Liberty International Airport.

Its nine-seat Cessna aircraft offer limited capacity. In the summer of 2012, Seaborne Airlines, a seaplane 

operator, began a land-based shuttle between the Henry E. Rohlsen International Airport on St. Croix and 

the Cyril E. King Airport on St. Thomas.

Figure IV-2 lists St. Croix services for August 2012

Figure IV-2. Scheduled Domestic Air Services to St. Croix

Airline Destination Aircraft Seats Flights/Week Seats/Week

American Airlines

Miami 737-800 148 7 1,036

San Juan AT7 66 49 3,234

Delta Air Lines

Atlanta M88 142 4 568

Atlanta CR9 76 1 76

Cape Air

St. Thomas Cessna 402 9 97 873

San Juan Cessna 402 9 48 432

Seabourne Airlines St. Thomas

deHavilland 

DHC-6 17 112 1,904

US Airways Charlotte A-319 Seasonal

Total 206 8,123

Source: Airline schedules for August 2012

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2001 2002 2003 2004 2005 2006 2007 2008

S

e

ats/Q

u

arter .

US Airways Delta American
PROPOSAL FOR FUNDING TO IMPROVE DIRECT AIR SERVICES TO THE MAINLAND

AT HENRY E. ROHLSEN AIRPORT, ST. CROIX, U.S. VIRGIN ISLANDS

VIRGIN ISLANDS PORT AUTHORITY │8

C. Traffic Volumes and Trends

A leading goal of this initiative is to halt the declining traffic at the St. Croix airport. Figure IV-3 illustrates 

the lengthy downward trend of enplanements. This decline parallels shrinking opportunities for the St. 

Croix tourism industry, declining travel options for St. Croix residents and industries, and lower levels of 

personal income and opportunity.

Figure IV-3. Passenger Enplanements at the Henry E. Rohlsen International Airport, St. Croix

Source: FAA Terminal Area Forecasts, Virgin Islands Port Authority

Traffic to the all-important mainland destinations has remained stagnant for one and one-half decades.

Figure IV-4 contrasts the mainland origin-destination traffic for St. Croix and for St. Thomas.

Figure IV-4. St. Croix/St. Thomas-Mainland Traffic, 1993-2007

Source: United States Department of Transportation Database 1B, YE December 31, 2008

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Enplanements .

0

200

400

600

800

1,000

1,200

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Passengers (000) .

St. Thomas St. Croix
PROPOSAL FOR FUNDING TO IMPROVE DIRECT AIR SERVICES TO THE MAINLAND

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VIRGIN ISLANDS PORT AUTHORITY │9

Figure IV-5 highlights the impact of new Virgin Island flights on origin-destination traffic. An analysis of 

airline schedules over the 1993-2007 period identified several cases of new nonstop services from the 

Virgin Islands to the U.S. mainland. The graph compares traffic in the year immediately following the 

introduction of new nonstop service to levels in the calendar year immediately preceding the inauguration 

of the new service. The frequencies, duration, and capacities of each new service, and its relationship to 

existing flights, vary widely. This causes corresponding variations in the stimulation rates. Nevertheless, 

the average increase of 43 percent testifies to the power of greater competition.

Figure IV-5. Stimulation Factors for New Virgin Islands-U.S. Mainland Services

Source: United States Department of Transportation Database 1B and Official Airline Guide, 1993-2007

The stimulation coefficients apply only to nonstop services. In addition, stimulation of traffic in behindgateway markets was undoubtedly impacted by each new service.

Travel related to the Hovensa refinery combined with the travel needs of St. Croix residents results in a 

large outbound travel component. Approximately 37.7 percent of the origin-destination traffic originates in 

St. Croix1. This ratio is very high by Caribbean standards. (For example the ratio for St. Thomas is just 19.5

percent.) It creates the need for flights timed around the needs of residents, such as a morning departure to

the mainland, with an evening return – flights which don’t currently exist. It also points to the need for 

year-round services, especially during the low-season for tourism.

D. Fares

Figure IV-6 shows average nominal fares at St. Croix, St. Thomas, San Juan and all U.S. domestic points, 

as reported by the United States Department of Transportation Origin and Destination Survey. The data 

excludes all city-pairs of less than 100 miles, to eliminate any distortion of short, inter-island routes such as 

between the Virgin Islands and Puerto Rico. Throughout the 1993-2008 period, average fares to and from 

St. Croix were higher than from St. Thomas, San Juan, or U.S. domestic routes as a whole. After 1999, the 

growth of low-fare carriers moderated any upward drift in domestic fares. Escalating fuel prices caused 

widespread fare increases after 2004. After 1998, the gap between fares at St. Croix and the other airports 

widened significantly. Over the 1993-2008 period, fares at St. Croix grew by 29.7 percent, compared to 

24.1 percent at St. Thomas, 10.2 percent at San Juan, and 12.1 percent for domestic markets as a whole.

 

1

Source: United States Department of Transportation Database 1B, YE March 2008

0%

20%

40%

60%

80%

100%

120%

140%

160%

St. Thomas – Philadelphia .

St. Thomas – Charlotte .

St. Thomas – Chicago .

St. Thomas-MIA/FLL .

St. Croix – Philadelphia .

St. Croix – Atlanta .

St. Thomas – Washington .

St. Croix – Charlotte .

AVERAGE

Stimulation .
PROPOSAL FOR FUNDING TO IMPROVE DIRECT AIR SERVICES TO THE MAINLAND

AT HENRY E. ROHLSEN AIRPORT, ST. CROIX, U.S. VIRGIN ISLANDS

VIRGIN ISLANDS PORT AUTHORITY │10

Figure IV-6. Comparative Fare Growth 1993-2008 STX vs. Other Airports

Tourists choose their destinations partly on the basis of air fares. While St. Croix offers unique natural and cultural 

attractions, the higher fares and limited selection of carriers pose an increasing disadvantage to its hotel and resort 

industry. This disadvantage has increased steadily since 1993, with the severe consequences to traffic at the Rohlsen 

Airport as noted above. The fare disadvantage has continued to increase, and a resolution to the growing problem 

through the measures outlined in this proposal has become a matter of urgency.

Figure IV-7 displays average one-way fares between the two Virgin Islands airports, St. Croix and St. 

Thomas, and selected U.S. mainland destinations. St. Thomas, the economic center of the Virgin Islands, is 

the closest peer to St. Croix. Except for Philadelphia and Hartford, fares to St. Croix are higher than to St. 

Thomas - sometimes significantly so. This differential discourages travel to St. Croix. The Consortium

believes that the project outlined by this application will encourage competition and help to alleviate the 

fare disparities.

Figure IV-7. Average Fares, St. Croix and St. Thomas to Selected Destinations, 2008

Source: United States Department of Transportation Database 1B, YE December 31, 2008

$0.00

$50.00

$100.00

$150.00

$200.00

$250.00

$300.00

$350.00

$400.00

$450.00

Miami

New York (All)

Washington (All)

Boston

Atlanta

Orlando

Philadelphia

Chicago

Houston

Tampa

Dallas/Fort Worth

Fort Lauderdale

Hartford

Fort Lauderdale

All

Fare

St. Thomas St. Croix

$100.00

$150.00

$200.00

$250.00

$300.00

$350.00

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Year

Fare

St. Croix

St. Thomas

San Juan

All

+29.7%

+24.1%

+10.2%

+12.1%

Source: United States Department of Transportation Database 1B

Average Domestic Fares for Trips Over 100 Miles for 1993-2008
PROPOSAL FOR FUNDING TO IMPROVE DIRECT AIR SERVICES TO THE MAINLAND

AT HENRY E. ROHLSEN AIRPORT, ST. CROIX, U.S. VIRGIN ISLANDS

VIRGIN ISLANDS PORT AUTHORITY │11

The Orbitz website affords further insights into fare differentials, and supports a comparison involving 

foreign destinations in the Caribbean. A search of the website gave a snapshot of fares to the Virgin Islands 

and competing destinations2. All fare queries were entered on August 6, for a hypothetical vacation lasting 

from Saturday, January 9, 2010, to Sunday, January 24. In every instance, the lowest fare, inclusive of 

taxes, was noted. Figure IV-8 displays fares (including taxes) between selected U.S cities and the 

Caribbean. It includes Orlando and Las Vegas for purposes of comparison.

Figure IV-8. Return Fares to the Caribbean and Other Leisure Destinations from Selected Cities

New York Boston Washington Philadelphia Chicago Houston

St. Thomas $351 $341 $345 $391 $301 $572

St. Croix $461 $486 $470 $499 $516 $552

San Juan $256 $278 $270 $276 $286 $356

Antigua $446 $608 $590 $568 $624 $673

St. Maarten $413 $423 $404 $574 $346 $688

Cancun $300 $310 $286 $467 $267 $292

Montego Bay $356 $361 $359 $372 $418 $489

Aruba $429 $419 $410 $499 $420 $566

Barbados $400 $404 $413 $569 $318 $553

Puerto Plata $391 $449 $445 $538 $445 $669

Las Vegas $268 $315 $238 $260 $372 $278

Orlando $239 $199 $139 $189 $213 $307

Source: Orbitz, August 6, 2010

E. Air Service Concerns

The air service market issues described above create significant problems for residents, businesses and 

visitors of St. Croix. They also complicate the management of the Henry E. Rohlsen International Airport.

The strategies summarized in this application will address the major air service deficiencies at St. Croix:

 Limited services to the U.S. mainland. American Airlines operates a daily nonstop service to Miami.

Delta Air Lines flies nonstop to Atlanta. US Airways has seasonal weekly nonstop flights to Charlotte.

Apart from these limited offerings, passengers must rely on routings via Puerto Rico or St. Thomas.

 Seasonal fluctuations in frequencies. The airlines reduce their services during the summer and fall 

months, with the result that St. Croix lacks consistent, daily, year-round nonstop services to any 

mainland destinations. Despite these seasonal changes, the second and the third quarters represent 26 

and 22 percent of annual traffic, respectively.

 Lack of nonstop services to the important New York destination. The Kennedy, La Guardia and 

Newark Liberty airports collectively constitute 12.3 percent of St. Croix’s origin-destination traffic, its 

largest single-city destination3. New York is also the critical source of tourists, and as headquarters of

the Hess Corporation, it is an important destination for staff of the Hovensa Oil Refinery.

 Reduced ability to compete. New York City, for example, has nonstop services to literally dozens of 

destinations throughout the Caribbean, Mexico and Central America. St. Croix is conspicuously 

absent. This is especially ironic, since St. Croix is part of the United States and has an airport superbly 

equipped to handle long distance overwater flights.

 Limited nonstop services to the U.S. mainland force a reliance on indirect routings via St. Thomas or 

San Juan. This situation reduces the competitiveness of St. Croix as a destination. In the fall of 2008,

American Airlines significantly reduced the size of its San Juan hub, from 93 down to 51 departures 

daily. Connections via St. Thomas rely mostly on nine-seat piston-engine aircraft and 17 seat turboprop aircraft and a change of airline.

 Poor timings for European visitors. Current flight offerings force most European visitors to stay 

overnight at an intermediate connecting point. In contrast, other Caribbean destinations such as 

Barbados, Antigua and St. Maarten have direct transatlantic services;

 

2 Direct fare comparisons on Orbitz can be difficult. Fare quotes vary by company, routing, day of travel, and seat availability. This 

“apples and oranges” problem complicates direct comparisons. Broad conclusions are still possible if a formal sampling procedure is 

followed closely.

3

The Miami International Airport is the largest origin-destination airport for St. Croix.
PROPOSAL FOR FUNDING TO IMPROVE DIRECT AIR SERVICES TO THE MAINLAND

AT HENRY E. ROHLSEN AIRPORT, ST. CROIX, U.S. VIRGIN ISLANDS

VIRGIN ISLANDS PORT AUTHORITY │12

 Limited competition. In many instances, particularly during off-peak periods, St. Croix-mainland 

passengers have few airline choices. While American and Delta offer nonstop services to the mainland 

throughout the year, and US Airways offers peak season-only weekend flights, passengers have a 

much more limited selection of carriers than those at most U.S. airports. On many days, only one 

carrier may operate a flight.

 A limited choice of departure times. The available flights arrive from the mainland in the early 

afternoon and leave in the mid to late afternoon. No nonstop flights are available with a late evening 

arrival in St. Croix and an early morning departure. Such flights would be particularly valuable for 

European visitors.

 Limited connections between St. Thomas and St. Croix. Connecting passengers must ride on nine-seat 

Cessna aircraft flown by Cape Air or 17-seat deHavilland aircraft flown by Seabourne Airlines. These 

aircraft not only have a small number of seats, but limited space for luggage.

 No services by low-fare carriers. While St. Croix is following a conservative strategy that stresses 

reinforcing the incumbent carriers, a low-fare carrier remains a goal for the longer term.

This Application summarizes the Consortium approach for resolving these concerns.

V. SCASDP Selection Criteria

This Application satisfies all criteria established by the DOT.

A. The Proposal Addresses High Air Fares

An award for this Project will help the Consortium and the community of St. Croix addresses a significant 

disparity in air fares. All passengers and the entire economy of St. Croix will benefit from increased 

competition, greater choice, and more responsive fares. Preceding sections have addressed the fares issue in 

greater depth.

B. A Proportion of the Cost is Provided by Local Non-Airport Sources

The following organizations have pledged $100,000 to provide the local share of this Project:

•U.S. Virgin Islands Department of Tourism •St. Croix Hotel & Tourism Association

•Virgin Islands Hotel & Tourism Association •St. Croix Chamber of Commerce

All of the pledged funds are from public and private sources and no airport funds are involved. In addition, 

funding for the Proposed Risk-Sharing Program (amount to be determined) will be pledged by the 

Consortium. This portion of the project’s cost will not rely on either SCASDP funds or airport revenues.

C. There is an Existing Established Public/Private Partnership

This project will be funded by the private and public sectors of St. Croix. The Partnership was established 

in 2006, is active, effective, and continues to grow. The Authority’s primary role will be to provide the 

leadership for the Partnership, as well as the routine administrative support and guidance that it might 

require.

D. The Grant Will Provide Material Benefits to a Broad Segment of the Traveling Public

This award will directly benefit:

 St. Croix residents traveling to the U.S. mainland for business, education, medical issues, vacations, 

visiting friends and relatives, and for other purposes;

 Residents of the U.S. mainland, traveling to St. Croix for business, education, vacations, visiting 

friends and relatives, and for other purpose;

 Residents of the U.S. mainland and St. Croix, who now travel between the two areas only rarely or 

never. The added convenience, better services, and lower fares will allow them to travel as well as to 

travel more frequently.

 Foreign visitors to the United States, who will now have better connecting options for visiting St. 

Croix.

Other beneficiaries, both direct and indirect include:

 Commercial airlines. Through stimulating long term traffic growth between St. Croix and the U.S. 

mainland, this proposal will benefit all airlines serving St. Croix, whether or not they participate in this 

incentives program. The added volumes will also create a wider base over which the VPIA can spread 

its costs. This will promote lower airport fees and charges – currently among the highest in the 

Caribbean.
PROPOSAL FOR FUNDING TO IMPROVE DIRECT AIR SERVICES TO THE MAINLAND

AT HENRY E. ROHLSEN AIRPORT, ST. CROIX, U.S. VIRGIN ISLANDS

VIRGIN ISLANDS PORT AUTHORITY │13

 The St. Croix tourism industry. The industry will be more competitive, and will enjoy a larger number 

of visitors, higher occupancy rates, increased revenues, greater employment and increased profits.

Large increases in scheduled capacity will be necessary to support up to three new hotel complexes.

 St. Croix businesses. They will obtain better access to the U.S. mainland. Even if the owners and 

employees of the businesses do not travel, they will benefit from the lower costs and greater ease of 

access for suppliers and other visitors.

 Shippers and consignees. The increased St. Croix-U.S. mainland cargo space will assist all entities 

shipping between the two areas.

 The people of the United States. This proposal would result in larger personal and corporate tax 

revenues. The economic development resulting from the proposed incentives would contribute to the 

recovery of the United States in the current difficult economic conditions.

E. The Funds Will be Used in a Timely Manner

The schedule calls for rapid implementation of this project. The Consortium will create the conceptual and 

administrative groundwork for the risk-sharing project in 2012. The negotiations with target carriers will 

occur in 2013. The risk-sharing mechanisms will be in place in the third and fourth quarters of 2013. That 

portion of the project for which this SCASDP grant is sought will end by December 31, 2013. After 2013, 

the Risk-Sharing Program will continue indefinitely, and independently of any SCASDP monies. The 

SCASDP grant and accompanying matching funds will provide the Consortium with the seed money to 

start the program. The Consortium will use the resources developed in this application and the experience 

obtained, to enable the Risk-Sharing Program to continue as a productive, creative and continually evolving 

entity long after the DOT’s involvement through SCASDP has ended.

VI. Proposed Actions

A. Project Schedule and Exit Strategy

The project covered in this application calls for establishing the framework for a Risk-Sharing Program.

The Consortium recognizes that any such program must be well funded and enthusiastically supported. The 

funds needed for an effective program would exceed any SCASDP grant. Furthermore, the Consortium and 

the community may require considerable latitude in the selection of carrier(s) and route(s) to be supported, 

and this may not necessarily be accommodated in a SCASDP grant.

The Consortium will work quickly to hire a professional air service consulting firm immediately after the 

grant is awarded. The team will hold exploratory talks with incumbent and prospective carriers to consider 

new services and routes, and estimate what level of assistance, if any, is needed.

Months

0 1 2 3 4 5 6 7 8 9 10 11 12 & Beyond

Award of Grant

Hire Professionals

Meet with Prospective Carriers

Prepare Risk Sharing Framework

Identify Funding Partners

Obtain Pledges

Negotiate Carrier Agreements 

End of SCSDP Grant

Services Start & Risk-Sharing 

Program Begins 

The consultants will develop a risk-sharing framework that considers the revenues and costs of selected 

improvements, and their economic benefits to St. Croix. The framework will help the Consortium in its 

negotiations with the carriers, as well as to conclude carrier service agreements that are fair, mutually 

beneficial, and fulfill the goals of the SCASDP program.
PROPOSAL FOR FUNDING TO IMPROVE DIRECT AIR SERVICES TO THE MAINLAND

AT HENRY E. ROHLSEN AIRPORT, ST. CROIX, U.S. VIRGIN ISLANDS

VIRGIN ISLANDS PORT AUTHORITY │14

The SCASDP grant will give the Consortium the resources to develop a Risk-Sharing Program. The 

SCASDP component of this program will end once the carrier agreements are in place and services are 

ready to begin.

The program itself and the funds used to provide incentives, risk sharing monies or partner with an airline

will be raised entirely by the community. There will be no SCASDP funds used in the actual 

incentive/Risk-Sharing Program. Rather, this grant will pay the costs of establishing an ongoing program

for use in the future. Through this mechanism, the Consortium will prepare and manage an air service 

development incentive and risk-sharing program that will remain an active and going concern long after the 

expiration of the St. Croix SCASDP program. We also believe that the mechanisms developed under this 

grant could be used for similar programs at other airports.

With an award in the fall of 2012, this schedule anticipates new services, backed by a comprehensive RiskSharing Program, in the late summer or fall of 2013. This schedule corresponds to the beginning of the 

peak winter travel period, the best time to begin a new service at St. Croix. This timing would also call for 

new flights to begin while the construction of new hotels is well underway. These hotels will need better air 

services than are presently available, and will increase the island’s capacity for visitors sufficiently to 

ensure success of the new flights. The financial problems of 2008-2012 have made airlines and hotel 

operators very risk averse. By 2013, the Consortium expects that a stronger economy will encourage new 

air services.

B. Proposed Budget

The table below provides an estimate of the likely division between local cash share and the SCASDP grant

by Phase. Based upon Phases I, II, and III the local cash share comprises 25% and the grant 75% of the 

$400,000 total.

Phase Description Local Cash Share SCASDP Grant Total Cash Cost

I Recruit New Mainland Services $25,000 $85,000 $110,000

II Recruit Low-Fare Service $25,000 $65,000 $90,000

III Develop Risk-Sharing Program $50,000 $150,000 $200,000

IV Institute Risk-Sharing Program To be determined - 0 - To be determined

Total $100,000 $300,000 $400,000

Percentage of Total Project Cost (I-III only) 25% 75%

C. Relationship to 2007 SCASDP Award

St. Croix received a $150,000 SCASDP award in 2007. This award financed the development of a strategic

marketing study, which mapped out short and long term strategies for St. Croix. The short term strategies 

reflect St. Croix’s current availability of visitor accommodations, with new capacity tied to room 

availability and occupancy rates. The short term strategies called for an increase in frequencies on existing 

routes and better flight timings

The long-term strategies call for a larger increase in capacity, with new carriers and new nonstop services.

These strategies also look to the introduction of low-fare service. It will ensure the construction of a

number of new hotels and resorts, now in the planning stage, help provide the capacity they will need to 

operate profitably and boost St. Croix’s tourism-based economy.

The first SCASDP grant included meetings with the three incumbent carriers (Delta, American, and US

Airways). The airlines reacted enthusiastically to the proposals. The meetings prompted a reassessment of 

their St. Croix services. Both Delta Air Lines and American increased frequencies and capacity as a direct 

result of those discussions.

The 2007 grant provided an essential framework for the work to be accomplished under this project. It 

helped, and will continue helping, the Consortium to determine the best routes and airlines for further 

development, while protecting the operations of incumbents. However, the airlines uniformly indicated that 

a larger and more aggressive financial support program would be necessary to attain ambitious air service 

goals. The 2007 grant covered only a study which contained the analysis market strategy and limited 

meetings with carriers. It did not include development of a risk-sharing/incentive program.
PROPOSAL FOR FUNDING TO IMPROVE DIRECT AIR SERVICES TO THE MAINLAND

AT HENRY E. ROHLSEN AIRPORT, ST. CROIX, U.S. VIRGIN ISLANDS

VIRGIN ISLANDS PORT AUTHORITY │15

The project envisaged by this application is a logical progression to the accomplishments made under the 

2007 SCASDP award. St. Croix will continue to benefit greatly from the work accomplished under the 

previous award. However, this project is an entirely separate and independent project. It consists of entirely 

new elements in St. Croix’s continuing pursuit of better air services.

D. Performance Measures

The success of this program will be measured by:

 Traffic growth at the Henry E. Rohlsen International Airport on St. Croix;

 An overall reduction in the average fares between St. Croix and the U.S. mainland; and

 Capacity growth, launching of new services, and recruitment of new carriers to St. Croix.

These metrics will be calculated from the Official Airline Guide and the DOT’s domestic origin-destination 

survey (Database 1B).

E. Financial Controls

As the sponsor, the Virgin Islands Port Authority will assume responsibility for all fiscal matters and DOT 

reporting requirements. As a public entity, the Authority assures the DOT that the DOT’s grant will be used 

in accordance with the terms of any subsequent grant agreement. The Authority understands that the 

proposed SCASDP grant is a reimbursable grant. The Authority is responsible for program expenditures, 

and will submit invoices to the DOT for reimbursement, based on a percentage of the total request.

F. Return on Investment

Through the success of the 2007 grant, the Consortium demonstrated its ability to generate tangible benefits 

through the SCASDP program. Increased frequencies by Delta Air Lines to Atlanta and by American 

Airlines to San Juan and Miami are tangible evidence that St. Croix can use the DOT’s scarce funds

effectively.

VII. Previous Steps to Improve/Increase Air Service and Tourism at St. Croix

The Virgin Islands has pursued continuing initiatives to resolve air service problems for both St. Thomas and 

St. Croix. These efforts have involved many government and private bodies. Countless individuals have 

donated their time and effort to a matter of broad concern in the community. This Application calls for 

continued reliance on voluntary efforts and the principle of self-help. Recent efforts have included:

 In 2003, the University of the Virgin Islands, acting on behalf of the Government, oversaw the 

development of a strategy to increase air arrivals to St. Thomas and St. Croix. The cost exceeded $100,000 

and all funds were raised locally. This project included extensive analysis of aviation databases, and 

meetings with community leaders of both St. Thomas and St. Croix. The research concluded with 

recommendations for both St. Croix and St. Thomas. It urged the community to pursue a route to Atlanta 

by Delta Air Lines (service began in 2005) and to apply for a grant under the Small Community Air Service 

Development Program;

 Also in 2003, the Authority met with Continental Airlines to consider new services to both islands.

 The Port Authority formally evaluates traffic at both St. Thomas and St. Croix twice every year. Senior 

staff and the Board review the findings;

 The Port Authority undertakes evaluations as needed on improvements in the airports. These assessments 

draw on an analysis of current traffic and include future prospects;

 The U.S. Virgin Islands Department of Tourism monitors cruise ship and air visitor origins, volumes, 

lengths of stay, accommodations, expenditures, and satisfaction levels. It meets periodically with hotel 

owners and operators and entities involved in tourism to identify trends, evaluate the business environment, 

and develop strategies. Air services are usually an important part of these discussions. Private sector bodies 

such as the St. Croix Hotel and Tourism Association and the St. Croix Chamber of Commerce participate in 

these discussions, and pursue projects of their own;

 In 2007, the Virgin Islands Port Authority assembled a public-private consortium to bid for funds under the 

Small Community Air Service Development Program. The bid was successful;

 Also in 2007, the Authority assessed the potential for developing St. Croix as an air freight hub for the 

eastern Caribbean. This could benefit passenger services directly, if the cargo strategy were to rely on belly 

capacity of passenger flights. Passenger traffic would benefit indirectly, since air cargo could utilize the 

airport, and the fixed costs of operating the airport could be spread over a larger base of operations. User 
PROPOSAL FOR FUNDING TO IMPROVE DIRECT AIR SERVICES TO THE MAINLAND

AT HENRY E. ROHLSEN AIRPORT, ST. CROIX, U.S. VIRGIN ISLANDS

VIRGIN ISLANDS PORT AUTHORITY │16

charges could then be lowered. The ground equipment and staff serving air cargo might be cross-utilized 

for passenger flights;

 In 2008, the Consortium engaged a consultant to develop air service strategies for St. Croix as stipulated 

under the SCASDP application and award. The consultant presented the market analysis and strategies to 

the VIPA Board in November, 2008;

 In February 2008, the Authority announced an incentive program that will waive all landing fees between 

June 1, 2008 and December 31, 2010, for airlines that introduce or increase service at St. Croix;

 In March 2008, Virgin Islands Governor John P. deJongh established a St. Croix Blue Ribbon Airline 

Committee. The goal of the Committee is to increase traffic to St. Croix and to attract new services. The 

Governor stated that such objectives can be best achieved through a partnership of public and private 

members. This Committee is very active, meeting regularly to review and resolve airline service issues and 

opportunities;

 In 2008, the Department of Tourism hired professional assistance to evaluate alternate air service strategies 

and provide it with the airline data, cost factors, and traffic statistics to serve as an analytical basis for 

negotiating air service incentive programs;

 In 2008, the Department of Tourism met with airline officials in the United Kingdom and Scandinavia to 

develop better air schedules and to attract increased numbers of European visitors to the Virgin Islands;

 In 2008, the Consortium paid substantial funds to Delta, American and US Airways to support promotional 

efforts. The Department of Tourism continued its aggressive promotion of the St. Croix tourism product;

 In January 2012, specialists hired by the Consortium met with American Airlines, Delta Air Lines and US 

Airways. Airline reaction was uniformly positive. However, the weak economy and several years of poor 

earnings have placed the industry under stress. In spite of the economic situation, some new flights have 

been added as a result of this work. However, all three airlines clearly indicated that some form of revenue 

guarantee or risk sharing would be necessary before any additional new or improved services would be 

provided.

The Authority and other members of the Virgin Islands have made significant investments in the St. Croix air 

market. Several projects testify to the community’s commitment to the Rohlsen Airport and its air services:

 Facility improvements completed in 2003, including reconstruction and enlargement of the terminal 

building from 76,000 square feet to 181,000 square feet, as well as improvements in ground access at a cost 

over $45 million;

 Also in 2003, the Authority and other parties submitted an application under the Small Community Air 

Service Development Program to support an incentive program for nonstop services between St. Croix and 

the U.S. mainland. This initial SCASDP application was not approved;

 In 2004, the Authority completed the extension of the main runway, from 7,600 feet to 10,000 feet; The 

$12 million cost of this project included land purchases and the relocation of 20 homes;

 In 2005, a $6 million air traffic control tower opened - financed entirely with local funds;

 In 2005 and 2006, the Government of the U.S. Virgin Islands paid $1 million for an experimental service 

between St. Thomas and St. Croix by American Eagle;

 In 2007, the Port Authority, supported by The Virgin Islands Department of Tourism and the St. Croix 

Hotel & Tourism Association applied for and received a $150,000 SCASDP grant to conduct a thorough 

strategic analysis of the St. Croix air service market and to develop short- and long-term goals out of that 

study. By all measures, this Phase I study has proved extremely successful as short-term goals have already 

been realized and three clearly defined long-term goals emerged; and

 In continuing efforts to improve St. Croix’s air services, the Port Authority and the Department of Tourism 

recently met with American, American Eagle, Cape Air, Continental, Delta (and pre merger, with 

Northwest), US Airways, and Spirit regarding better services to the Virgin Islands.

VIII. Other Program Details

Under this Application, the Virgin Islands Port Authority and the Department of Tourism of the Virgin Islands, 

in conjunction with private entities, would pursue improved commercial air services between St. Croix and the 

U.S. mainland. The improvements would be based on the market research already completed under an earlier 

SCASDP grant, and a well structured and narrowly focused program of incentives and risk sharing. This 

Application also provides the Authority and the Department with a portion of the funds to pursue the air service 

objectives through direct meetings with targeted carriers. The Governor of the U.S. Virgin Islands, Mr. John 

deJongh, has expressed a personal interest in this Project and will monitor all efforts.
PROPOSAL FOR FUNDING TO IMPROVE DIRECT AIR SERVICES TO THE MAINLAND

AT HENRY E. ROHLSEN AIRPORT, ST. CROIX, U.S. VIRGIN ISLANDS

VIRGIN ISLANDS PORT AUTHORITY │17

The Port Authority must by law maintain separate accounts for aviation and other functions. It follows a strict 

policy of cost recovery, and accordingly will commit no cash from airport sources in support of this effort.

However, with the $100,000 in cash committed by the public-private partnership and the requested $300,000 in 

the form of a SCASDP grant, the Port Authority will have $400,000 at is disposal to develop the risksharing/incentive program and pursue the two other objectives of 1) additional service to new markets to correct 

the deficiency in capacity and 2) new low-fare service to address the high fares and resulting disadvantage 

experienced by St. Croix,