INSIDE:
Festival Schedule Weekend & Culture
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The light that comes from wisdom never goes out.
Thursday, July 26, 2012 |
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FESTIVAL TIME SPECIAL REPORT: AIRPORT PART 1 Questions remain about EIS runway extension
Stamp duty report tabled
Experts: Direct flights not a sure thing
By CHRYSTALL KANYUCK ckanyuck@bvibeacon.com
By JASON SMITH jsmith@bvibeacon.com
Among other business during a Tuesday sitting of the House of Assembly, legislators explained planned changes to labour policy, tabled the 2010 stamp duty report, amended two laws, chastised the media for “reckless” reporting, and chose a territorial song and dress. They are to continue their sitting today. Deputy Premier Dr. Kedrick Pickering, who is also the minister of natural resources and labour,
Five scale model passenger airplanes sit in a neatly arranged row above Denniston Fraser’s desk at the BVI Airports Authority. Only one of the models’ life-size counterparts currently flies here. Three of the models represent wide-body jets like the Boeing767 that won’t be flying to the Virgin Islands anytime soon. A much larger version of another model, LIAT’s 50-passenger turboprop DHC-8, takes off several times a day from the 4,350-foot Runway see page 30
Photo: TODD VANSICKLE
José Santiago replaces a coloured light bulb on the Ferris wheel on Tuesday afternoon at the Festival Village Grounds. The ride is one of nine attractions that Coney Island officials were preparing for the opening of this year’s Claudette “Boopie” Smith Festival Village slated for today. See story on page 16.
By TODD VANSICKLE tvansickle@bvibeacon.com
A
Beacon Business..........................18 Vol. 28 No. 50 • 2 sections, 60 pages Road Town, Tortola, British Virgin Islands © 2012, The BVI BEACON
HOA see page 28
From trunker to tagger Leatherbacks monitored
INSIDE
New labour policies unveiled at HOA
s a boy Austin Freeman went with his grandfather to kill leatherback turtles for meat and oil. “When trunk season come it had me excited. Even if we don’t catch, I still felt good because I just liked to see them,” Mr. Freeman said. “It fascinated me.” Nowadays Mr. Freeman, a senior BVI Customs officer who is almost 50, spends his free time recording and protecting the endangered animals that nest along the shores of Tortola. Although he has been a volunteer with the Conservation and Fisheries Department
for more than 20 years, he still struggles to convince some people that he is protecting the leatherbacks and not harming them. According to Mr. Freeman, leatherback hunting was a “tradition” in the Virgin Islands, but it is now fading away with hunters like Mr. Freeman’s grandfather, who died in the 1970s. They were known as “trunkers,” reportedly because the Danes claimed the turtle resembled a large leather trunk. In many cases, beaches took on the name as well. The oil that trunkers collected from the turtles was used for home remedies for asthma and other ailments and would sell for $35 to $200 a bottle, Mr. Freeman said. The meat and eggs were eaten. In the 1960s, Mr. Freeman remembers trunkers showing off their catch at Josiahs Bay
to schoolchildren during a picnic-style setting where turtles would “provide plenty of food.” “We used to catch it for medicine and food, and now we are trying to protect it for my grandchildren so that [leatherbacks] don’t become extinct,” Mr. Freeman said. In 1989 a moratorium on killing the leatherbacks was put into effect by the Ministry of Natural Resources and Labour. Around the same time, Mr. Freeman started volunteering with the CFD, tagging nesting leatherbacks. Currently only three people — Mr. Freeman and CFD officers Joel Dore and Gary Frett — tag the leatherbacks in the VI, according to Mr. Dore. The three men are the only ones who officially monitor Tortola’s
Leatherback see page 36
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Special Report
Runway from page 1 runway located a few hundred feet outside Mr. Fraser’s office at the Terrance B. Lettsome International Airport. But it’s the plane shown in the fifth model, a miniature of the 189-passenger Boeing 737-800, that the BVIAA managing director and other officials hope will make frequent trips between the mainland United States and the VI in the coming years. Through statements in the House of Assembly, Deputy Premier Dr. Kedrick Pickering has made it clear that the planning stages of the 2,500-foot runway extension project are well under way: Residents have been consulted, the environmental impact has been studied, and contractors were recently invited to express interest in the job. He added Tuesday before the HOA that his Ministry of Natural Resources and Labour is assembling teams to support the project. “Our progress thus far looks good and we are on target to commence ground-breaking by the beginning of 2013,” he said. But despite the statements that Dr. Pickering and other supporters have made about the project, there has been vocal opposition from some community members. Opponents have raised questions that they say have not been adequately answered: • If the territory can even afford a multimillion-dollar runway at a time of economic recession, is it a wise investment, and how will it be funded? • If the runway is extended, will passenger demand be enough to bring the direct flights from the US and other countries that government has promised? • Will large jets be prepared to land on the runway despite the technical challenges consultants have warned about? [See page 31]
The plans
Dr. Pickering has treated the expansion, which was promised last year in his National Democratic Party’s manifesto, as an election mandate. At the first of two public meetings on the topic, in March, he said he wasn’t there to discuss whether the project should be carried out, but how it should proceed. And, standing before the HOA on June 29, Dr. Pickering answered that question, too: He announced that work would start after the contractor or contractors
V
irgin Islands leaders and airport managers have had to work hard to keep up with planes ever since 1956, when the first runway, a 1,800-foot dirt landing strip, was cleared on Beef Island. Initially, agriculture generated most of the airport’s traffic, but tourism soon took hold in the territory. Future expansions designed to accommodate bigger planes were studied and approved by successive governments, including the current one.
are chosen by December to extend the existing runway about 2,500 feet: about 2,000 east into the sea and some 500 feet west into Well Bay. The runway portion of the project should be complete by December 2015, Dr. Pickering said. The plans also include upgrades to other infrastructure: the airport “ramp” where jets will park; the passenger terminal; and the nearby parking lot, according to a recent government advertisement inviting firms to express interest in the project. A new welcome centre, ferry docks and a fixed-base oper-
ator facility, which will service aircraft, are also in the works. The expansion is designed to allow commercial jets to operate out of Beef Island. Currently, the largest plane operating there regularly is the 70-passenger ATR-72. The extension, Mr. Fraser said, would be designed to bring the Boeing 737700, which seats up to 149; the Boeing 737-800, which seats up to 189; and the Airbus 320, which normally seats about 150. Technically, such jets are already able to land on the existing runway. However, when they are loaded with enough fuel to fly to
the US mainland, they become too heavy to take off with a full passenger load, according to the Louis Berger Group, a team of Washington DC-based consultants who were hired in 2007 to produce strategic and master plans for the territory’s airports. The extended runway will also be long enough for some models of Boeing-757, which can seat as many as 240 passengers, although such planes likely would have to keep some of their seats empty to stay under their maximum weight limit to take off from Beef Island, Mr. Fraser, the BVIAA managing direc-
tor, said in an interview this month. He added that private jets, some of which are reluctant to fly here in poor weather because they’d like to see an additional 500 feet of landing space, will also benefit from the expansion. “They will have way more than 500 feet; they will have 2,000,” Mr. Fraser said of the planned expansion, adding that it will mean that the private jets’ range will no longer be limited by the length of the VI runway but by the amount of fuel they can carry.
Runway see page 31
Special Report
The BVI Beacon | Thursday, July 26, 2012
Consultant advises against using the existing runway alignment But others say challenges are surmountable By JASON SMITH jsmith@bvibeacon.com In order for the runway expansion project to be successful, officials have to find funding, pick the right contractor and convince airlines to fly here. But another challenge could be technical. Deputy Premier Dr. Kedrick Pickering announced in the House of Assembly on June 29 that the Terrance B. Lettsome International Airport’s existing runway would be expanded by 2,500 feet, a $38 million project he previously called Option Six. But that decision to extend the existing runway goes against the advice of one consulting team, which recommended reorienting the runway to the northeast, a $70 million plan presented to the public as Option Four.
Challenges posed
Simply extending the runway along its current alignment isn’t a good idea, consultants with the Louis Berger Group wrote in a master plan submitted to the BVI Airports Authority last year. The consultants noted that hills surrounding Beef Island obstruct the path of landing planes. Such obstructions generally aren’t a problem in good weather, because pilots — although they typically prefer to make a straight-in descent — are able to land using a curved path that keeps them a safe distance above the high terrain. But when visibility is limited or the weather is bad, pilots preparing to land have to be guided by the plane’s instruments until they can see the runway, according to pilots interviewed for this article. When an airport has certain navigation equipment installed, jets such as the Boeing-737 can use a “precision instrument” approach when landing. The equipment supplies pilots with readings of the plane’s horizontal and vertical location in relation to the runway. At Beef Island, however, the
Graphic: PROVIDED The proposed expansion extends the runway along its existing alignment about 2,000 feet to the east and about 500 feet to the west. hills that require a curved landing path mean a precision instrument approach isn’t an option, the Berger consultants wrote. Currently, the airport has the proper equipment to allow for a “non-precision instrument” approach, which provides horizontal but not vertical guidance, BVIAA Managing Director Denniston Fraser said in a recent interview.
Five options
Of 16 runway expansion options they originally considered, the Berger consultants narrowed the field down to five, which they examined in more depth. Two of those five reoriented the runway, and one extended the existing runway by a few hundred feet but wouldn’t accommodate commercial jets. “Two additional alternatives were studied to extend the existing runway [along its current alignment]. However, due to the lack to provide instrument approach for Code 4C aircraft [including jets such as the Boeing 737], these options are not recommended,” the report stated. After reviewing the Berger report, the Airport Development Committee, which consisted mainly of BVIAA employees, created Option Six. This option, which Berger never considered, also extends the runway along its existing alignment. John Morrison, a former VI cargo pilot who has been critical of the proposed runway expansion, said the lack of a precision instrument approach means that in bad weather, jets will be unable to land at Beef Island and will be forced to divert to a nearby airport. The
airlines may not tolerate the hassle and expense of a diversion, he said. “They’re not going to do it. The cost is enormous. People are talking about big jets, 300 passengers. You’d get stuck in St. Croix with 300 passengers overnight or something,” he said. Mr. Morrison said he remains sceptical that large jets would fly here. “It’s not like the old baseball movie: Build it and we will come. [The extended runway will] be a big old expensive white elephant, I think,” he said.
Experts unconcerned
Other experts, though, believe that the non-precision instrument approach will be sufficient. After Berger completed its analysis, the aviation consulting firm Ricondo and Associates contributed to the Runway Extension Impact Assessment, which was completed in May. The consultants found that “due to the low occurrence of weather conditions requiring precision-instrument approaches, a nonprecision instrument approach is considered sufficient during poor weather conditions.” The Ricondo consultants added that they spoke with representatives from US airlines that fly the 189passenger Boeing 737-800. The airlines said that a type of non-precision instrument approach known as “area navigation procedures,” which uses navigation beacons, would be acceptable for their jets, according to the Ricondo report. Dr. David Esser, a professor of aeronautical science at Embry Riddle Aeronautical University, said he doubts that the lack of a precision instrument approach
would prevent airlines from offering flights here. “Given the type of climate you have in the Caribbean, it’s not as critical of an issue,” he said, adding that cold and snowy airports in the northeastern US would be more affected. Dr. Esser said that the type of pilots the airlines hire would have ample training and experience to make a non-precision instrument approach. “It’s not a safety issue,” he said.
GPS approaches
According to Mr. Fraser, the BVIAA director, bad weather affects VI airport operations “not even 10 percent of the time.” He added that when weather requires it, pilots can also use GPS, the satellite-guided location tracking technology, to guide a plane along a pre-designated route. “You fly to this GPS waypoint, and then this waypoint and then this waypoint and this waypoint, and hopefully then you can see the runway,” he said, tracing a finger along a printed approach chart that guides pilots during landing. Mr. Fraser said that he is not concerned that the lack of a precision instrument approach will prevent airlines from coming here. “I would say no because the technology has evolved; more and more aircraft are getting GPS approaches,” he said. A United Kingdom-based company, Davidson Ltd., has been contracted to design the extended runway’s approach chart, which ultimately will have to be approved by Air Safety Support International, the territory’s regulator, Mr. Fraser said.
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Runway from page 30 New passengers
Though there are various technical challenges with government’s plan, the Berger consultants’ findings suggest that it is feasible: Commercial jets could indeed operate out of an expanded runway on Beef Island, according to the report. But would they? The answer to this question is less clear. Dr. Pickering has said that tourist demand is enough to motivate airlines to fly regular direct flights from cities in the US and elsewhere. He added that his government is in talks with several airlines that may consider such flights, including two that are “gung ho” about the expansion. But he has yet to publicise a study that supports his claims about demand, and he acknowledged that carriers haven’t yet made firm commitments to fly here. “The simple answer would be yes, but it’s not that simple. It’s a process,” he said during the March meeting.
‘More iffy’
Thomas Tacker, an economics professor at Embry Riddle Aeronautical University, said enticing US carriers to serve the VI market is not a sure thing. Some airport developers ink contracts with airlines, expanding facilities for service guarantees. But in most cases, airlines decide where to fly based on what makes economic sense for them, Mr. Tacker said. “If they don’t have that kind of deal, I’d say it’s somewhat more iffy,” he said. Mr. Tacker, who wrote the textbook Introduction to Air Transport Economics, said that when determining a new route airlines first consider the population and the distance between potential destinations. “Then they’ll mix in some variables, such as, ‘Is this a popular tourist destination?’ They might look at hotel capacity: ‘Is Disney there or some other major attraction?’” he said. Then route planners look at a destination’s neighbours, he said. “Of course they’ll also look at — if they don’t have service to that city now — how far is that city from another city that they can go to,” he said.
San Juan as a hub
Lately, the VI’s neighbours have been getting considerable atRunway see page 32
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Runway from page 31 tention from US carriers. JetBlue — whose executives met with Dr. Pickering last month as he tried to entice them to fly to the VI — has added 23 Caribbean destinations to its routes in recent years. The airline’s San Juan hub offers flights to nine mainland US and three Caribbean cities. The airline is increasing flights to San Juan months after American Eagle Airlines announced in March that it plans to cut its flights there. Omer ErSelcuk, the president and CEO of the USVI-based Seaborne Airlines, said he sees a bright future for the city, and a continued demand for smaller airlines like his to move passengers from PR to the VI. “San Juan is turning into a low fare focus city area for a number of carriers,” he said, referring to JetBlue, Southwest Airlines and Spirit Airlines. He added that those airlines may offer lower priced service than what larger airlines might offer on direct flights to the VI. “What you’ll have is much lower fares: The roundtrip fare will be 300 bucks into [San Juan’s Luis Munoz Marin International Airport from the US mainland]. It’s probably going to be about $700 or even $800 into Tortola if you compare what happened in the US Virgin Islands, because they figure that people will be willing to pay for a non-stop flight and they’ll charge [excessively] for it,” Mr. ErSelcuk said. Ultimately, though, enticing airlines to fly directly to the VI may depend on two factors: tourists’ demand for VI vacations and the financial health of the airlines themselves. Mr. Tacker, the economist, said he believes that the coming years may be better for the industry than the recent past. “Even now with the economy kind of weak, they’re still doing half decently. I think the merger activity and the consolidation has really helped them, and they are poised to do much better in the future,” he said.
Demand question
The Berger study took a stab at the question of passenger demand, but its projections included assumptions about the VI’s tourism product that now seem outdated. According to consultants, the
Runway see page 33
Special Report
Consultants’ reports not public yet But meetings held By JASON SMITH jsmith@bvibeacon.com Speaking to hundreds of Virgin Islands residents on March 27 at the East End/Long Look Community Centre, Deputy Premier Dr. Kedrick Pickering said that the public meeting he was about to convene aimed to kill “three birds with one stone.” The meeting, his government’s first comprehensive presentation about the proposed runway expansion at Beef Island, served to fulfill the “public consultation” requirement of the 2004 Physical Planning Act, he said. Secondly, residents’ feedback would be useful to the consultants compiling the project’s impact assessment, added Dr. Pickering, who is also the minister of natural resources and labour. “Thirdly, the government that I am a part of promised to be transparent and open, and so public meetings are a part of our organisation and a part of our modus operandi,” he said. In the four months since he made that statement, his government has partially complied with his promise. Dr. Pickering gave two detailed statements to the House of Assembly in two months describing the runway project’s progress. He and other ministers also addressed residents’ concerns at public meetings and on the National Democratic Party’s radio programme.
‘Private’ documents
However, officials have thus far declined to make public two detailed studies about the expansion: the BVI Airports Authority Master and Strategic Plan produced by the Louis Berger Group, and an impact assessment created by Kraus-Manning and a team of consultants. The Berger study contains 342 pages of technical information on various topics: the state of the existing airport; the 16 runway expansion alternatives considered; passenger estimates; financial projections; and the consultants’ final conclusions. Berger’s conclusions included a recommendation against extending the runway along its existing alignment, due to technical concerns. Dr. Pickering did not mention this
Photo: JASON SMITH Residents weighed in on the runway extension during a meeting in East End on March 27. Two public meetings were held about the project, but consultants’ reports have yet to be released to the public.
“I don’t know that government would want to keep this sort of information private. That’s the whole point of having these consultations: so that government can stand and say, ‘This is what the consultant said we could or could not do.” DR. KEDRICK PICKERING Deputy Premier recommendation when he announced in the HOA last month that the runway would be extended along its existing alignment. At the March 27 public meeting, Dr. Pickering suggested that a resident’s question about the expected economic benefits could be answered by the consultants’ studies. And when she asked if the re-
ports would be made public, the MNRL minister seemed to imply an affirmative response. “I don’t know that government would want to keep this sort of information private,” Dr. Pickering said. “That’s the whole point of having these consultations: so that government can stand and say, ‘This is what the consultant said we could or could not do.’” But weeks later, when this reporter asked for a copy of the Berger study on May 4, Dr. Pickering declined to provide it, calling it a “private document” that may contain proprietary information. The Beacon later viewed a copy of the report through another source, who did not wish to be identified.
Impact assessments
Additionally, consultants produced the Runway Expansion Impact Assessment in May and turned it over to government. Impact assessments normally become public documents eventually, but this one hasn’t been released. The assessment is still under review and “will be ready for public consumption” at an unknown future date, Ronald Smith-Berkeley, the permanent secretary in the MNRL, said this month. That 134-page document and its accompanying appendices, a copy of which was provided to the Beacon by another
source, detail the expansion’s potential environmental, economic, cultural and social impacts. A third document, the runway expansion’s “business plan,” could shed more light on the project’s financial feasibility, but it hasn’t yet been completed, BVI Airports Authority Managing Director Denniston Fraser said. Under the Protocols for Effective Financial Management signed by the VI and United Kingdom governments in April, an “appraisal and business case” must be produced and reviewed by Cabinet before a decision is made to proceed with the project. It is unclear whether the business case will eventually be made public. After returning this reporter’s phone call on May 4, Dr. Pickering said that he wouldn’t give any interviews about the project that weren’t broadcast live via television or radio due to concerns that his words would be taken out of context. Since then, he did not respond to several phone calls and two written requests for an interview about the runway expansion. Speaking before the HOA Tuesday Dr. Pickering said his ministry plans to appoint an information officer by Aug. 9, a position he said was “critical.” “We need to make a real effort to keep the public properly informed as to our progress,” he said.
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The BVI Beacon | Thursday, July 26, 2012
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Questions remain about runway’s costs, benefits
Runway from page 32
Consultant calls for an analysis
airport saw about 157,000 arrivals in 2008. If the runway is not extended, their estimates suggest, this figure would rise to about 269,000 by 2030. If the runway is extended to about 6,200 feet – some 650 feet shorter than the proposed expansion – the number of arrivals would increase to about 298,800 passengers by 2030, the study suggests. And an 8,800-foot runway is predicted to bump the number up further to an estimated 308,900 arrivals. To create their projections, the Berger consultants assumed that the number of passengers using the airport would be dependent on the number of hotel rooms and charter yachts in the territory. According to their projections, in 2007 there were a total of 1,875 rooms at hotels and villas available for rent in the VI. Additionally, there were about 1,000 yachts in the territory the same year, according to the study. In order to forecast room growth, Berger examined four major resorts that were in development as of 2008. Those projects were slated to add more than 800 rooms by 2030. While two of the developments — Oil Nut Bay and the Scrub Island Resort — are functioning and capable of expansion, another — the 300-room five-star hotel proposed for Beef Island — was put on hold due to a legal challenge. The fourth development, which was to add 200 rooms at Smugglers Cove by 2019, was scrapped in 2009. Mr. Fraser, the BVIAA managing director, said he would like more to be done to predict passenger growth when the airport updates its strategic plan. Revised passenger projections, he said, could be calculated by taking into account factors such as vacationers’ demand to visit the territory. “I think if you’re doing a forecast for something like this, you need to look at it holistically; you need to look at the whole picture. More than just the number of rooms, I want to see what is the trend, what is the pattern,” he said.
By JASON SMITH jsmith@bvibeacon.com Deputy Premier Dr. Kedrick Pickering may be spearheading the proposal to expand the runway at the Terrance B. Lettsome International Airport, but his government’s ability to execute the project may be limited by what officials in London think of it. Undertaking a capital project of this magnitude — $38 million, according to government’s estimates — has become more complicated since Premier Dr. Orlando Smith signed the Protocols for Effective Financial Management with the United Kingdom in April. Under the agreement, which commits the government to pass an “enhanced” Public Finance Management Act by next month, capital projects worth more than about $11 million have to go through a detailed planning, evaluation and management process. Specifically, the protocols state that before contracts are signed, a project must be “suitably appraised” to ensure that the territory receives “value for money.” The protocols also require officials to produce a “business case” that explains the economic rationale for the project and includes a “robust cost-benefit analysis.” Cabinet then has to use that analysis in deciding whether to approve the project.
Other studies
While the Berger report considered the feasibility of expanding the runway and the Kraus-Manning assessment investigated some of the potential effects, it is unclear whether either of those studies satisfies the protocols’ requirements. Denniston Fraser, the BVI Airports Authority managing director, said in an interview this month that a separate business plan has been drafted and Ministry of Finance officials are currently reviewing it. Attempts to reach Financial Secretary Neil Smith were unsuccessful as of the Beacon’s print deadline yesterday. The protocols do not explicitly
Photo: JASON SMITH Premier Dr. Orlando Smith, left, signed the Protocols for Effective Financial Management in April along with Governor Boyd McCleary and Henry Bellingham, the Foreign and Commonwealth Office’s minister for the overseas territories. The agreement with the United Kingdom requires the government to conduct a “robust cost-benefit analysis” before starting work on major capital projects, such as the airport expansion. give the UK government the power to veto VI capital projects. But, because the territory is currently in breach of the UK’s borrowing guidelines, officials have to receive written approval from UK Secretary of State William Hague before taking out new loans. Additionally, unless Mr. Hague gives his approval, the VI government can’t borrow for any project unless it is forecast to “yield sufficient revenues to fund the additional debt service costs,” according to the protocols.
US requirements
In the United States, the Federal Aviation Administration requires airports that seek more than $10 million in FAA grant funding to perform a cost-benefit analysis. The agency doesn’t make the decision to fund a project until an analysis is complete, according to a statement from the administration. The analyses, which are only part of the decision-making
process, help policymakers “focus attention” on whether a project’s benefits are justified by their expense, according to the FAA. The agency considers passengers’ reduction in travel time as a key benefit of expansion. “This reduction in travel time may be in the form of a more efficient flow of people through the airport system or reduced passenger delay. To estimate these cost savings it is therefore critical that the [cost-benefit analysis] attempts to estimate current and future passenger demand,” the agency wrote in a statement. Dr. Birney Harrigan wrote in the VI project’s socioeconomic impact report that the expansion’s costs and benefits can’t always be measured in dollars. “Stakeholders’ common refrain, ‘What are we giving up and what are we getting?’ deserves an answer that calls for a cost-benefit analysis to fully understand the value of the territory’s investment
in airport infrastructure,” she wrote in the report. The “non-economic” benefits and costs can best be assessed through future studies by aviation planners, oceanographers, coastal engineers, ecologists and anthropologists, Dr. Harrigan wrote.
Planning process
Meanwhile, the planning process is moving ahead as well. Though a development application has not been filed, Chief Planner Marva Titley-Smith said the Town and Country Planning Department has been informally working with the Ministry of Natural Resources and Labour to ensure that the planning process is followed. After a particular plan is developed and submitted, Ms. Titley-Smith said, the TCPD may ask for further studies to detail the impact. The Planning Authority would ultimately need to approve any expansion before it starts, she said.
Development
Existing rooms aside, others argue that the airport expansion itself would help spur demand and development alike. Since the mid-1960s, tourism has taken off in the territory, rising
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Runway from page 33 to be the islands’ main source of employment and a key provider of government revenue. Its success and the perceived need to bring more tourists motivated the 1999 addition of about 1,000 feet to the airport’s runway. A 10-year “National Tourism Development Strategy” produced by the consulting firm Coopers and Lybrand in 1996 called air access an issue that “needs to be addressed as a matter of priority.” A follow-up tourism report published in 2006 by Oyster Global Marketing echoed that sentiment, urging government to “accelerate the extension of Beef Island runway” and develop strategies to increase the number of seats air carriers offered to the territory. Russell Harrigan, the author of the 2006 report and the current BVI Tourist Board chairman, said in an interview this month that he is not aware of any studies that estimate the number of tourists who would want to come to the VI if direct flights were available. But Mr. Harrigan, who is also the owner of the Beacon, added that he believes there is “absolutely no question” that airlines will be able to find enough willing passengers to make direct flights to the mainland US profitable. He added that he also feels it is possible to find enough new wealthy visitors to fill airline seats without resorting to a “mass market” strategy. “When you look at the wealth creation in the world, the amount of wealth that is constantly being created, the question is how do we attract the segment of the market that we are looking for, which is the high end,” Mr. Harrigan said.
New investment?
The BVITB chairman added that the organisation plans to ramp up its marketing efforts in the coming years to encourage additional tourists to visit. He also believes there will be plenty of available rooms for future visitors, predicting that the expanded runway will encourage a wave of new investment. “[The expansion] is an element that will encourage investors to put cement in the ground,” Mr. Harrigan said. David Johnson, the developer behind the Oil Nut Bay Villa community in North Sound, Virgin Gorda, said he believes that the expansion will bring enough interested passengers from commercial and private jets to create a
Special Report
Photo: TODD VANSICKLE Deputy Premier Dr. Kedrick Pickering said this week that he expects construction to start early next year on the runway extension at the Terrance B. Lettsome International Airport. 10-month tourism season. “It can’t be an if. The airport has to be expanded to sustain tourism in the BVI. The rest of the world has adapted to the changing tourism market,” he said in a March interview. Mr. Johnson hopes to eventually build 88 villas on ONB’s 300acre property, though the project could take several years. Currently, seven are built or under construction, but the development’s affiliation with the recently built Yacht Club Costa Smeralda, an offshoot of a Sardinia, Italy-based yacht club, is beginning to garner international visitor interest in North Sound, Mr. Johnson said.
Residents’ concerns
But some VI residents feel that the increased visitor numbers could also bring major environmental problems and other negative consequences that could be detrimental to the territory’s tourism industry. In order to gauge the runway expansion’s potential socioeconomic impact, a consultant, Dr. Birney Harrigan, was hired by government to conduct multiple interviews and focus groups with residents, business owners and others. “While some BVI stakeholders question whether expanding the runway is the best way forward, others argue that the government needs to proceed with caution without destroying one of the territory’s beautiful natural resources, Trellis Bay,” the socioeconomic impact report states. “The capacity of the marine and terrestrial environments needs to be studied very carefully and with some urgency, especially because of the increased pressures from the influx of visitors and workers that will result if the goal of a larger
runway is realised.”
Funding
Questions have also been raised about how the project will be funded in a time of economic uncertainty, when the territory owes tens of millions for other major capital projects that have faced delays in recent years. But during the March public meeting in EE/LL, Dr. Pickering told residents he had been receiving calls from prospective financiers “almost on a daily basis.” “They see the BVI as a great investment and the potential for this airport as being tremendous,” said the deputy premier, who did not identify any of the potential financiers. “So there’s no shortage of interest as far as the financing and the financing availability.” Speaking before the HOA Tuesday, Dr. Pickering said that he hopes five to 10 contractors will have expressed their interest in the project by next week. The governments of Canada and China have already made submissions, he said. The initial studies have been funded and about $2.3 million in airport development fees has been set aside, Mr. Fraser told the Standing Finance Committee earlier this year. However, the expansion’s estimated $38 million cost will have to be raised through loans, Dr. Pickering said in March. This cost could be increased by several million dollars if certain environmental mitigation measures are put in place to preserve water circulation in Trellis Bay, according to the Kraus-Manning impact assessment. Any new borrowing would be added to government’s debt burden at a time when the existing runway is not yet paid off. According to the 2012 budget estimates,
about $13.7 million in loans related to the 1999 runway and terminal expansion are still owed to the BVI Social Security Board and the Caribbean Development Bank.
Financial feasibility
Project opponents have also challenged the accuracy of government’s $38 million cost estimate, citing substantial overruns on other capital projects. But Dr. Pickering has downplayed the extent of the financial commitment. “I will hasten to add that, based on revenue projections … we expect that the airport will be able to pay for its own development,” Dr. Pickering said in March. The Berger study, however, included a series of forecasts that suggest that several of the expansion options government considered would actually lose money. Berger forecasted the net present value of five runway expansion alternatives using the cost estimates and passenger projections the firm developed. Net present value is a type of financial analysis that compares the projected revenues and expenses of a project with its development costs. For four of the five expansion options studied — all except for a shorter extension that wouldn’t allow the commercial jets the government seeks to attract — Berger calculated negative net present values, indicating that the future cash flows produced by the expansion would also be negative. Berger, however, did not analyse the particulars of the option currently on the table —“Option Six,” which was created after the Berger study by the VI’s Airport Development Committee — and government has not publicised any detailed financial analysis.
Still, even if the runway doesn’t pay for itself as promised, it could bring other perks. Mr. Johnson, the ONB developer, said he considers his company to be in a “strategic alliance” with the VI government because a portion of each multimillion-dollar sale of land at ONB generates tax revenue. “The government stamp duty from Oil Nut Bay will pay off the new runway,” he said.
Hen or egg?
But even if funding can be found and other details ironed out, questions will likely remain about the project. Historically, worries about the merits of runway expansion are not new. On April 12, 1969, 40-year-old Hamilton Lavity Stoutt, then two years into his term as the territory’s first chief minister, stood before a small crowd gathered at Beef Island to inaugurate the newly paved 3,600-foot runway. Mr. Stoutt said that it was “almost redundant” for him to repeat that the VI was committed to “a course of tourism.” But first, policymakers had to settle a question, he said: “Which came first: the egg or the hen?” “Should we proceed from the demand side or from the supply side?” he asked. “Should we provide decent access and so stimulate additional hotel rooms, or should the provision of hotel rooms force the provision of access?” This article, the first of a two-part special report on the proposed runway expansion, investigated the project’s likelihood to achieve its goals. The second part of this report will explore the project’s potential environmental, social and economic impacts.