In January 2016, the government of the British Virgin Islands agreed to provide BVI Airways with a US$7 million subsidy in exchange for the airline establishing a direct route between the BVI and Miami by October of that year – an agreement touted as crucial for the continued development of the territory’s financial and tourism sectors.

But after finally receiving all the requisite regulatory approvals from the United States and the United Kingdom after months of delays, BVI Airways announced last week that its cash reserves are depleted and that it is laying off its entire flight crew. The airline had yet to operate a single flight between the BVI and Miami.

In a written statement, BVIA executives attributed its financial woes to unfulfilled obligations by the government, as well as recent efforts to expand the territory’s airport.

The airport-expansion efforts, the executives claimed, hampered their ability to raise private capital because an expanded runway would attract competing airlines that would also offer direct flights to the United States. This claim was made despite the fact that the airport expansion project has been a priority for the current BVI administration since it took power in 2011.

The executives also stated that government has “unfulfilled obligations” with the company, including promised updates to the airport’s terminal and additional Customs Department personnel.

“Passengers cannot be expected to wait in line for two hours to get through the security and immigration – this would be disastrous. The current system is antiquated and barely works for low-density flights,” the airline stated in its layoff announcement. “There was a clear understanding from the onset that this needed to be corrected and better training of personnel provided prior to our launch of service.”

The BVI government, for its part, strongly disputed those claims.

“The government has provided all the financial support agreed between ourselves and BVI Airways, and furthermore, the Airports Authority has put in place most of what was agreed to enhance the arrivals and departure experience of BVI Airways passengers, including an office, additional seating, air conditioning and two ticket counters,” stated the territory’s premier, Dr. Orlando Smith. “Having provided the agreed support, this government and people are awaiting the commencement of the much-anticipated direct Miami-BVI flight.”

Neither government nor BVI Airways has responded to media inquiries about what steps they are taking to resolve their disagreements, and when the airline’s operations are expected to resume.

Commenting on the layoffs last week, BVI opposition legislator Julian Fraser, who was the minister responsible for airlift when his party was in power, said that direct routes are vital for the BVI to compete with the Cayman Islands and other offshore financial sectors.

“Cayman has an international airport, a national airline and an economy three times that of ours,” he stated on his Facebook page on Thursday. “It is not rocket science what’s missing in the BVI.”

Mr. Fraser further called for government to emulate the Cayman Islands by injecting more money into BVI Airways to help it launch.

“In fiscal year 2016-17, the Cayman government has given its national airline US24.7 million … and yet an additional US7.7 million to help pay off its debt,” Mr. Fraser stated. “In the scheme of things, US7.2 million on the part of the [BVI government] to own its own national airline is not a big deal.”

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