A bid to introduce flights from Munich to Bermuda proved a "failure" despite Government spending more than $1.5 million on the scheme, the Premier has admitted.

Ewart Brown told the House of Assembly: "This was one of our unsuccessful ventures in an attempt to develop business out of Germany.

"The vast majority of our efforts to bring in flights has obviously been successful but it would be disingenuous of me to stand here and claim that the Munich flight was a success. It was, in fact, a failure. I think this is quite an admission for me to make here."

The Premier, who is also the Minister for Transport and Tourism, was explaining to MPs on Friday night how Government managed to go $1,577,900 over-budget in the Airport Operations department in the last financial year.

He said the deficit was directly related to the Munich to Bermuda flight, prompting Opposition Leader Wayne Furbert to ask what the cost benefit to the Island had been.

Dr. Brown explained that the Government had lost money on the Munich venture but had not abandoned its efforts to bring in visitors from Europe. "We still believe that there is a successful formula that can work," he said. "Right now we are in negotiations for a flight out of Milan."

The $1.5 million was a one-off payment to Munich Air and Eurofly made because of a "risk-share" agreement negotiated by Government with the airlines to persuade them to start running the Munich flights to the Island.

Government has similar arrangements with other flight operators, including American Airlines, where it has to stump up an agreed sum of money if plane seats aren't filled.

In 2005, it was reported that airlines received $529,000 out of a possible $820,000 the previous year in guarantees, largely to cover passenger shortfalls on US Airways' Bermuda to Fort Lauderdale flight.

Last year, the Government set aside $1.4 million in its budget for such agreements but the $1.5 million for the Munich flight was in addition to that amount.

Dr. Brown said: "We were convinced that Munich was the right city for us to fly from but all of the ingredients did not fall in place in time and we experienced this deficit. Bermuda Hotel Association partners took a hit."

He added: "When 99 percent of the flights work and one doesn't we acknowledge it and go out and try again."

Former Opposition Leader Grant Gibbons said the payment meant the department of Airport Operations had effectively blown the original $1.4 million and then had to spend almost $1.6 million in addition.

"The total is therefore $3 million on air incentives," he said.

But Dr. Brown replied: "I will not allow him to characterise it in that fashion. The air incentive budget was $1.4 million for all flights. Some of that is used and some of it is simply on the line because the proof positive has not yet occurred. That money is set aside. We may not have to pay it."

Shadow Finance Minister Patricia Gordon-Pamplin asked why the department had not first used up the $1.4 million to pay the European airlines.

Dr. Brown said the $1.4 million was mainly for American flights, such as the American Airlines one from Miami. "Even though we do not expect that we will have to pay on flights we still have to have that money available," he said.

He attributed an overspend of $400,000 in the Tourism Department to initiatives aimed at boosting the Island's golf and spa season. One, involving a promotional charter flight from Boston, brought an extra 5,000 visitors to Bermuda.

Government went more than $29 million over budget last year. MPs approved the supplementary spending on Friday.