The much heralded arrival of low cost airline JetBlue Airways to Bermuda has resulted in US Airways scrapping its service from New York's LaGuardia Airport and Spirit Airlines now having doubts if it will start a competing service.

On the plus side, major carriers Continental and American Airlines have reacted to the imminent arrival of the low cost rival by lowering ticket prices, Tourism Minister told the House of Assembly yesterday.

But Dr. Brown also admitted the $49 ticket currently being offered to North American air visitors by TNT Vacations is being subsidised to the tune of $1 million by Government.

Dr. Brown said he was confident Bermuda that Bermuda would be the winner with increased flights coming to the Island from New York's JFK once JetBlue starts its twice daily flights from May 4.

He said the loss of US Airways from LaGuardia was not overly significant as it was a seasonal service, while uncertainty over Spirit Airlines would not result in a loss of seats as the airline has not started its New York service.

The TNT Vacations $49 air ticket promotion from New York and Boston runs until mid-April but is not open to Bermudians wishing to fly in the reverse direction.

It has been one of the talking points amongst travel agents and tourism figures in the US who attended the Department of Tourism's North American road show this week, with many expressing disbelief that such a $49 deal could exist on a route where round trip fares traditionally cost around $700.

In the House of Assembly yesterday, Tourism Minister Ewart Brown, who had just returned from the road shows in Boston, New York and Philadelphia, said: "TNT is being subsidised by almost $1 million. That's no secret."

Hoteliers have been asked to contribute $165 per booking as part of a joint subsidy with the Government.

Speaking to after the debate, Dr. Brown saidthe hoteliers were not losing out as they only paid the $165 if they took a guest booking as a result of the flights.

The money from the bookings is used to offset the Government's $1 million commitment to the two-month deal.

The flights run until April 27 and, according to Dr. Brown, passenger numbers are rising with 3,000 packages sold in Boston to date and the numbers improving in New York.

He said: "Out of this effort around 6,000 or more people who would not have been here in the Golf and Spa season will come."

The question of air arrivals was a major talking point during a Budget debate on how the $40 million allocated to the Department of Tourism in this year's budget is to be spent.

Dr. Brown was upbeat at the initiatives he has overseen that will bring low-fare JetBlue to the Island in May offering flights around $350 ? around half the current fare price ? and the latest news that both Continental and American Airlines have cut their prices from New York.

"We believe there will be a $400 saving on air tickets and half of that saving will end up in Bermuda," said Dr. Brown. He estimated if 200,000 passengers from North America made such a saving and spend the extra $200 in Bermuda it would boost the economy by $40 million each year.

The Tourism Minister said Government did not subsidise scheduled flights but has "minimum revenue guarantee" agreement with air carriers and has so far only paid out one $250,000 guarantee on a loss-making flight.

He promised to make pre- and post-JetBlue air arrival figures available for public scrutiny.

Shadow Tourism Minister urged the Minister to increase air arrivals, which he said were down 27 percent in the past 15 years, and in 2006 are due to fall below the number of Cruise ship visitors for the first time in Bermuda's history.

He stressed the need for Bermuda not to seek more cruise ship visitors ? who typically spend eight times less on the Island than an air visitor.

Former Opposition Leader pointing out that total visitor expenditure in Bermuda that once hovered around $470 million between 1990 and 1999 had fallen to $353 million in 2004 according to official statistics.

Since the PLP Government took power in 1998 the accumulative decline up to the third quarter of 2005 amounted to $651.5 million " lost to the Island" according to Mr. Gibbons who said it was "a dismal performance" and he wanted to know what the $100,000 a day the Government is spending on tourism is achieving.