CPA readies to roll back airport fees

The Commonwealth Ports Authority Board of Directors will convene on Saturday to act on the request by CNMI signatory carriers to roll back existing passenger departure fees following projections by airline executives that passenger traffic will increase in the next two years.

Citing a study carried out by CPA financial consultant Rex I. Palacios, acting Board Chair Roman Tudela mentioned the possibility of a rollback in passenger departure fees from $8 to $5.79 but added that the reduced fees may only be implemented until the end of September.

Executive Director Carlos H. Salas explained the ports authority’s existing bond indenture may be jeopardized if the rollback will be extended beyond the Fiscal Year 2001, pointing out that this would need additional studies to make sure CPA’s revenues will be able to meet the debt service coverage ratio.

“We see the great possibility of reducing passenger departure fees until September 30, 2000 but we also would like to get a commitment from the airlines that passenger traffic will increase to mitigate the impact a rollback may have on CPA revenues,” said Mr. Tudela.

During a meeting between CPA officials and airline executives yesterday, most carriers disclosed an average of five percent increase in the projected number of passenger traffic to the Northern Marianas between now and the year 2001.

Continental Micronesia stressed it will maintain its current schedule with the deployment of four nonstop Saipan-Osaka flights per week starting February 1, 2001 to accommodate the expected influx of Japanese tourists during the summer.

Japan Airlines and Northwest Airlines both projected an increase of five percent in passenger traffic, while Asian Airlines anticipates visitor arrivals from Seoul and Pusan in South Korea to grow by a whooping 25 percent.

Saipan Station Manager Charlie Ling said Mandarin Airlines may be able to increase flights to Saipan when three new Boeing 737-800 aircraft purchased by its parent company, China Airlines, arrive in January and February of next year.

Mr. Ling said Mandarin Airlines may deploy an additional flight per week by then, which should bring the number of Saipan arrival by the carrier to three per week.

But he promptly added that everything is still under evaluation although Mandarin Airlines has registered an increasing load factor during the first few months of its operations in the Northern Marianas.

The positive projections by the carriers is expected to pave the road for the eventual granting of their request to rollback airport fees, which were increased beginning March this year. CNMI airport fees have not been adjusted in 10 years.

CPA previously disclosed it would need at least $1.7 million in annual legislative appropriations to reduce current airport charges which carriers claim make air transport service to the Northern Marianas more costly than in other destinations in the region.

Because of the ports authority’s mandate to run all three airports in the CNMI, Saipan International Airport is currently subsidizing the expenses incurred in the operation of both Tinian and Rota air transport facilities.

CPA Board of Directors and management were amenable to reduce current airport fees only if it is able to receive funding from the CNMI government to subsidize the expenses for operating Rota and Tinian airports.

CPA has actually suspended the implementation of the new rates from October 1999 to March 2000, pending pledges from the Legislature of annual government subsidy.

CPA has been urged to increase its current $0.85 landing fee at the airport to $1.40 per thousand pounds for signatory airlines. The financial consultants said this is necessary as this is one of the two options left for the Ports Authority to pay its bond by 2008.

Tourism and aviation task force officials have persistently opposed the idea, contending that this would discourage airline companies to increase flights to the Commonwealth, and eventually result to increase in airline tickets.

Also, to mitigate the impact of the rate increase, CPA implemented the Airline Incentive Program which grants 50 percent reduction in arrival and departure fees to CNMI signatory airlines which are able to bring up their arrival figures by 15 percent from their current traffic load.

To qualify under the CPA Airline Incentive Program, airline companies need not increase flights between Saipan and foreign countries but bring in more people through upgrade in equipment or increase seating capacity.