A voyage to recovery

It wasn’t the Titanic but it sure was a sinking ship. Taking control over it knowing that so many lives heavily depend on what the outcome would be takes more than an ounce of courage, knowledge and determination.

The Commonwealth Ports Authority in 1998 was not an inch different from the Titanic when the ship hit a giant iceberg during its maiden and last voyage from London to New York in 1912 that left thousands of people dead.

The only difference is that competent individuals — led by Board Chair Roman S. Palacios and Executive Director Carlos H. Salas — took control of CPA’s command before the agency came too close at scuttling.

CPA coffers, incurring a monthly shortfall of $200,000 from its airport operations, were almost empty when Mr. Palacios and Mr. Salas assumed office in early 1998.

Today, it anticipates a modest four percent growth in revenues from its operation of the islands’ air transport facilities for the Fiscal Year 2001. CPA’s revenue is expected to reach $12.4 million from the FY 2000’s $11.9 million.

Revenues generated by the ports authority from seaport activities soared 21 percent in Fiscal Year 2000 to $5.3 million from 1999’s $4.4 million. CPA attributes the $0.9 million difference to the adjustments made on the seaport charges that include fees on embarking passengers, wharfage and entry, as well as the implementation of paid parking at the harbor.

The sudden turnaround of the agency’s financial condition and CPA’s involvement in the concerted moves to revive the Commonwealth’s embattled tourism industry through various programs should undoubtedly be credited to the leadership of Mr. Palacios and Mr. Salas.

Commendation

They do not want to claim credit for everything, though. “The man on the top should have the support of the men on the bottom for him to properly man a disgruntled ship and bring it back to the right direction,” says Mr. Palacios who took over the chairmanship of the CPA Board of Directors in September 1998 replacing Victor Hocog.

He adds that credit should also go to former CPA Board Chair JM Guerrero from whom he seeks advise on serious matters that relate to managing the agency, as well as his family who was always supportive of his undertakings as public official.

Mr. Salas acknowledges the sacrifices of the employees during the time CPA had to make a painful cut on manpower hours by 10 percent in 1998. The measure was implemented in order to offshoot declining revenues aggravated by internal financial crisis left by the previous administration.

He rose from a long-term position as assistant to the executive director to become CPA’s executive director in early 1998 to fill the seat vacated by Carlos Shoda. He was acting executive director since Mr. Shoda retired from the government office.

When Mr. Hocog and Mr. Shoda vacated their respective seats at the CPA, the succeeding CPA Board of Directors and management were left trying to solve a puzzle on how the $23 million budget surplus inherited from the previous administration was spent.

Mr. Palacios was instrumental in urging Gov. Pedro P. Tenorio to appoint new members to the CPA’s board of directors, as he reasoned out that this is the only option left to solve the financial crisis in the disgruntled agency.

Mr. Salas, on the other hand, requested that the Office of the Public Auditor conduct a financial audit of the CPA to determine what had transpired which resulted to the depletion of the ports authority’s coffers despite a $23-million budget surplus.

As the agency drew near to bankruptcy, CPA installed cost-cutting measures following close scrutiny of operation requirements, assessment of actual needs, review of staffing pattern, and the application of the staff cross-utilization method.

CPA even went as far as considering the need to dismiss employees who have allegedly been irregularly recruited since 1994 to keep the ports authority at pace with its self-instituted austerity measures.

A review of its personnel disclosed that the agency has accumulated a total of 252 employees with a cumulative annual income of at least $8.5 million. Documents revealed that in 1994, the ports authority had 167 employees with a combined total income of about $3.6 million.

Revitalizing tourism

Under the leadership of Mr. Palacios and Mr. Salas, 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.

CPA was able to make this possible despite the failure of the CNMI Legislature to act on its request for $1.7 million in annual appropriations that should have been instrumental in its ability 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 agency’s mandate to serve all three airports in the Northern Marianas, the Saipan International Airport is forced to actually subsidize the expenses incurred in the operation of both Tinian and Rota air transport facilities.

This and the current enplanement and deplanement figures prompted CPA to increase airport charges.

The agency’s determination to help revive the Commonwealth’s disgruntled tourism industry, however, gave birth to a board decision in September, rolling back departure facility charge from $8 to $5.79 per passenger through heavy lobbying from the carriers.

The September rollback, which was retroactive to March, took effect only until October 31, 2000, or at the same time when the CPA Airline Incentive Program expired.

Earlier this month, lobbying from the tourism and airline industries prompted CPA to once again extend the implementation of the incentive program that gives signatory airlines 50 percent discount on departure facility charge if they are able to bring their visitor traffic 15 percent above their current passenger haul.

At the same time, the CPA Board of Directors approved the adjustment to existing departure facility charge from the current $8 per passenger to $6.35 beginning Jan. 1, 2001. The new rate will be in effect until Sept. 30, 2001.

The new rate reflects the financial outlook for the ports authority, which is currently servicing a multi-million bond floated in 1998 to support improvements projects at both air and sea transport facilities.

However, the current departure facility charge of $8 per passenger will remain in effect and will be adjusted to $6.35 beginning Jan. 1, 2001, which is higher than the pre-March 2000 level of $5.79 per passenger.

The new rate was agreed upon in consideration of the extension of the Airline Incentive Program until Sept. 30, 2001 and the agency’s current financial obligations including repayment of the $53 million bond floated in 1998.

New routes

The Airline Incentive Program will also be extended to airline companies that are servicing new routes, including those recently launched like Mandarin Airline’s service to Taipei, Asiana’s Pusan route, and Japan Airlines’ Osaka and Fukuoka service.

Mainly because of recommendations by its United States-based financial consultants, CPA increased airport charges beginning March 1, 2000 in efforts to meet the requirements set by its 1998 airport bond agreement.

The decision also came following projections by airline companies plying the Northern Marianas route that passenger haul from major cities in Japan and South Korea is showing good promise of growth in the next months.

During a previous meeting between CPA officials and airline executives, 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 Asians Airlines anticipates visitor arrivals from Seoul and Pusan in South Korea to grow by a whooping 35 percent.

Earlier this week, the Strategic Economic Development Council commended the ports authority’s efforts in cutting back airport charges which strengthened the CNMI’s competitiveness as a prime tourist destination.

Bob Jones, chairman of the SEDC committee on air service initiative, says CPA’s decision to rollback charges at the Saipan International Airport makes it easier to sell the CNMI as a destination to airline companies.

From the beginning of the Fiscal Year 2000 up until April, CPA records showed the number of international passengers arriving at and leaving Saipan’s air transport facility exceeded the level registered during the previous fiscal year.