50% discount for airlines proposed

Commonwealth Ports Authority board chair Kimberlyn King-Hinds, third from right, gestures as she explains during yesterday’s CPA board committees’ meeting her proposal to give an incentive to all international and commuter airlines by giving them 50% discount on landing fees and other applicable fees until December 2020. (FERDIE DE LA TORRE)

An incentive to give all international and commuter airlines a 50% discount on landing fees and other applicable fees until December 2020 is being looked at as a way to entice air traffic to the CNMI and revive its tourism industry.

Commonwealth Ports Authority board chair Kimberlyn King-Hinds suggested this during yesterday’s CPA board committees’ meeting and was supported by other board members—Roman T. Tudela, Barrie C. Toves, Ramon A. Tebuteb, Pete P. Reyes, Thomas P. Villagomez, and Joseph M. Diaz.

The members agreed with King-Hinds to put the proposed 50% discount as an action plan so that when they have a full board meeting by hopefully at the end of this month, they can revisit and adopt the incentive program.

King-Hinds said that, although half of CPA’s revenues are supported by airline revenues, the fact is that the tourism and the airline industries have been greatly paralyzed by COVID-19 pandemic. “So given the pandemic, all the airlines are basically struggling and having a hard time right now on getting back online. And we’re trying to find a way, look for way to incentivize to get some sort of activity coming back to the CNMI,” she said.

One of the ways the CPA can do that is by reducing the fees that they charge airlines, King-Hinds said.

She compared the Francisco C. Ada/Saipan International Airport to a water faucet, where the tourists are the water that come out through that faucet to support the CNMI’s economy. “I think that sometimes we’re going to spend a little bit of money—in this situation forego collection—to be able to realize a long-term gain,” King-Hinds said. “Obviously, the airline industry has been the most impacted as far as the pandemic is concerned. They’re having hard time getting back online.”

This comes as the Torres administration is proposing to reopen the CNMI’s economy by July 15, and policymakers are working balancing public health concerns and the need to have an economy that supports the government’s ability to provide essential services.

King-Hinds concedes that the fees that they currently charge airlines are obviously what has sustained CPA’s operation but she also pointed out that the money CPA has received from the CARES Act is supplementing CPA’s operational budget right now.

She said the long-term plan is to be able to get CPA back to the level of where it used to be in terms of airport revenue collection. “What I’m proposing basically for the board to consider is giving a sizable discount to the airlines,” she said, adding that CPA also gave a three-month rent abatement to their tenants a few months ago.

She said she is proposing to give a 50% discount on landing fees, enplanement, deplanement fees, and any other applicable fees except for passenger facility charges. She said CPA cannot touch the passenger facility fees pursuant to Federal Aviation Administration’s regulations.

“I’m not expecting that, by giving this discount, a whole bunch of airlines are going to fly here because we still have the pandemic,” King-Hinds said, adding in a later interview that “each country has different requirements in terms of public health measures from point of origin.”

The chair said the board just passed CPA’s budget for fiscal year 2021, which has been supplemented by the CARES Act funding. Because of the amount they got from the CARES Act, CPA can sustain itself, she added.

“The idea basically is to look out long-term. We are collecting zero now,” King-Hinds said. From now until December, CPA is already expecting to collect zero revenue.

“Whether we give this discount or not, we’re already anticipating collecting zero. That’s how we forecasted our budget. So it would not hurt us by giving a discount,” she said, adding that this discount applies to all international and commuter flights because they cannot discriminate. In a later interview, King-Hinds said FAA requires that any discount should be applied to all airlines across the board.

“So what I’m suggesting is a 50% discount in terms of landing fees and enplanement and deplanement,” she said, adding that she is open to any suggestion that will provide relief to airlines.

Diaz said it’s an outstanding plan as this will extend the future plans of CPA’s business partners.

Villagomez suggested giving a discount for only three months, then possibly extend it.

Tudela said he is inclined to support the chair’s suggestion. “When I look at that, it tells me we’re actually giving 50% from zero. It doesn’t really hurt CPA per se,” Tudela pointed out.

Tudela hopes that the incentive will lure international airlines to come in, at least before December. “And before that, once they realize and experience the discount, they would probably be happy to stay on the route and have a continued scheduled flight,” Tudela said.

Reye said, “I’m on board.”

Toves said United Airlines and Star Marianas will be happy and welcome this proposal and may even consider providing additional flights.

King-Hinds later said that everybody is pitching in and figuring out ways on how to stimulate the CNMI’s economy.