Northwest balks NMI request for more airline seats

Northwest Airlines, the only remaining air transport player which provides direct flights between Japan and Saipan, has turned down a request from the CNMI Aviation Task Force for additional passenger seating capacity.

In a letter to Task Force Chair JM Guerrero, Northwest-Japan director for revenue management and market planning Steven Crowdey said the airline company is currently not likely to add capacity from two Japanese cities.

The CNMI Aviation Task Force, the Commonwealth Ports Authority and the Marianas Visitors Authority have contacted Northwest for possible additional capacity from either Osaka or Nagoya, Japan.

The Commonwealth government’s intensified efforts to entice carriers presently servicing the island came in the wake of Continental Micronesia’s decision to completely abandon its direct service between Japan and Saipan.

Mr. Crowdey pointed out that Northwest studies have determined that the carrier is not likely to generate sufficient revenues should it provide additional seats between Saipan and the two Japanese cities.

Not even with the present incentives offered by the ports authority to airline companies that will be able to bring in more people can enable Northwest Airlines to break-even.

“Even with your kind offer of extending the incentives that cover the equipment upgrade from Narita to services from these cities, our estimates are that we would be unable to achieve adequate financial returns to warrant commencement of service at this time,” Mr. Crowdey wrote to CNMI aviation and tourism officials.

Aside from Mr. Guerrero who heads the Aviation Task Force, the airline executive based in Japan also wrote MVA Board Chair Dave Sablan and Ports Authority Board Chair Roman S. Palacios.

In what appears to be a consolation, Mr. Crowdey said Northwest has been in constant review of its scheduling options as he reassured the Commonwealth of the airline company’s interest in the Northern Marianas.

“We would like to reassure you of our interest in your islands and that we will continue to look for opportunities to add capacity to Saipan,” he said.

The ports authority in July last year approved the carrier’s proposal to extend the implementation of the airline incentive program until October 2000 in exchange for Northwest’s upgrading of its Saipan fleet from DC10 to 747.

Northwest Airlines has proposed to upgauge its DC10 aircraft to 747 if the ports authority would extend by seven months the implementation of its incentive program which gives signatory airlines 50 percent discount on arrival and departure fees if the carriers are able to increase average load factor by over 15 percent.

Originally, the airline incentive program stretches on a 10-month period from May 1, 1999 to Feb. 29, 2000. This period has been determined to be critical in terms of timing on CPA being able to generate additional revenue to meet debt service coverage.

The ports authority is also scheduled to implement the new airport rates in March 2000.

CPA offers the 50 percent reduction in arrival and departure fees to signatory airlines with hopes to revitalize the Commonwealth’s declining tourism industry.