CPA plans gaming machines in airports

Efforts by the Commonwealth Ports Authority to increase non-aviation revenues by installing gaming machines in all three CNMI airports may suffer a setback due to existing prohibitions contained in its regulations and the Master Concession contract with Duty Free Shoppers.

CPA Board Member Ray Cing said the agency may be able to push through with the plan to install gambling machines at the West Tinian International Airport through the island’s Gaming Initiative, which paved the road for the establishment of the Tinian Dynasty Hotel and Casino.

“We are already finalizing the plan for the project and we are on constant discussion with the Tinian Gaming Control Commission and the local government to make sure it will push through,” said Mr. Cing in an interview.

However, CPA legal counsel Jose S. Dela Cruz said there would be a need for the ports authority to amend its existing rules and regulation because it prohibits the installation of any gaming devise in any of the CNMI air transport facilities.

If CPA is serious about its plan to install gaming machines at the airports to increase non-aviation revenues, then the Board of Directors and the management should start looking at amending the rules and regulations, Mr. Dela Cruz told a board meeting.

Financial consultant Rex I. Palacios also warned the CPA Board and management that the current agreement with DFS may get in the way, since the retail company holds the master concession contract for all CNMI airports.

“DFS would of course want to have the tourists spend their dollars purchasing items from the store than see them play the poker while waiting for their departure flights. And DFS can object because it holds the master concession contract,” said Mr. Palacios.

The ports authority is exploring all possible ways to increase its non-aviation revenues in order to subsidize operations, thereby, being able to cut down airport charges which have been the subject of major concerns raised by CNMI signatory airlines.

CPA last week rolled back airport departure facility charge from $8 to $5.79 per passenger but only until October 31, 2000 in efforts to prevent any adverse impacts it may have on the agency’s 1998 bond indenture obligation.

Board Chair Roman S. Palacios said the rollback will result to substantial savings on the part of the airline companies without adverse impact on CPA’s capabilities to meet the requirements set by the 1998 airport bond agreement.

The rollback is retroactive to March 1, 2000 although airlines are not getting cash refunds for the amount that they have paid CPA in excess of the rolled back $5.79 per passenger fee.

Board Director Roman Tudela previously asked financial consultant Rex Palacios to carry out a study on the possibility of a rollback in passenger departure fees from $8 to $5.79, following complaints by airline companies of the restrictively high airport charges in the CNMI.

The study emphasized that CPA’s financial capability to continue meeting the bond indenture requirement will not be adversely affected by a reduction in fees but only if the rollback is implemented until the end of October.

Mr. Tudela explained CPA’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.

The ports authority deferred action on the request by carriers for a reduction in airport charges until the agency was given assurance by the airline companies that passenger traffic in the following year will improve to mitigate the impact possible losses on CPA revenues because of the rollback.