Tinian Shipping settles CPA debt

Cash-strapped Tinian Shipping & Transportation Inc. has started settling its outstanding account, comprised largely of unpaid passenger fees, with the Commonwealth Ports Authority, according to CPA Board Chair Roman S. Palacios.

Mr. Palacios disclosed that Tinian Shipping last week sent CPA a check of $20,000 as initial payment to the ports authority for the company’s use of government-operated harbor in ferrying passengers between Saipan and Tinian.

He said a payment scheme is now being worked out by CPA with Tinian Shipping to provide the ferry company with some form of flexibility in paying passenger fee that has remained unsettled due to internal financial upheavals.

“We are at least making progress in trying to collect from Tinian Shipping what it owes CPA and the company has been very cooperative. It’s a good sign,” Mr. Palacios pointed out during an interview.

The special measure, which allows Tinian Shipping to give CPA a flat rate of $20,000 per month in payment to its outstanding balance, was proposed by CPA financial consultant Rex I. Palacios in a previous meeting with ports authority and company officials.

Although both CPA and Tinian Shipping has agreed to the proposal that paved the way for the initial payment of $20,000 last week, company general manager Peter Cheung said they are still waiting for confirmation from the ports authority.

In a letter to CPA Executive Director Carlos H. Salas, Mr. Cheung said Tinian Shipping currently suffers a huge financial loss of about $4.4 million a year to keep its ferry operations.

“Our operating budget is about $0.5 million every month. Should we transport our passengers by using chartered flights, the expenses will be far lower than our operating budget,” he told Mr. Salas.

He pointed out that Tinian shipping carries about 12,000 passengers from Saipan each month, with almost 39 percent of the total ferry commuters being local residents and 61 percent are assumed guests of the Tinian Dynasty Hotel and Casino.

If this is the case, only about 7,320 passengers are Tinian Dynasty guests who may only cost the company about $256,200 each month if it ferried them to Tinian through chartered flights, assuming that a one-way airfare would cost $17.50.

“The passenger fee has contributed a great deal in our operating budget. If the passenger fee can be waived or kept to an acceptable minimum, our operating budget can be reduced correspondingly,” Mr. Cheung explained.

He is also asking the ports authority management to provide the company a black and white confirmation for the proposed payment scheme for Tinian Shipping’s outstanding passenger fee account at $20,000 each month.

The company, said Mr. Cheung, has invested over $1.2 million for its two high-speed ferries for the primary purpose of providing public transport system between Saipan and Tinian.

In order to unburden the financially-distressed company, CPA previously thought of taking away from Tinian Shipping the responsibility to collect harbor terminal fee.

At an average of 22,000 ferry passengers a month, CPA generates over $120,000, even when more than half of the people ferried between Saipan and Tinian are non-paying passengers.

During the period covering January to May 1999, 94 percent, or a total of 106,966, of the ferry passengers used complimentary tickets, and because CPA collects the passenger fee from Tinian Shipping every month, the company is actually paying for it.

The seaport passenger fee of $4.50 has been raised to $5.85 last year, following the new rate schedule approved by the CPA board of directors.