CPA okays flat monthly charge for Tinian Shipping

Cash-strapped Tinian Shipping & Transportation, Inc. received a much-needed help from the Commonwealth Ports Authority which last week approved the collection of a flat monthly rate of $20,000 for passenger fees effective Aug. 1, 2000.

Before giving the go-signal for the collection of the flat rate from the ferry firm, the CPA Board of Directors led by Chair Roman S. Palacios made sure Tinian Shipping would earmark a portion of available seats for local passengers.

Executive Director Carlos H. Salas said the shipping company has agreed to allocate at least 39 percent of the available seats from each ferry schedule to local passengers without charges, as part of the agreement that paved the road for the implementation of the flat rate.

Mr. Salas explained that the agreement does not guarantee a rollback in passenger fee charges that are still to be collected by the CPA from the financially-troubled company from its previous obligation.

He pointed out that the flat monthly rate comes as an amendment to the existing lease agreement sealed by the ports authority with Tinian Shipping for its use of government-owned harbor facilities both on Saipan and on Tinian.

Tinian Shipping & Transportation Inc. has actually started paying the $20,000 rate for the month of August, according to Mr. Palacios who disclosed that the company sent CPA a check of $20,000 as initial payment under the terms of the amended lease agreement.

He also 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 as payment for passenger fee, was proposed by CPA financial consultant Rex I. Palacios in a previous meeting with ports authority and company officials.

Tinian Shipping currently suffers a huge financial loss of about $4.4 million a year to keep its ferry operations. The company is expected to save on costs if it decided to use chartered flights in transporting its passengers from Saipan to Tinian.

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,” said Tinian Shipping general manager Peter Cheung.

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.

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.