Tinian Shipping losing over $4 million per year

The decision by the Commonwealth Ports Authority to collect a flat monthly rate of $20,000 for ferry operations between Saipan and Tinian came as a welcome news to financially-distressed Tinian Shipping & Transportation Inc. which has reported to have been incurring losses of over $4 million a year.

General manager Peter Cheung said TSTI is suffering a huge financial loss of approximately $4.4 million per year in order to continue with its commitment to ferry passengers between Saipan and Tinian.

Mr. Cheung said TSTI ferries an average of 12,000 passengers from Saipan each month. Of this figure, 39 percent are local non-paying passengers and the remainder are mostly guests of Tinian Dynasty Hotel & 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.

He said CPA’s decision to keep the passenger fee to an acceptable minimum level is anticipated to help reducing TSTI’s operating budget of about $500,000 each month.

TSTI had previously asked CPA to consider either reducing the Passenger Head Tax from $3.75 to $1, and tax break for company staff for two years, or charging only paying passengers for two years.

Its huge financial deficit almost led to the confiscation by the financier of the ferry boats by taking legal action against Tinian Shipping last year.

In order to help TSTI address its financial concerns jeopardizing its ferry operations, CPA late last month approved the collection of a flat monthly rate of $20,000 for passenger fees effective August 1, 2000.

The approval came in the heels of TSTI’s mounting unpaid passenger fees which continue to pile up unless the CPA and the company come up with a workable collection scheme and a flat monthly rate.

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.

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.

TSTI 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.

The special measure, which allows TSTI 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.