Northwest asks CPA: Extend airline discount program

Citing the benefits it reaped for both Saipan signatory carriers and the Northern Marianas tourism industry, Northwest Airlines is asking the Commonwealth Ports Authority to extend the implementation of a discount program beyond Fiscal Year 2000.

Laurie Lofgren, Northwest general manager for Philippines, Guam and Micronesia, pointed out CPA’s Airline Incentive Program was a major factor behind the carrier’s decision to upgauge its aircraft on Saipan beginning October last year.

Northwest, in a letter to Executive Director Carlos H. Salas, is asking CPA to conduct a financial analysis in order to assess the feasibility of continuing the Airline Incentive Program beyond October 31, 2000.

“We understand that you have to ensure that the CPA has sufficient revenue to service its 1998 Airport Bond Indenture Obligation, thus the need to increase the airport departure fees,” the airline executive said.

The bond obligation may still be met even if the ports authority would extend the implementation of the Airline Incentive Program, which expires toward the end of next month through a series of revenue-increasing programs.

The Northwest official cited plans by other Saipan signatory airlines to increase their capacities, which may be complemented by CPA’s efforts to raise more revenues from non-aviation operations and proposed funding from the Legislature.

The Airline Incentive Program was a significant player that paved the road for Northwest’s decision to upgauge from a DC-10 to a Boeing 747 in October 1999. The increased capacity has resulted in more passenger arrivals on Northwest this year versus 1999.

“We still have same room for growth given our current capacity and are committed in maximizing our capacity,” the airline official told Mr. Salas.

CPA’s airline incentive program offers 50 percent reduction on arrival and departure fees for each additional passenger above a historical median passenger load factor plus 15 percent.

The 50 percent reduction in arrival and departure fees is offered by CPA to signatory airlines with hopes to revitalize the tourism industry in the Northern Marianas.

CPA Board of Directors has approved the extension of perks to airline companies servicing the CNMI since last year on condition that they are able to bring up their arrival figures by 15 percent more than their current traffic load.

Figures recorded during the first six months of the fiscal year 1999 indicated that Continental Micronesia would be needing an additional 481 passengers, aside from its current 3,204 average pax per week, in order to qualify to the perks.

With its 996 average arrivals per week, Japan Airlines needs 149 passengers more; Northwest will have to lure 267 passengers in addition to its average 1,778 arrival figures; while Asiana needs 89 arrivals more in a week before they are granted incentives.

The incentives will be in effect only until October 2000 since CPA is starting to implement a new rate schedule by then in compliance with its 1998 bond indenture.