Continental reports losses from rising fuel costs

Rising fuel costs is taking toll on Continental Micronesia’s earnings as officials report that the carrier is bound to lose at least $800,000 each year for each cent added to the existing prices of aviation gasoline.

Continental Micronesia President Bill Meehan said much of the financial burden arising from the recent series of oil price increases had been carried by the airline company, with very little impact on the existing fare schedule.

Mr. Meehan explained that Continental has initially downsized operations in the region in order to hold off possible effects of the increasing fuel costs which could have translated to higher airline ticket prices.

He pointed out price of aviation fuel was only a little over 50 cents per gallon last year but has since gone up to $1.15 per gallon, which translates to higher operational costs to the aviation industry throughout the world.

He emphasized, however, that Continental Micronesia does not have any immediate plans to adjust airfare between the region and major cities in Asia which the airline company currently serves.

Rising fuel costs which contribute much to its losses is apparently among the many reasons why Continental Micronesia decided to temporarily suspend its nonstop flights between Saipan and major cities in Asia.

Continental Micronesia has downsized its air transport services to the Northern Marianas by 572 flights in the first eight months of Fiscal Year 2000.

The Houston-based carrier’s decision to drop all nonstop flights to the Northern Marianas resulted to a dramatic 19 percent decline in international aircraft traffic between Saipan and major cities in several Asian countries.

Government statistics disclosed Continental Micronesia reduced its services to Saipan by 64 percent between 1997 and 1999, bringing only 74,000 passengers into the CNMI last year.

In 1997, Continental Micronesia had more than 700 direct Japan-Saipan flights each year. The carrier does not currently have even a single direct flight between Saipan and Japan.

The Commonwealth Ports Authority reported a declining trend in the volume of passengers arriving on Saipan on board Continental Micronesia beginning 1996. The carrier’s passenger haul dropped by 23 percent from 166,000 to 127,000 during the period covering calendar years 1996 and 1997.

In 1998, the volume of passengers brought in by the carrier to Saipan is lower by 23 percent compared with the previous year’s level, from 127,000 to 98,000. The figure dipped further by 25 percent last year, totaling only 74,000 passengers by end-December 1999.

Continental Micronesia downsized its air transport services to the Northern Marianas by seven percent during the period covering 1996 and 1997.

The following year, the airline company reduced its direct flights to Saipan by a whooping 43 percent, then again in 1999 when Continental slashed services to the island by a painful 37 percent.