‘DFS rethinks renovation’

The impending pullout of Japan Airlines has got DFS Galleria thinking twice about its $2.5-million renovation plan for the shop’s airport outlet.

DFS Galleria informed the Commonwealth Ports Authority last week that the company may postpone its renovation proposal, CPA executive director Carlos Salas disclosed yesterday.

The company’s plan comes in anticipation of the economic impact of JAL’s withdrawal from Saipan next month.

“We’re discussing the plan with DFS. We have asked them to consider phasing in the project, rather than totally putting it aside, so that the renovation would be in place when the traffic returns,” said Salas.

DFS Galleria made a presentation before the CPA board of directors in February 2005 regarding its plan to improve the existing store at the Saipan International Airport.

The $2.50-million renovation proposal included a change in the store layout, expansion of the boutique gallery, and improvement of the local souvenir product display. The duty free shop also planned to offer new luxury brands to maximize revenue.

DFS managing director Stephen Timms had said the renovation would be conducted at 15 percent of the property at a time to ensure that airport activities would not be interrupted.

However, this plan may be put on the back burner for now, as DFS strives to cut costs in the wake of JAL’s pullout.

Last month, DFS already reduced employee hours from 36 to 32 hours weekly.

“We’ve been looking at areas to cut our costs, or contain our costs. One of the first things that we have already done is to cut our employees’ hours. We continue to find ways to mitigate the loss that we expect we will have,” DFS president Marian Aldan Pierce said.

JAL will cease operating its regular, scheduled flights from Tokyo and Osaka to Saipan—and vice versa—effective Oct. 4, 2005.

A June 2005 study by Economists.com, a U.S.-based economic and financial consulting firm, showed that JAL’s pullout could mean a loss of as much as $216.2 million in annual economic output if none of JAL’s airlift capacity was picked up by other carriers.

Such a scenario could also result in the loss of 2,550 jobs and $38.8 million in personal income annually, according to Economists.com.

Northwest has announced a plan to replace the Osaka service in October but the new flight would not be enough to fill the vacuum that will be left behind by JAL.

The new service, which will provide direct daily access from the Kansai International Airport, will be serviced by 182-seat aircraft—a downsize from the 240-seater Boeing 767 currently used by JAL.

Northwest’s flight represents 66,430 seats annually, a 24-percent drop from JAL’s current capacity of 87,360 seats per year.

JAL’s Tokyo-Saipan flight operates daily using DC 10 aircraft, with 260 passenger seats. The service provides the CNMI a capacity of 94,640 seats.