CPA says NMI govt will be fully subsidizing Star Marianas’ fees

In order to resume interisland travel as soon as possible, the Commonwealth Ports Authority has gotten assurance from the CNMI central government that it is committed to fully covering all of Star Marianas Airline Inc.’s fees that has made it financially tough for it to continue providing air service for the CNMI.

In a letter addressing Star Marianas’ concerns, CPA chair Kimberlyn King-Hinds assured the airline that, with the goal of immediately resuming interisland air connectivity, Gov. Ralph DLG Torres has given his commitment to fully subsidizing all fees and charges that CPA will assess SMA for the remainder of fiscal year 2022, provided that SMA agrees to reduce the cost of travel to the islands of Tinian and Rota.

“It is the board’s goal and priority to amicably resolve CPA and SMA’s dispute over the new rates methodology through a series of consultations with you in the immediate future. It is my hope that you consider this proposition and deem it a good faith effort to finding a pathway moving forward that is mutually beneficial. As this is of urgent concern and one that would greatly benefit the people of Tinian and Rota, please contact me as soon as possible. We look forward to working together to resume interisland air service,” she said in the letter to SMA.

King-Hinds also informed Star Marianas that the administration is also looking at ways to permanently lower the cost of interisland travel, like availing of the U.S Department of Transportation’s Small Community and Rural Air Service program.

“The governor is committed to finding a way to permanently lower the cost of interisland travel. The governor agrees with CPA that the long-term solution to this issue is for the CNMI to avail itself of U.S. DOT’s Small Community and Rural Air Service programs,” King-Hinds stated.

However, in response to King-Hinds, Star Marianas president Shaun Christian said that fully subsidizing Star Marianas’ fees is not the appropriate solution to the issue at hand.

“SMA would like to point out that the core dispute is not entirely about money. Therefore, the proposal to subsidize SMA’s operation with either CNMI taxpayer funds or federal funds is not an appropriate solution. SMA has never sought to avoid the payment of its fair share of properly determined and allocated costs as an aeronautical user of the CNMI airports,” he said.

What Star Marianas wants, Christian said, is to resolve any disputes with CPA informally but in an appropriate and structured format that involves a neutral third party.

“In order to make meaningful progress there must be a commitment by both sides to engage in mediation within a definite time frame in the near future. [Star Marianas] is not interested in saddling the CNMI taxpayers with the burden of subsidizing SMA’s operations. SMA is capable of managing its own business affairs. If CPA is willing to engage in meaningful, structured discussions based on the above parameters, then SMA is also willing to engage in such discussions and work toward restoring interisland air service,” he said.

According to Saipan Tribune archives, Star Marianas claims that CPA’s new method in assessing rental rates has made the company’s cost to provide air services not financially feasible and forced them to stop flying.