DFS backs bidding out Tinian, Rota duty-free concessions

DFS Saipan supports breaking up the CNMI master concession into three separate master concessions for the islands of Saipan, Tinian, and Rota, as proposed in a Senate bill that is now awaiting action in the House of Representatives.

In a statement yesterday, DFS Saipan president Marian Aldan-Pierce said that what DFS wants is to have a master concession for Saipan only.

“The law presently does not allow for a Saipan-only master concession, but Senate Bill 19-48 would divide up the CNMI master concession into three master concessions, one each for Rota, Tinian, and Saipan. We support that legislation with amendments. If it passes, it will create a Saipan-only master concession,” she said.

Aldan-Pierce was commenting on a recent Commonwealth Ports Authority board resolution to not negotiate another master concession with DFS. On Sept. 28, the CPA board voted to not enter into another Commonwealth-wide duty-free master concession with DFS Saipan, although such negotiations received overwhelming support at a public hearing.

Aldan-Pierce stated: “It appears that the CPA directors, anticipating the bill’s passage, denied the request to negotiate a CNMI-wide master concession with us and we are fine with that.”

DFS Saipan has operated the duty-free store at the Saipan International Airport for almost 40 years.

In 1985, Public Law 4-60 established a master concession that provided exclusive duty-free privileges for all ports at all islands in the Commonwealth. DFS was granted the first 20-year master concession in November of 1985. In 1997, a second master concession was granted to DFS for an additional 10 years. It will end next month.

The law permits a concession to be renewed with an incumbent concessionaire based on negotiated terms if CPA determines after a public hearing that it is in the best interests of the Commonwealth to negotiate the renewal.

In 2014, DFS requested that CPA negotiate a renewed master concession. A public hearing was held on Oct. 16, 2014. Eighteen persons testified, all in support of negotiating with DFS. Written testimony was received from 435 persons, all but one in support of negotiation with DFS. One vendor submitted a letter of interest in bidding, but did not attend the hearing.

At its recent September meeting, the CPA board voted to not negotiate a new Commonwealth-wide master concession with DFS. Citing the pending Senate Bill 19-48 that would dissolve a Commonwealth-wide master concession and create three island master concessions, one each on Rota, Tinian, and Saipan, the CPA board resolved to issue requests for proposals for each island’s master concession.

The introduction of Senate Bill 19-48 by Senate President Victor Hocog on June 18, 2015, was a “game changer,” according to Aldan-Pierce, because it would create three island master concessions.

Under the current master concession, DFS has not opened a duty-free shop at either the Rota or Tinian airport due to low passenger traffic and low retail demand.

“We want to see Rota and Tinian benefit from having their own airport shops. If the casino wants to open a shop on Tinian, for example, that would certainly help Tinian’s development,” said Aldan-Pierce.

The legislation passed the Senate on July 23, 2015, and is now pending in the House of Representatives.

Aldan-Pierce said that DFS supports the Senate bill “with appropriate amendments.”

“The bill does not harm us. We want to renew our concession at the Saipan airport only,” she said. “DFS wants to keep its shop open at the Saipan airport. We want to protect the jobs of our employees at the airport. Some have worked there for 20 years.”

Aldan-Pierce added: “We see a potential for great growth in tourism and a need to expand the airport. Historically, we have provided the funding for the construction and expansion of the Saipan International Airport. We want to do that again. We hope not only to keep our shop, but also to expand its size in a larger airport.”

DFS paid over $7.6 million to CPA in 2011, 2012, and 2013, according to testimony at the public hearing. It is one of the largest employers of resident workers in the Commonwealth.

Aldan-Pierce is also chairperson of the Marianas Visitors Authority, a public agency that works to increase tourism in the CNMI. (Saipan Tribune)