Saipan Air's historic launch and the millions of dollars it would infuse into the economy by bringing in more tourists from Japan and China could have been the single major driving factor in the CNMI's economic recovery in 2012 but yesterday's announcement that the airline is ceasing its operations came as a shock, with the Fitial administration and the business sector describing it as “a sad day for the CNMI.”
“This latest development is certainly a devastating blow to the widespread anticipation of increased visitor arrivals and much needed economic stimulation. Truly, it’s a very sad day for the CNMI,” press secretary Angel Demapan told Saipan Tribune.
The Fitial administration projected $5 million to $7 million in additional direct and indirect tax revenues from Saipan Air's operations, and the governor was poised to revise his $102 million budget submission for fiscal year 2013.
The additional projected revenues were meant to restore most government employees' 80 work hours biweekly, after two years of having 16-hour pay cuts per payroll.
But the Fitial administration is “not completely” giving up on revising the $102 million budget, down from over $200 million just a few years back as the economic conditions worsened as a result of the demise of the garment industry, uncertainties related to immigration, and a downturn in tourism.
“The administration is still analyzing budget figures through the weekend. A decision on any form of budget revision could come as early as Monday,” Demapan said.
Douglas Brennan, president of the 150-member Saipan Chamber of Commerce, separately said yesterday that a lot of businesses in the CNMI were looking forward to increased business if and when Saipan Air begins its operations, but the circumstances of the past few days are beyond Saipan Air's control.
“It's a sad day. Saipan Air put a lot of effort, time and money to it. Everybody was looking forward to additional airline seats. It's a big disappointment that it's not going to happen but it's something beyond Saipan Air's control,” Brennan said.
Rep. Ray Yumul (R-Saipan) said last night that Saipan Air “would have helped revive the tourism economy.”
“My thoughts are now with the employees who will not have employment. As I understand, some have left their prior jobs to work for Saipan Air,” he said.
Rep. Ray Palacios (Cov-Saipan) said Saipan Air's operations “would have been a big boost to the CNMI economy, the revenues derived from it by the businesses and the government would have been great.”
“It's disappointing for the business and I don't blame Saipan Air because it was beyond their control. Their business partner, Swift Air, that was supposed to provide the airplanes but didn't deliver on that promise,” Palacios said, adding that he wishes Tan Holdings well in its other business ventures.
Palacios said it is also time for the CNMI to be open minded about other proposals to boost the economy such as legalizing casino gaming on Saipan.
“It's not a 100 percent guarantee but at least open the door,” he said.
House floor leader George Camacho (Ind-Saipan) said it is “sad” and “unfortunate” that it has come to this.
“I totally understand why a decision to cease operations had to be made. I feel for Tan Holdings and the Tan family,” Camacho said.
He believes Tan Holdings will be able to survive this ordeal and continue its success if not in the area of airline, then in other businesses.
Tan Holdings, the parent company of Saipan Tribune, own major businesses in the CNMI and in the region, including hotels.
Saipan Air received notice of cancellation from Swift Air a week before Saipan Air’s scheduled July 1 launching despite Saipan Air’s payment of $1.26 million in security deposits and good faith negotiations with Swift Air.
Swift Air later filed for bankruptcy.
House Commerce and Tourism Committee chair Rep. Edmund Villagomez (Cov-Saipan) said he hopes it will turn out well for Saipan Air.
“And if there is any way my committee or the Legislature can help, I stand ready to assist,” he said.
During presentations early this year, Saipan Air's launching is set to increase arrivals by 22 percent in 2012 alone and by 97 percent in 2015. Tan Holdings president Jerry Tan had spoken of a private sector-driven economic recovery, optimism, belief in the CNMI and its people, not losing track of the only industry that fuels growth which is tourism, and the launching of the CNMI’s first local airline called Saipan Air.