Chamber appeals to USDOT on China flight cap exemption

The Saipan Chamber of Commerce has written directly to U.S Department of Transportation Secretary Pete Buttigieg in support of the Commonwealth Ports Authority’s efforts to have the CNMI be exempted from the current cap in China flights.

Chamber president Joe C. Guerrero recently wrote Buttigieg to express the Chamber’s support of CPA’s application for a CNMI exemption from the current cap in China flights as established under China Order part 213. That order limits the number of flights from China to the entire United States. Starting near the end of October 2023, that limit is at only 24 flights a month. That includes flights to the CNMI, Guam, and other U.S. territories.

“The Saipan Chamber of Commerce, the most significant association of private businesses in the CNMI, wholeheartedly support[s] the CPA’s application for exemption. Our plea is simple: granting this exemption will pave the way for the revival of the CNMI’s economy. We urge you to consider this application favorably, recognizing its immense potential to bolster economic activity and improve the lives of countless residents in our community. We remain hopeful for a positive outcome that will benefit the CNMI and the many hard-working Americans who seek to live productive and successful lives here at home,” he said.

Guerrero explains in his letter that an exemption from the China flight cap is essential to the CNMI’s economic recovery.

“We believe that granting this exemption is necessary for the economic recovery and sustainable growth of our region,” he said.

Guerrero states that many local businesses continue to grapple with the repercussions of the COVID-19 pandemic, most notably the massive decline in revenue seen in the past three years.

“The CPA’s application offers a comprehensive insight into the CNMI’s unique economic landscape, especially in the aftermath of the COVID-19 pandemic. The application underscores the challenges our local businesses face, many of which continue to grapple with the repercussions of the pandemic,” he said.

To emphasize the gravity of the CNMI’s situation, Guerrero cited statistics on the state of the CNMI’s private sector according to the U.S. Census Bureau’s Economic Census. That census, he said, showed that the CNMI had 1,719 businesses in 2019.

“By 2021, we witnessed a sharp decline of 13% in the total number of businesses across all sectors due to the pandemic’s devastating impact. These impacts have had repercussions across the economy.

“Between 2019 and 2021, total employment across CNMI businesses declined by 30.9%, and annual payroll paid to employees within the economy fell by 30%, resulting in a loss of $129 million in annual employee compensation compared to the year before the pandemic. The loss of income and ability to support consumption expenditures in the domestic economy will have continued ramifications to business revenue, employment opportunities and government tax receipts.

“In total, in utilizing available government data, we estimate that total business revenue declined by $1 billion between 2019 and 2022—or a decline of 38%,” he added.

Essentially, Guerrero said, as pandemic-related restrictions on commercial activity have lifted throughout the CNMI and the world, the only constraint on the ability of the CNMI to recover from economic losses is the lack of a fuller recovery of its tourism sector.

“As of August 2023, total arrivals to the CNMI for fiscal year 2023 was 59% below [fiscal year] 2019 arrivals. The South Korean market has been the primary driver in the recovery of the tourism sector, but has only reached 74% of the pre-pandemic levels of arrivals for the market. The greatest inhibitor of tourism recovery is the lack of air service from China,” he said.

Emphasizing the role of the China market to the overall economy, Guerrero reiterated what CPA previously shared: In fiscal year 2019, the CNMI’s tourism sector catered to 186,141 tourists from China, while in the 11 months of data for fiscal year 2023, total arrivals from China was at 3,451.

“In perspective, the pre-pandemic levels of arrivals from China were greater than the total number arrivals in [fiscal year] 2023. If the CNMI were to recover the same proportion of arrivals from China as those witnessed in the South Korean market, total arrivals would have reached levels of arrivals signifying a recovery at 313,556, or only 26% below pre-pandemic arrivals. Recognizing the supreme role tourism arrivals have on the CNMI economy, along with the lack of alternatives to support wider business revenue and employment, the only avenue for economic recovery is increased effort to build back pre-pandemic tourism markets,” he said.