Biba Continental!

A memo to some of our government officials: Continental Airlines exists to make a profit. It exists to serve the financial interests of its shareholders. There is absolutely nothing wrong with this profit motive.

Our government officials need to understand that Continental Airlines does not exist to incur financial losses merely to make the CNMI government happy. If some government officials are unhappy with Continental’s decision to reduce flights, they only have themselves to blame.

Continental cannot be blamed for making sound and economically rational decisions. Continental has a moral obligation to provide the best possible returns on invested capital. The company has a duty to its shareholders. It has a duty to protect its bottom line.

The CNMI government has no right to coerce Continental into increasing its CNMI bound flights. It has no right to demand that Continental make direct Saipan-Japan flights. Continental Airlines has every right to adjust its flight route according to actual market demand.

Like all profit-making corporations, Continental Airlines must operate on market demand, not political demands. If it is profitable to increase Saipan bound flights, Continental will do so. But if it is unprofitable, if market demand is weak, then Continental should quite logically reduce its capacity to reflect the prevailing demand.

Impoverished countries such as Sri Lanka and Zimbabwe would no doubt love to have Continental and other air carriers increase their flight service to those areas. But even if Continental boosted its flight service to Sri Lanka, it is extremely unlikely that the Sri Lankan tourism industry would flourish as a direct result.

Our inept government can only blame itself for Continental’s understandable decision to reduce or eliminate flights. It can blame itself for increasing CPA landing fees and then actually expecting Continental to be greatly encouraged by the added costs of doing business. It can blame itself for failing to successfully promote our tourism industry. (We can blame MVA for that failure.) It can blame itself for stifling that market demand in the first place–by increasing taxes and regulations. Our government can certainly blame itself for imposing the Foreign Investment Act of 1997, with its absurd $100,000 “security” deposit. Our government can blame itself for driving out market demand.

Continental Airlines is only reacting to our government’s follies. Continental is not to blame for looking out for its shareholder interests.