Legislators asks CPA to defer hikes

Legislators yesterday frowned on a proposed rate increase at the airport to repay some $53 million in debt owed by Commonwealth Ports Authority due to potential negative impact on the local tourism economy that has been battered already by plummeting tourist arrivals.

Instead, they urged CPA to defer the hike for at least one year and give way to a plan by the Aviation Task Force to reduce the landing fees paid by airlines in a bid to entice the carriers to increase their flights to the Northern Marianas.

In a meeting with members of the House of Representatives and the Senate, ports authority officials defended the move as an urgent measure to generate additional revenues to meet its various financial obligations, including debt servicing.

But Senate Vice President Thomas P. Villagomez maintained CPA’s financial condition may improve if it agrees to slash the landing fees by half as part of the efforts to assist airlines that will open new routes for direct link between Saipan and major destinations.

“If they do get more passengers coming in here, the rate increase might not be needed at all,” he told in an interview after the meeting.

“So what we are trying to say is that ‘why don’t you hold off for at least a year your plan and we will try to work with the airlines in trying to get them more passengers and generate more revenues for CPA,” the senator added.

Chair of the Senate committee on Public Utilities, Transportation and Communications, Villagomez has been a member of the government body tasked to map out a strategy that will encourage airlines to provide more flights to the CNMI.

Lawmakers have expressed worry that the CPA plan may be counterproductive to ongoing efforts aimed at stirring the local tourism industry. The sector has been reeling from the fallout of the economic recession in Asia, the island’s prime market.

Rep. Manuel A. Tenorio, who earlier had sponsored a resolution calling on CPA to reduce landing fees by 50 percent, underscored the need to come up with incentives for airlines to open routes following drastic cutdown in Continental Micronesia’s flights to the CNMI.

“How do we address the situation of airlines pulling out from the market while we try to increase the fees they pay to the government,” the representative asked during the meeting.

CPA Executive Director Carlos H. Salas said that while the ports authority has tried to forego any rate increase in the past 10 years, the critical state of its finances prompts them to take that option.

He also assured that even if the hike is implemented now, it will only take effect by September this year — thus, giving the Aviation Task Force the grace period it needs for its plan.

“It’s just wrong timing but we must face the music and CPA has got to take care of its own problems,” he said after the meeting, adding that another alternative is to ask financial assistance from the legislature.

Under the proposal to be decided today by the CPA board, the passenger facility charge will go up by 39 percent from $5.79 to $8.00 while the landing fee will be from 85 cents to $1.40 per 1,000 lbs.

Amid mounting losses from its operations due to dwindling tourists arrivals, Salas had expressed concern that the ports authority will not be able to meet the required 1.25 percent debt service requirement on the $53 million bonds it floated last year for various improvement projects.