CPA buckles down on port fees

The Commonwealth Ports Authority board has deferred increasing the airport fees yesterday after the Marianas Visitors Authority pleaded for more time to study the effects of the planned rate hike on the half-a-billion-dollar tourism industry.

MVA board chairman Dave M. Sablan warned that the planned rate increase would waste all efforts that they have been doing to entice more airlines provide service and increase their flights in the Northern Marianas.

CPA held a dialogue with MVA that lasted for more than three hours as part of its series of consultations before making any decision.

The ports authority is planning to carry out a 64 percent increase in landing rates from $.085 to $1.40 per 1,000 pounds; and 38 percent hike in departure facility charge. It has been 10 years since CPA last raised its airport fee.

During the meeting, Sablan said MVA will conduct its own analysis on the planned increase to help the ports authority in making a decision that would be acceptable to all concerned.

“Our feeling is that it will discourage people from doing business with us because we have very aggressive destinations in other Asian countries that have become cheaper as a result of the currency devaluation,” said Bart Jackson, board member of MVA.

However, the ports authority is forced to carry out the increase in rates to raise money for the payment of the $53 million bond, said Carlos H. Salas, executive director.

“When CPA decided to float the bond, it took that responsibility alone. We did not get any guarantee from the government. What CPA is trying to do is fix the situation because the arrivals have declined drastically even if we have not raised the fee for 10 years now. Maybe we have to ask what does the CNMI has to offer as a destination,” said Salas.

CPA financial consultant Rex Palacios explained to MVA board members the airport study made by Ricondo & Associates which projected a mere 4.5 percent growth for the airport this year.

According to Palacios, MVA must provide the ports authority the data on the number of tourists it will be able to bring in to the Northern Marianas so that CPA can make a comparison of its own study.

If the ports authority will not increase its airport fee, the Northern Marianas must attract some $740,000 visitors to the island so that CPA can earn the needed revenue to repay its debt.

CPA board member Roman Tudela said MVA must be able to quantify its projections of arrivals to help the ports authority in making a decision on the amount of increase it has to make. “I certainly hope you share our concern in paying the bond because CPA will be in default if we don’t meet the 1.25 debt service,” he said.

CPA is currently seeking an investment grade bond rating to the $53 million bond it issued in March 1998 which hinges on the increase in airport fees.

Without any increase by March 15, 1999, the bond interest rate will go up from 6.25 percent to 6.70 percent. Failure to get investment grade rating would make it difficult for the agency to float successive bonds.