The Saipan Chamber of Commerce has opposed the planned increase on airport fees because it will have an adverse effect on the efforts of the CNMI government to lure investors to the Northern Marianas.
In a letter to Carlos H. Salas, executive director, Commonwealth Ports Authority, the Chamber said any hike in airport fees would most likely result in reduction in revenues as airlines may scale down its operation.
Airlines that are even considering to increase their flights may be discouraged after learning about the planned rate hike, according to David Wiseman, chairman of the Chamber’s Government Relations Committee.
With the cutthroat competition in the travel industry, the Northern Marianas may find it hard to survive considering that its neighboring destinations offer more value as a destination, Wiseman said.
While the Chamber believes that the planned airport rate increase is justified, this is however definitely not the time to implement it, he added.
Due to shrinking revenue brought about by Asia’s financial crisis, the ports authority may not be able to repay its $53 million debt if it does not raise its fees. It has been 10 years since CPA last raised its airport fees.
At the same time, the increase in fees was a condition imposed by the rating agencies — Fitch IBCA and Standard & Poor’s — before rating the bonds. Without any increase in rates and rating by March 15, 1999, the bond interest rate will climb from 6.25 percent to 6.70 percent. Failure to get an investment grade rating would make it difficult for the agency to float successive bonds.
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 a 38 percent hike in departure facility charge.
An airport study conducted by Ricondo & Associates, projected a mere 4.5 percent growth this year in the aviation division of CPA. The Northern Marianas must attract at least a total of 740,000 visitors for the ports authority to generate the needed revenue should it drop the planned airport fee increase.
The Marianas Visitors Authority has strongly opposed the planned rate increase claiming that it will destroy efforts to save ailing tourism economy. Since the Asian crisis began last year, arrivals from Japan and Korea have suffered a double-digit decline which led to the closure of many establishments in the Northern Marianas.
In a move to recapture its lost market share, the CNMI has hired the services of Tokyo-based Dentsu Inc., to help promote the Northern Marianas in Japan.