CPA OKs fees cut •Move is aimed at reviving tourism

The Commonwealth Ports Authority board yesterday decided to provide a 50 percent cut in departure and arrivals fees for all airlines servicing the Northern Marianas in a move to entice them to increase traffic and revive the ailing tourism economy.

However, the incentive which shall take effect on May 1 1999 to February 29, 2000 will only be given to carriers that can provide an additional 15 percent increase in seating capacities.

Beginning March 1, 2000, the ports authority will implement the new rates for the airport which was suspended in a move to help the island’s main source of revenue recover. This means that passenger facility charge shall increase by 39 percent from $5.79 to $8.00 per passenger and the landing fee shall jump by 65 percent hike from $.85 to $1.40 per 1,000 pounds.

The board did not grant the request of the Aviation Task Force to reduce the landing fees because of the difficulty in providing equal incentives as the four airlines currently servicing the CNMI are using various types of aircraft. Northwest is using DC10, Continental is using a B727 and B757, Japan Airlines is using a B747, DC10 and B767 and Asiana is using a B767.

CPA legal counsel Jose dela Cruz warned the board against providing a 50 percent reduction in landing fee just to encourage airlines that are using smaller aircraft to use a B747 since it will become discriminatory and may encourage lawsuits.

“I am positive that the airlines would be happy to receive the incentives which we have decided to offer,” said Salas. The ports authority also did not make any decision in providing incentives to airlines that will serve new markets because board members have yet to study the impact on its operations.

CPA financial consultant Rex I. Palacios reminded board members not to make hasty decisions in providing incentives because they have always to think of finding ways on how to repay the $20 million airport bond.

“I think to a certain extent, we are barking up the wrong tree. The real concern really is the obligation that we have to meet right now which is the debt service ratio,” he said. He added that the ports authority promised its trustee, the Bank of Guam, that it will meet certain conditions which will ensure repayment of debt.

In providing incentives, Palacios said the board must make sure that these would trickle down to the passengers since they are the main source of revenue for both the airlines and the destination.

But board member Roman Tudela said it would be difficult to dictate to the airline executives on how their savings through the incentives would be spent.

Giving a 50 percent discount on fees to the four airlines now servicing the CNMI without any assurance that they would bring in additional passengers would result in total revenue loss of $160,175 per year, said Palacios. To recover revenue loss, some 55,328 tourists must visit the CNMI every year.

The board granted a 50 percent cut in arrival and departure fees after Northwest Airlines sent a letter to the Aviation Task Force seeking a reduction in landing and passenger departure fees for the carrier to upgrade its aircraft from a DC10 to a B747.

Northwest, which is just using a DC10 for its seven daily Saipan-Narita flights, claimed that the CNMI would realize an annual earning of $23.1 million if the carrier would be able to bring in visitors using a B747 with a seating capacity of 303.