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Deferment of airline incentive plan rejected • Pushing back program would put CPA in deeper financial mess, says chairman Roman Palacios
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Posted on May 25 1999
Commonwealth Ports Authority Board Chairman Roman S. Palacios has denied the request of Northwest Airlines to alter the date of the implementation of CPA’s Airline Incentive Program because of its commitment to generate the needed revenue to repay its $20 million airport debt.
In a letter sent to Thomas C. Kennedy, finance director of Northwest, Palacios said the ports authority has already deferred the increase in airport rates until March 2000 to encourage new airlines provide service in the CNMI and revitalize the CNMI economy.
In expressing his regrets to Kennedy, Palacios said the financial difficulties besetting the company plus the decline of the island’s tourism economy have made them unable to change the incentive program’s timing.
The ports authority is offering a 50 percent discount on arrival and departure fees to airlines that will be able to bring in an additional 15 percent increase in the number of passengers that they bring in using the first six months if fiscal year 1998 as the baseline data. It took effect on May 1, 1999 to February 29, 2000.
However, Northwest sought an extension on the effective date of the incentive period because it cannot immediately change its current aircraft from a DC 10 to a B747. The airline is still in the final planning stage of deciding the future schedule for Saipan which is scheduled to be announced no later than early June.
The Governor’s Aviation Task Force and the Marianas Visitors Authority have earlier appealed to Northwest to consider starting the Osaka-Saipan service at least four times a week in a move to revive the ailing tourism industry.
Tourism officials were also hoping that the airline would be able to fill in the routes abandoned by Continental Airlines which has continuously carried out a reduction in service in the CNMI due to low traffic demand.
