Northwest seeks delay in CPA incentive plan • Executive says airline unprepared to upgrade aircraft

Posted on May 21 1999

Northwest Airlines has asked the Commonwealth Ports Authority to defer the implementation of its incentive program for airlines servicing the CNMI because it cannot immediately upgrade its DC10 aircraft to a B747.

The request was made by Thomas C. Kennedy, director, finance of the Pacific Region in a letter sent to CPA board chairman Roman S. Palacios. All signatory airlines servicing the CNMI will be given a 50 percent cut in departure and arrival fees in a move to entice them to increase traffic and revive the ailing tourism economy.

The incentive which took effect on May 1, 1999 to February 29, 2000 will be give to carriers that can provide an additional 15 percent increase in the number of passengers that they bring in using the first six months traffic in fiscal year 1998 as the base.

In a memorandum issued to Palacios, CPA Executive Director Carlos H. Salas reminded the board chairman that the period chosen for the incentive program is critical in terms of generating the needed revenue to meet debt service coverage and the imposition of the new airport rates in March 2000.

According to Kennedy, the incentive offered by the ports authority will provide a significant boost toward the airline’s objective to upgrade its aircraft. He said Northwest is in the final planning stages of deciding the future schedule for Saipan, which is scheduled to be announced no later than early June.

“However, due to scheduling complications and aircraft maintenance commitments, it is unlikely we could implement scheduled 747-200 service before the fall,” said Kennedy. In order for Northwest to avail of the reduced fees, he asked the board of directors to move the implementation of the incentive from the time it will upgrade its aircraft for a period of 10 months.

Kennedy expressed hope that the ports authority can give him an answer on whether or not his request can be granted by May 21 since he will discuss the issue with the planning and scheduling team in Minneapolis.

Northwest had promised to upgrade its DC10 service to the Northern Marianas by flying the 371-seater Boeing 747 aircraft to boost passenger arrivals by additional 49 daily.

Despite the financial difficulty besetting the ports authority, the board granted the incentive to signatory airlines. However, it did not approved a reduction in landing fees sought by Northwest since it will be difficult to provide equal incentives to all the four airlines which are using various types of aircraft.

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