CPA to charge head tax on ferry passengers • Ports authority rejects Tinian Dynasty’s plea to reduce fees

Confronted with declining revenues and huge debt, the Commonwealth Ports Authority yesterday rejected the appeal of Hong Kong Entertainment (Overseas) Ltd. board chairman Michael Kwan to lower passenger fees in order to assist its financially-beleaguered subsidiary, Tinian Shipping.

Instead, the ports authority will carry out its own collection of the $4.50 regulatory passenger fee at the Saipan Seaport. “We will set up our own collection system so that we get the payment for each passenger as soon as possible. We will relieve them (Tinian Shipping) of the burden of collecting from the passengers,” said Salas.

The $4.50 regulatory passenger fee is the new rate which the ports authority will be charging starting July 1 after the board approved an increase in the Seaport fees and charges. The current passenger fee rate is $3.75.

CPA is working out a payment scheme with Tinian Shipping for the settlement of accrued passenger fees. The ports authority has to generate as much revenue to pay the $33 million debt of its Seaport Division.

Tinian Shipping ferried an average of 22,000 passengers a month covering January to May 1999. Ninety-four percent of the total 106,966 passengers during the five-month period were non-paying. Majority of the six percent paying passengers came from Tinian.

In seeking assistance from the ports authority, Kwan offered two options: reduction of passenger head tax from $3.75 to $1 for the company staff for two years and charging paying passengers $3.75 during the period.

Hong Kong Entertainment spent over $12 million when it acquired the two high speed ferries — M/V Tinian Express and M/V Saipan — to service tourists coming from Saipan to Tinian.

Unfortunately, poor tourist arrivals and reduction in international flights coupled with Asia’s economic crisis have pushed the company into a financial distress since its operation in May 1998. Every month, Tinian Shipping incurs a net loss of over $300,000.

While they are willing to pay the head tax, Kwan explained the regional crisis has greatly affected the expected revenue from the ferry, hotel and casino. He added that despite marketing efforts, tourist arrivals in the island-municipality of Tinian remain very low. The financial situation is so critical that the company has missed mortgage payments for the ferries.

Debis Financial Services Inc., the company which financed the acquisition of the two vessels, has filed a lawsuit before a federal court for alleged non-payment of a $7.6 million loan.

Kwan said he has managed to make an out of court settlement to prevent the seizure of the two ferries which are vital to the service of Tinian and Saipan, especially for Tinian residents who have relied on the vessels as their only means to go off-island.