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CPA to decide on Northwest’s plea for incentives
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Posted on Jul 15 1999
The Commonwealth Ports Authority is set to decide today on the request of Northwest Airlines for a seven-month extension of its incentive program, according to CPA Executive Director Carlos H. Salas.
Salas explained the board and management will analyze its effect on the financial situation of the ports authority, particularly its impact on the capability of the Airport Division to repay its $20 million debt.
“If we grant Northwest’s request, we should also provide the same extension to the other airlines to be fair to all the airlines,” said Salas. The ports authority is scheduled to implement new airport rates in March 2000 as it is under pressure to generate the much-needed revenue to meet debt service coverage.
CPA has granted a 50 percent cut in departure and arrival fees to all signatory airlines servicing the CNMI to entice them to increase traffic and revive the ailing tourism economy.
The incentive, which took effect on May 1, 1999 and will continue until February 29, 2000, will be given to carriers that can provide an additional 15 percent increase in the total number of passengers that they bring into the Northern Marianas. CPA will compute the grant of the incentive using the first six months traffic in fiscal year 1998 as the base.
In anticipation of the influx of visitors this summer, Northwest is planning to replace its current DC 10 aircraft to a B747 to accommodate the additional number of passengers coming to Saipan.
However, in exchange for the increased seat capacity, Northwest wants the ports authority to extend its incentive program until October 2000 to make it economically feasible for the airline to use a bigger aircraft.
In a letter to CPA, Martin Gross, Northwest general manager for the Philippines and Micronesia, warned that the 747 will be assigned to other competing Northwest Airlines regions which are simultaneously pushing for an upgrade of their aircraft if the ports authority fails to make a decision. The 371-seater Boeing 747 aircraft will be able to accommodate an additional 49 passengers compared to a DC 10.
This is the second time that Northwest has made a request to extend its incentive program.
