CPA rolls back airport fees

The Commonwealth Ports Authority on Saturday decided to roll back existing airport departure facility charge from $8 to $5.79 per passenger, a development that resulted from a series of discussions between CPA officials and CNMI signatory airlines representatives.

Board Chair Roman S. Palacios said the rollback will result to substantial savings on the part of the airline companies without adverse impact on CPA’s capabilities to meet its airport bond indenture.

The decision by the CPA Board of Directors came in the wake of pressing requests from foreign carriers to reduce airport charges to the pre-March 2000 level.

Mainly because of recommendations by its United States-based financial consultants, CPA increased airport charges beginning March 1, 2000 in efforts to meet the requirements set by its 1998 airport bond agreement.

Executive Director Carlos H. Salas said the rollback is retroactive to March 1, 2000 although airlines are not getting cash refunds for the amount that they have paid CPA in excess of the rolled back $5.79 per passenger fee.

“What the airlines will get is a credit in their outstanding accounts with CPA. We will deduct from their outstanding accounts the amount they should be getting which is actually in excess of what they should pay us because of the rollback,” explained Mr. Salas.

He pointed out ,however, that only the passenger departure fee has been rolled back. Landing and deplanement fees, which were also raised in March 2000, will be collected according to their existing rates.

The rollback will take effect only until October 31, 2000, or at the same time when the CPA Airline Incentive Program expires.

Board Director Roman Tudela previously asked financial consultant Rex Palacios to carry out a study on the possibility of a rollback in passenger departure fees from $8 to $5.79, following complaints by airline companies of the restrictively high airport charges in the CNMI.

The study emphasized that CPA’s financial capability to continue meeting the bond indenture requirement will not be adversely affected by a reduction in fees but only if the rollback is implemented until the end of October.

Mr. Tudela explained CPA’s existing bond indenture may be jeopardized if the rollback will be extended beyond the Fiscal Year 2001, pointing out that this would need additional studies to make sure CPA’s revenues will be able to meet the debt service coverage ratio.

The ports authority deferred action on the request by carriers for a reduction in airport charges until the agency was given assurance by the airline companies that passenger traffic in the following year will improve to mitigate the impact possible losses on CPA revenues because of the rollback.

During a meeting between CPA officials and airline executives last week, most carriers disclosed an average of five percent increase in the projected number of passenger traffic to the Northern Marianas between now and the year 2001.

Continental Micronesia stressed it will maintain its current schedule with the deployment of four nonstop Saipan-Osaka flights per week starting February 1, 2001 to accommodate the expected influx of Japanese tourists during the summer.

Japan Airlines and Northwest Airlines both projected an increase of five percent in passenger traffic, while Asians Airlines anticipates visitor arrivals from Seoul and Pusan in South Korea to grow by a whooping 35 percent.

Saipan Station Manager Charlie Ling said Mandarin Airlines may be able to increase flights to Saipan when three new Boeing 737-800 aircraft purchased by its parent company, China Airlines, arrive in January and February of next year.

Mr. Ling said Mandarin Airlines may deploy an additional flight per week by then, which should bring the number of Saipan arrival by the carrier to three per week.

CPA would need at least $1.7 million in annual legislative appropriations in order to permanently reduce current airport charges which carriers claim make air transport service to the Northern Marianas more costly than in other destinations in the region.

The ports authority has actually suspended the implementation of the new rates from October 1999 to March 2000, pending pledges from the Legislature of annual government subsidy.

CPA has been urged to increase its current $0.85 landing fee at the airport to $1.40 per thousand pounds for signatory airlines. The financial consultants said this is necessary as this is one of the two options left for the Ports Authority to pay its bond by 2008.