DUE TO AIRPORT FEE ROLLBACK CPA owes signatory airlines $400K

The Commonwealth Ports Authority owes CNMI signatory airlines close to $400,000 in total credits for the payments they have made between March and June 2000, when airport departure fee was raised to $8.00 per passenger which the agency has retroactively rolled back to $5.79.

A financial analysis report prepared by consultant Rex I. Palacios disclosed that as of June 30, 2000, rollback credits owed by CPA to international airlines amount to $385,676, and about $10,500 to commuter carriers.

Japan Airlines, which has the highest passenger traffic count of 67,321, will be receiving $148,780 in total credits from the ports authority during the March-June 2000 period.

Arising from its decision to roll airport facility charge to the pre-March 2000 level, the report also revealed that CPA owes Continental Micronesia some $95,300 in total credits; Northwest Airlines, $79,415; and Asiana Airlines, $57,380.

New industry player Mandarin Airlines, which launched its maiden flight between Taipei and Saipan in May 2000 after striking an agreement with the Tinian Dynasty Hotel and Casino, will receive $4,775 in credits.

Domestic carriers Freedom Air and Pacific Islands Aviation are getting $5,250 and $5,219 in credits respectively from the ports authority, according to the report submitted by Mr. Palacios to the CPA Board of Directors.

CPA has decided to roll back airport departure facility charge from $8 to $5.79 per passenger following a series of discussions between agency 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.

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.

The rollback will take effect only until October 31, 2000, or at the same time when the CPA Airline Incentive Program expires.
Mr. Salas said CPA will continue to meet the bond indenture requirement despite the reduction in airport facility charge but only if the rollback is implemented until the end of October.

During a meeting between CPA officials and airline executives, 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.

CPA had been advised by its United States-based financial consultants to increase airport charges as this is one of the two options left for the Ports Authority to pay its bond by 2008.