Carriers save $200K from CPA’s incentive program

Major signatory airlines flying the Saipan route made an estimated $200,000 savings after the Commonwealth Ports Authority refunded almost 50 percent of the departure facility charge collected from them.

CPA Executive Director Carlos H. Salas said CPA ordered a 50 percent off on departure facility charge since November last year and the discounted rate is part of the Airline Incentive Program.

Signatory airlines usually pay the departure facility charges in advance and CPA has to credit it back to airline companies after CPA decided to extend the program’s implementation, said Mr. Salas.

The implementation of an incentive program gives signatory airlines 50 percent discount on departure facility charge if they are able to bring their visitor traffic 15 percent above their current passenger haul.

The CPA Board of Directors also approved the adjustment to existing departure facility charge from the current $8 per passenger to $6.35 beginning Jan. 1, 2001. The new rate will be in effect until Sept. 30, 2001.

Board Chair Roman S. Palacios said the new rate reflects the financial outlook for the ports authority, which is currently servicing a multi-million bond floated in 1998 to support improvements projects at both air and sea transport facilities.

Mr. Palacios explained that extension of the Airline Incentive Program, which has been called for by carriers servicing the CNMI, will be retroactive to Nov. 1, 2000 and will stretch up to the end of the current financial year.

However, the CPA management pointed out that the current departure facility charge of $8 per passenger will remain in effect and has been adjusted to $6.35 since Jan. 1, 2001, which is higher than the pre-March 2000 level of $5.79 per passenger.

Mr. Palacios stressed that the new rate was agreed upon in consideration of the extension of the Airline Incentive Program until Sept. 30, 2001 and the agency’s current financial obligations including repayment of the $53 million bond floated in 1998.

The Airline Incentive Program will also be extended to airline companies that are servicing new routes, including those recently launched like Mandarin Airline’s service to Taipei, Asiana’s Pusan route, and Japan Airlines’ Osaka and Fukuoka service.

The CPA Board decided to extend the Airline Incentive Program and roll back the $8 departure facility charge to $6.35 due to presentations made by financial consultant Rex Palacios who noted that CPA’s actual revenue is higher than the projected yield.

Mr. Palacios said the adjustment of the airport facility charge per passenger 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 and extend the implementation of the Airline Incentive Program. (EGA)