‘Asiana’s closure shouldn’t come as a surprise’

The impending closure of Asiana Airlines’ Saipan office and the forthcoming end of its Incheon-Saipan route was foreseeable and shouldn’t come as a surprise, according to NMI delegate candidates.

Last week, Asiana Airlines’ Saipan office announced that come June 30, it will be closing its doors and ending its over 30 years of air service to Saipan.

NMI delegate candidates and the Saipan Chamber of Commerce has expressed their thoughts on the announcement and, although they hope for the best, they believe the news should not come as a surprise.

Rep. Ed Propst (D-Saipan), in a statement to Saipan Tribune, said Asiana Airlines has been operating on a charter basis and telling the CNMI for months now of their plan to close in June.

“News of the actual closure shouldn’t exactly come as a surprise. I understand the pending merger with Korean Airlines is a factor and is expected to be completed later this year. Asiana has also told us that the previous Commonwealth Ports Authority board leadership’s decision last year to drastically raise fees by 90% was making it much harder for them to continue operations in the CNMI. The new CPA board has tried to help by adjusting the fees, but perhaps the damage was already done,” he said.

Despite this, Propst says it is still sad news to have a long-time CNMI partner close its doors. However, Propst remains optimistic and says he hopes the Marianas Visitors Authority’s efforts to engage with Korean Airlines to provide Seoul-Saipan flights, is fruitful.

“We are all sad to see Asiana go, and we thank them for their partnership and many years of service to the CNMI. We hope that after the dust settles from the merger, new flights from Korea will be added, especially since we have been seeing such healthy demand from that market. I’m glad to hear that MVA has been proactively engaging with Korean Airlines to consider opening a Seoul-Saipan route, and that Jeju and T’Way are looking to add flights to meet demand. This is hopeful and welcome news. I also urge the new CPA board to reverse the damage done by the previous board, and to move swiftly on infrastructure improvements and new incentives to attract and retain airlines in the CNMI,” he said.

Propst is running for NMI delegate under the NMI Democratic Party.

Former CPA chair King-Hinds, in a statement to the media, said what is happening today is foreseeable. Not because of CPA’s need to increase its rates to remain self-sustainable, but because of the administration’s choice leading up to both Asiana and Hyatt’s closures.

“Right after this governor was inaugurated, my first words to him was that his success is the CNMI’s success and I was going to help in any way I can to help him succeed. One of our first official discussion late January of 2023 was the new rates. CPA has a federal mandate to be self-sustainable and the new rate methodology ensures that CPA is able to pay for its personnel and operations. CPA also knew that absent a subsidy, these new rates will make it cost prohibitive to fly to the CNMI and that is why on April 17, 2023, CPA sent a letter to DOT Sec. Pete Buttigieg requesting for additional supplemental operational funds in the amount of $30 million and explained to him the cascading impact these new rates will have on CPA and the CNMI’s economy if we did not get any assistance in the absence of more tourists landing. I wrote a letter to the governor and spoke to him numerous times begging for him to support CPA’s request and even drafted a letter on his behalf, but he never signed off on it and never supported the request. The fact is, we need more tourist landing and our governor is not willing to lift a finger to pursue all markets. He was asked to apply for the Annex VI exemption and he refused. Because CPA needs more tourist landing to bring down the rates, it pursued the exemption on its own. It’s mind-boggling how Chinese tourists are welcomed in America and good for the American economy, but it is a national security risk for the CNMI,” she said.

King-Hinds said she can continue to be blamed for the decisions made under tenure, but the decisions made has been data- and business-driven with the input from subject matter experts in the industry in compliance with federal requirements.

“This governor can continue to blame me personally as former chair of CPA for raising the rates and his surrogates can continue to personally attack me, but at the end of the day, I’ve done everything within my power and authority to answer the call for help from our business community. He can’t say that he doesn’t know or that it wasn’t foreseeable that all of this was going to happen because I’ve met and spoken to him several times personally, I have been in the news, and have written letters to the federal government about this issue. I went as far as attempted to coordinate a door-knocking trip to D.C. with him, the governor of Guam, Guam Airport Authority, DOD, and the Chamber while I was chair but he refused. At this point, the path to total economic collapse is his choice,” she said.

King-Hinds is running for the delegate seat under the CNMI Republican Party.

John “Bolis” Gonzales, who is running an independent, said the permanent closure of Asiana Airlines’ operations on Saipan after more than three decades is a sad poignant reminder of just how volatile and fragile the CNMI’s small economy of scale is largely driven by external factors, including the unrelenting exorbitant costs of doing business here.

“Regretfully this has come on the heels of Hyatt Regency Saipan’s decision to close operations. The Korean won currency’s depreciation against the U.S. dollar, the increase in passenger fees imposed by CPA on airlines, and the mounting financial challenges besetting Asiana has proven insurmountable in its corporate strategy and decision to reorganize as it prepares to sell its assets to another major Korean airline carrier,” he said.

Having experience in economic matters and knowledge in global and regional markets from my graduate studies in business, and as a policy analyst and/or advisor and chief of staff in prior gubernatorial administrations, Gonzales said he understands and sympathizes but equally as important, he pledges to prioritize the CNMI’s economic revival should he win the race for NMI delegate.

“In the outset I will prioritize my efforts to secure a waiver of the current U.S. Cabotage law in order to reduce the exorbitantly high costs of air travel into and from the Northern Marianas to incentivize more flights and seat capacities from our major tourism source markets in the Asia Pacific region and our neighbors in Guam and Micronesia,” he said.

Gonzales notes that the CNMI is inherently a HUB Zone (Historically Underutilized Business).

“Our extenuating geopolitical circumstances and remoteness, and prolonged volatile business environment due to unilateral decisions of the U.S. federal government (Congress and White House) eroding its original promises and pledge that led to the mutual agreement of our Covenant to usher in a progressively higher standard of living to upgrade the quality of our peoples’ lives and achieve a sustainable island economy, etc. provide me just the compelling recipe or platform with valid justifications to sensibly and diplomatically seek effective solutions and support accordingly. I cite a few examples of U.S. federal policy decisions that have since triggered our volatile economic demise since 1998, include eroding our competitive economic advantages provided in our Covenant, namely revoking our Headnote 3(a) that exempted the NMI from export tariffs for our once $1-billion apparel industry in the late 1990s, revoking our once NMI control of immigration in May 2008 under the U.S. Consolidated Natural Resources Act (CNRA 2008), which frankly violates the NMI’s right to control our labor, “indirectly interfering” by unilaterally deciding which foreign nationals are allowed to enter the CNMI to visit “and to work.” These are on top of the inconvenience related to bureaucracy with U.S. immigration and Homeland Security processing of laborers since, which, together with the continuing lack of one-stop business processing by the CNMI government, make it a non-conducive environment to do business here,” he said.

Furthermore, Gonzales said he will explore effective strategies and prioritize comprehensive customized legislation and U.S. federal policies tailored for the CNMI to steadfastly revive our depressed economy in view of the extenuating conditions alluded above that have led to our extraordinary financial and socioeconomic crises since 1999 to date.

“To be sure another hallmark of my leadership is I will espouse to “all hands on deck” with a concerted effort by collaborating with our executive and legislative branches and our respective mayors and municipal councils, among key stakeholders as your NMI delegate, including periodic public town hall meetings with our communities on Luta, Tinian, Saipan, and Northern Islands for transparency and accountability to expect results throughout my tenure as your humble elected servant for and on your half,” he said.

Saipan Tribune reached out to NMI delegate candidate Liana Hofschneider for a comment but as of press time, she has yet to issue a statement.

Meanwhile, the Saipan Chamber of Commerce says it remains hopeful that MVA is successful in securing an alternate legacy carrier, such as Korean Airlines, soon.

“The loss of a legacy carrier Asiana who provided first and business class service will put a damper on our effort to promote quality-over-quantity. We are hopeful that MVA is successful in securing an alternate legacy carrier, such as Korean Airlines soon, so we don’t lose much momentum from our Korean market which presently makes up over 80% of our visitors. Unfortunately, because we are heavily reliant on this market for our visitors at this time, the impact of Asiana’s closure will be felt for perhaps the remainder of 2024,” said the Chamber in a statement to the media.