CPA: Over 70% rate increase possible
It appears the Commonwealth Ports Authority’s fears will soon become a reality as the only budget scenarios before the CPA board that would allow CPA to continue its airport operations includes a 70% to 79% increase in CPA’s current airport rental rates.
CPA is set to hold an emergency board meeting tomorrow to discuss its fiscal year 2024 budget.
According to CPA board chair Kimberlyn King-Hinds, based on the viable scenarios that would allow CPA to maintain its operations, the board will be discussing the implementation of a 70% increase or more in its current airport rental rates.
“My job is to keep the airports open and I will do whatever it takes to keep the airports open. So what we anticipate is exactly what we’ve been saying since April—we are going to see rates and charges at the airport go up significantly. Right now, we’re looking at a potential 79% increase in rates. So how do we think that is going to work out in our ability to attract airlines to the CNMI?” she said.
Airport rentals do not only refer to rent paid for actual physical space like a store, but also refers to the assigned gate for each airline, called a terminal rental.
King-Hinds shared that one of the budget scenarios that will be discussed tomorrow is raising the current average terminal rental rate per square foot from $18 to a little over $32.
“The current average terminal rental rate per square foot for fiscal year 2023 is $18. For fiscal year 2024, a possible scenario is that the rental rate will go up to $32.78. All the scenarios we’re looking at now is around that rate. It’s going to increase because we don’t have [American Rescue Plan Act] funds to supplement our budget, and we don’t have the carrier numbers to split the cost in terms of these rentals and landing fees. We have multiple scenarios that we’re looking at and we’re trying to see which will be least painful for our airline partners,” she said.
“It makes me sick, having to adopt a budget like this, but what options do we have?” King-Hinds added.
Despite this possible significant increase in airport rates, King-Hinds said CPA will still need to cut down on operations as there just aren’t enough airlines coming to the CNMI.
“Because the way our budget works, the more airlines that come to the CNMI, the more tenants we can divvy up the cost of running these airports,” she said.
Aside from significantly increasing airport rental rates, King-Hinds said the board will also be discussing the possible elimination of airline incentive programs.
“One of the considerations before the board right now is eliminating airline incentive programs. Do you think that’s a good idea? That’s a source of revenue. All these are problematic and all of these are before the board and because we have a deadline and we do have notice requirement with our airlines, we have to adopt this budget by Thursday and this is why we’re having an emergency meeting [tomorrow],” she said.
Kimberlyn King-Hinds
