CPA lowers airport fees

The Commonwealth Ports Authority has reverted back to the old methodology rates prior to the most recent increase essentially lowering airport landing fees after airlines threatened to pull out from the CNMI.

Yesterday, the Commonwealth Ports Authority held its monthly board meeting and gained an unexpected visit from Gov. Arnold I. Palacios.

During his visit, Palacios raised concerns he received from Korean airline partners like Jeju Airlines who have expressed that the current landing fees (which were significantly increased last year) is taking a toll on them.

“I received a letter from the chairman of Jeju Airline addressing their concerns with airline landing fees. We need to move forward in addressing this. We need to hold the increase in fees. That was their concern. The increased fees. If they pull out two of their flights, we’re going to be in a worse position compared the position we were in in the beginning of the fiscal year. We need to see what we can do to hold the increase fees in abeyance,” he said.

Palacios added though that the board must still go through the right process before implementing a hold or a suspension of the increased fees.

“I know there is a process. It’s a matter of taking a look at the fees and possibly rescinding the increase or suspending the previous board’s decision. I know you have to go through a process in reviewing the legalities. Maybe the whole board can go back and re-vote. We need to go through the correct process before the board makes a decision to approve sort of a temporary suspension or rollback on the new rates if we want to continue to see these flights come in. We need to move on that,” Palacios told the board.

CPA board chair Joe Ayuyu said that CPA, for a while, has been receiving similar feedback from airline partners who have expressed that they may have to either pull out their service from the CNMI or make cuts to their service due to the increase in fees.

“The economy (based on the recent news of the Hyatt Regency Saipan closing) is getting worse. We can’t address the issue of reviving our economy if we take our time. Action must be taken,” he said.

Because of this feedback, CPA recently adopted a program that would essentially charge airline partners less if they, in turn, continue to provide service to the CNMI.

“The program we’ve set up is from Oct. 1 to December 2023, we stuck to the old rate [prior to the increase], then from January to March, we gave a 50% discount on the new rate provided that [the airlines] bring in more customers. Then, for the remainder of the year, airlines are eligible for the discount if they increase the number of customers they fly to the CNMI. If you don’t increase, you’re not entitled to the program. I feel it’s a very fair program for both the airlines and us. Is this permanent? No. But, the economy is changing, and we need to adapt to those changes. The economy won’t get better if we don’t do anything,” he said.

Ayuyu, in support of helping its airline partners, added that CPA will definitely be losing money.

“Yes, CPA is going to lose some money, but sometimes you need to lose money to make money,” he said.

CPA executive director Leo Tudela shared that last week, he met with Jeju Airlines representatives and gave them an invoice reflecting the new rate and the old rate and gave them the option to pay the old rate.

“They will be paying the old rate for now,” he said.

According to Saipan Tribune archives, back in September 2023, the previous CPA board adopted a new rate methodology that reflected a 90% increase in landing fees and a 79% increase in terminal rental fees which makes up CPA’s fiscal year 2024 budget.

With the adopted budget, the CPA terminal rental rates for the Saipan International Airport’s main terminal went up from $19.49 per square foot to $34.92. Meanwhile, the terminal rental rates for all CNMI commuter terminals went up from $7.79 to $13.97.

As for landing fees, with the 90% increase, CPA charges international airline carriers $15.25 per thousand pounds of certified maximum gross landing weight of the aircraft; they were previously being charged $8.01. As for CNMI commuter terminals, the 90%-increase brings landing fees up from $4.81 to $9.15.