CPA says no to DFS’ request to extend concession terms

The Commonwealth Ports Authority has turned down the request of DFS Saipan Ltd. to extend its airport concession agreement at the Francisco C. Ada/Saipan International Airport.

After researching the legalities of DFS Saipan’s request for a five-year extension of the expired concession agreement it had with CPA as the master concessionaire at the Saipan airport, CPA has determined it will not pursue an extension. DFS Saipan, however, has, again, written to CPA to ask it to reconsider.

In its request for reconsideration, DFS identified several significant challenges that arose both before and after CPA’s decision was made regarding an extension of the concession agreement.

Some of those challenges was Super Typhoon Yutu and COVID-19, which had a severe negative impact on the economy of the CNMI, airport operations, and tourism.

“In light of these successive major challenges and their far-reaching effects, I find it reasonable for CPA to reconsider its previous determination regarding the extension of the airport concession agreement,” DFS stated in its letter.

DFS also noted the anticipated exit of some brands toward the end of 2023. In order for DFS to retain and attract similar luxury brands, certain areas of the airport must be improved and DFS said it is interested in making those improvements. However, it would need a concession term of at least five years to justify new investments in the concession space.

DFS representatives went before the CPA board back in August to broach the subject of an arrangement that would allow them to retain the master concession at the airport for at least five more years.

DFS has held the master concession at the Saipan airport for the last 40 years, but their agreement expired in 2018. To date, they remain the master concession on a month-to-month basis.

Because of the uncertainty of this month-to-month arrangement, DFS claims it can’t continue to make an investment.

Because of this, they asked CPA for a short-term arrangement that gives them stability for the next five years to be able to have depreciation on their investment, which it said would also give CPA some time to put together a good request-for-proposals for a new master concessionaire.