CPA seeks extra support

The Commonwealth Ports Authority has recently written to local leaders seeking further support for its efforts to obtain a federal exemption from the U.S. Department of Transportation’s China Part Order 213 regarding incoming flights from China.

Last Monday, CPA sent out letters to the CNMI Senate, House of Representatives, and the office of Delegate Gregorio Kilili C. Sablan (Ind-MP) seeking support in in its efforts for a federal exemption from U.S. DOT’s China Part Order 213 which imposes restrictions on incoming flights from China to the United States.

“[We] seek your support for our request to the United States Department of Transportation regarding limitations on scheduled Chinese air service from China to the Commonwealth of the Northern Mariana Islands. Our request pertains to 14 CFR Part 213 Order 2020-6-1 and seeks an amendment to the Order to explicitly exempt the CNMI from its limitations,” CPA stated in its letter.

CPA explained in its letter that the importance of re-establishing the Chinese tourism market cannot be understated.

“Before the onset of the COVID-19 pandemic, Chinese tourists accounted for a substantial portion, approximately 38%, of all visitors to CNMI. Further, Chinese tourists significantly contributed to on-island expenditures, with Chinese tourists ranking third in terms of spending, behind Japanese but ahead of Korean tourists. On average, Chinese tourists spent $681.40 when visiting the CNMI,” said CPA.

For clearer context, CPA noted that in 2019, the CNMI had 185,526 visitors from China. Based on this figure and the average amount spent per tourist, the loss of the Chinese market will result in a direct economic loss of $126,417,416.

“Along with this direct economic loss, there will be an indirect economic loss because each dollar spent by a Chinese tourist generates additional economic activity. Every dollar spent by a Chinese tourist in the CNMI generates an additional $1.62 in CNMI Gross Domestic Product (GDP). The loss of the Chinese tourism market will lead to an indirect economic impact of $204,796,215. This means that the total economic impact of losing the Chinese tourism market is $331,213,630,” CPA explained.

“The economic impact of losing the Chinese tourism market is substantial. This loss would not only affect the government’s revenue but also private companies in the CNMI, particularly those in the tourism industry. With a projected drop in hotel occupancy rates and the potential exit of some tourism-related businesses, the consequences of losing this market would be far-reaching,” CPA added.

Additionally, CPA said the reduced tax contributions to the government would compound the economic challenges faced by the CNMI. Because of these factors, CPA said it needs further support in its efforts to revive the China market.

“In light of the above, we kindly request your support of CPA’s efforts to have the CNMI exempted from the Order 2020-6-1 limitations on scheduled air services between the PRC and the CNMI. Your advocacy would be instrumental in ensuring the continued resumption of international flights to the CNMI,” said CPA.

According to an explanation provided by CPA about the China flight order, civil aviation relations between the government of the United States of America and the government of China are governed by the U.S.-China Civil Air Transport Agreement.

This agreement establishes various rights for the carriers of both parties in regard to air service between our two countries. Annex VI of the U.S.-China Civil Air Transport Agreement explicitly permits the airlines of the People’s Republic of China (PRC) to offer unlimited scheduled air services between the PRC and the CNMI. It also states that these air services are not subject to limitations concerning flight designations or frequencies.

On June 3, 2020, the United States Department of Transportation issued Order 2020-6-1, which concluded that the PRC had, against the objections of the U.S. government, impaired the operating rights of U.S. air carriers and denied them a fair and equal opportunity to exercise their operating rights under the U.S.-China Civil Air Transport Agreement.

As a result, Order 2020-6-1 suspended all Chinese carrier scheduled passenger air services between the United States and China.

Despite Annex VI of the U.S.-China Civil Air Transport Agreement, it was relayed to CPA that the U.S. Department of Transportation International Office has stated that Order 2020-6-1, as amended, limits Chinese carrier scheduled passenger services between the PRC and the CNMI without exception.

“CPA firmly believes that Annex VI should apply in this context and exempt the CNMI from the restrictions outlined in Order 2020-6-1,” said CPA.

To address this matter, CPA has initiated direct communication with the United States Department of Transportation, seeking a summary written confirmation or follow-on amendment to Order 2020-6-1 that confirms Annex VI remains applicable and continues to exempt the CNMI.

However, because it is uncertain whether the United States Department of Transportation will address CPA’s correspondence, CPA intends to file for an exemption or waiver to the order.