Airport revenues go up 5 percent in first five months

Airport revenues increased by 5-percent during the first five months of fiscal year 2005 compared with the same period last year, mainly due to the Commonwealth Ports Authority’s cancellation of one of its airline incentive programs.

CPA data showed that the three CNMI airports generated a combined income of $5.46 million from October 2004 to February 2005, slightly surpassing the $5.18 million income posted in the same period last month.

CPA comptroller George Palican attributed the increase mainly to the almost $100,000 which the authority saved in airline incentive discounts, following CPA’s decision to call off the “above-median” incentive program.

Under this program, airlines that bring in more than their average number of passengers get discounts in airport fees.

The increased revenues were also a result of growth in collections from passenger departure fees at the commuter and international terminals, landing fees, car rental concession rental fees, restaurant concession income, and parking booth income.

The airport division’s net income reached $494,470, a 381-percent rise from the $175,715 deficit during the first months of FY 2004.

Besides the improved collections, the airports’ lessened expenses contributed to the increased net income.

CPA spent $3.87 million to operate the three airports during the first five months of FY 2005, a decline of 13 percent from the same period last year.

The authority achieved this by cutting salaries and employee benefits by $465,112, as well as maintenance and other operating expenses by $99,132.

Nevertheless, Palican said the “surplus” is necessarily dispensable. In fact, he said, the ports authority needs to generate more income to further boost its bond debt coverage ratio.

Currently, the airport division’s bond ratio is at 1.48. This means that that the division generated an income that is 48 percent greater than its required bond payment.

Palican said that, while CPA’s bondholders require only a bond ratio of 1.25, they actually encourage the authority to maintain a bond ratio of up to 2.0. A high bond ratio, according to Palican, will ensure liquidity in the event that the travel industry again experiences a downturn such as that caused by the SARS epidemic and Iraq war outbreak in 2003.