Large incentives eyed for airlines

The Marianas Visitors Authority is willing to give as much as $150,00 cash incentive to any airline that launches new flights to the Commonwealth.

In a proposal, MVA stated plans to spend about two-thirds of the $1.5 million Japan supplemental budget it expects to receive from the central government on an airline incentive scheme.

The funds form part of the $2-million additional budget that MVA has been requesting to beef up its promotional efforts. The remaining $500,000 is being eyed for marketing campaigns in Korea and China, as well as for other collaterals.

According to the proposal, the Japan campaign will be divided into two phases, with the first one allocated a budget of $1 million and the other $500,000.

The airline incentive scheme, which aims to encourage airlines to fly to the CNMI by offering them marketing funds, was allotted a budget of $545,000 for the first phase and $380,000 for the second phase.

The program comes on the heels of Japan Airlines’ reported plan to suspend flights to Saipan. The plan is expected to result in a significant decline in visitor arrivals from Japan, which is the CNMI’s primary tourism market.

Under the proposed incentive program, an airline currently not flying into the CNMI may receive $150,000 if it launches a new regular scheduled service, or between $50,000 and $100,000 if it introduces a new charter service into the islands.

Meanwhile, an airline that is already flying into the Commonwealth may receive $120,000 for adding a new regular scheduled direct service, or between $50,000 to $100,000 for increasing seat capacity on the current routes.

“[A]irlines can decide the use of the money as long as it’s used for the promotion of Saipan flights. The use can be joint advertisement with agents or MVA, consumer campaign, agent brochure support, etc., but must be 100 percent dedicated to the CNMI,” MVA stressed.

The tourism agency added that they did not expect the fund to be over-subscribed by airlines. But if this happens, the money will be applied on a first-come, first-served basis. Additional cash support will then be allocated from the Phase 2 budget.

On the other hand, if there are not enough airlines that will take advantage of the incentive fund, MVA proposes to use the money equally among airlines that are currently servicing the CNMI for joint advertisement programs.

However, MVA cannot proceed with the cash incentive program until House Bill 14-109 is signed into law.

Currently, it is not clear whether existing laws allow MVA to utilize its appropriated funds for promotional expenses.

H.B. 14-109 would clarify the expenditure authority for MVA to include marketing strategies and promotional activities such as the awarding of cash prizes and discount coupons.

“The addition of the words ‘and promotional activities’ would clearly permit the expenditure of appropriated funds by MVA for purposes other than operations. MVA’s board of directors have long advocated such legislation and wholeheartedly supports the proposed legislation as it would codify language that such expenditures will be permitted by MVA to achieve its mandate of the promotion of tourism in the Northern Marianas,” MVA managing director Vicky I. Benavente said in a May letter to the House Committee on Commerce and Tourism.

The bill has been passed by the House of Representatives and now awaits Senate action.