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Airline incentive discounts down by 55%
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Posted on Jun 19 2005
The Commonwealth Ports Authority has cut airline discounts by more than half in the first eight months of fiscal year 2005, as compared to the same period last year, with the termination of the “above-median” incentive program.
CPA’s latest financial report showed that airlines serving the CNMI received only $186,141 in incentive discounts from October 2004 to May 2005. This represents a 55 percent drop from the $410,955 total discounts given to airlines in the same period in FY2004.
CPA used to have two incentive programs, providing air carriers a 50-percent discount on airport fees when they establish nonstop flights from “unserved” markets or when they bring in more than their average number of passengers.
Fees waived under these programs are the $8 departure facility service charge and the $2.20 international arrival fee.
The load factor-based program expired on Sept. 30, 2004.
CPA had also expressed plans to let the remaining incentive program at the end of the current fiscal year.
But with the impending pullout of Japan Airlines from Saipan, the CPA board of directors approved last week a resolution to continue the “new-service” incentive program for another year.
The financial report also indicated that the 55-percent decrease in incentive discounts offset the CNMI airports’ decreased non-aviation revenues, which include rental, concession, and parking fees.
Non-aviation revenues reached only $3.17 million in the first eight months of FY 2005, less by over $200,000 as compared to the collections in the same period last year.
Overall, the CNMI airports have earned a net income of $2.17 million so far this year, a 28 percent increase from the $1.70 million net earnings from October 2003 to May 2004.
The increased income, amounting to $478,133, resulted mainly from cuts in operating expenses.
For the first eight months of the year, CPA has slashed its personnel costs by $246,142 and its maintenance and other operating expenses by $228,735.
CPA stressed however that the net income would be reserved for bond payments and bond liquidity; it was not available for operations.
